The Drug Foundation wants to remove schools' powers to expel any student younger than the school leaving age of 16.
The foundation has lodged a submission to a committee reviewing the "Tomorrow's Schools" system proposing a law change to remove the power to expel students under 16 and instead create incentives for schools to keep all students engaged in learning.
"Students who feel connected to their school are less likely to engage in many risky behaviours, including alcohol, tobacco and drug use," it says.
"Disconnection from school, especially physical disconnection resulting from stand-downs and exclusions, increases the likelihood that young people will experience harm."
The latest Ministry of Education data shows that rates of stand-downs, suspensions and exclusions have all risen in each of the past two years, reversing a decade of declining expulsion rates up to 2015.
Drug use was the third most common reason for exclusions, accounting for 11 per cent of students below age 16 who were kicked out of schools last year, behind "continual disobedience" (33 per cent) and physical assault on other students (20 per cent).
A detailed breakdown provided to the Drug Foundation shows that 55 per cent of the students excluded for drugs were Māori, slightly higher than the Māori share of exclusions for all other reasons (48 per cent).
Drug Foundation director Ross Bell said other figures presented at last week's Justice Summit showed that 51 per cent of all prisoners were kicked out of their schools as children, and 50 per cent of prisoners were Māori.
He said schools needed more support from mental health and behaviour specialists to work with even the most violent students.
"If students do have behavioural issues involving being aggressive and violent, then I would think that provides more reason why we should be wrapping a lot of support around those young people so we don't send them on a path to prison," he said.
But Secondary School Principals Council chairman James Morris said exclusions were usually a result of balancing the safety of students and staff against a student's right to education.
"Most schools recognise misuse of alcohol and drugs to be primarily a health issue rather than a behaviour issue, however the right of a board to exclude a student should not be removed," he said.
"The Ministry of Education is able to return a student to a school, usually with additional support, if an exclusion is unreasonable. Better access to drug and alcohol counselling services for students could make a valuable difference in the strategies available to schools to keep students engaged."