The Drug Foundation says the Government's proposed drug testing regime for beneficiaries could lead to an increase in methamphetamine use.
Social Development Minister Paula Bennett on Tuesday released details of a Government plan that would cut benefits for job seekers who fail drugs tests.
Legislation will be introduced to Parliament in September which, if passed, would mean beneficiaries looking for work may have welfare payments suspended or cut by up to 50% if they turn down jobs that require a drug test, or if they fail a test.
At present, a person receiving the unemployment benefit can turn a job down on the grounds they would not pass the drug test.
Drug Foundation executive director Ross Bell says there is a risk that people will simply move on to drugs that are less readily detected.
"One of the unintended consequences of promoting drug testing is people shifting from easy-to-detect drugs, cannabis for example, to harder-to-detect drugs like methamphetamine.
"We've seen that already in the prison environment and I think we need to be careful if that's going to be one of the consequences of this policy."