Anyone wanting to import or manufacture the latest "party pill" will first have to have the product approved, if Law Commission proposals released yesterday win backing.

Currently, new drugs - including party pills - can be imported, manufactured and sold without regulation.

Any banning of the chemicals - such as in the case of pill ingredient BZP, which is now a Class C controlled drug - can only happen once the drug is in the country, and known to be dangerous.

Such a situation has the potential to create "a real risk of harm to the public", the commission says.

Its paper - entitled Issues Paper on Controlling and Regulating Drugs - calls for "a major overhaul" of the laws regulating psychoactive chemicals, including the drugs colloquially known as party pills.

The recommendations come as part of a wider report into New Zealand's drug laws, released by the commission yesterday.

The report makes a number of suggestions to free up drug statutes and move the emphasis away from law enforcement to a health and educational emphasis.

It said there is no doubt that alcohol and illegal drugs both cause harm to the community, but "while the harms and costs associated with alcohol are typically understated and misunderstood, those associated with illegal drugs are often generalised and overblown".

It lists a range of options designed to free up police to battle commercial drug dealers while ensuring drug users received education or treatment.

Included in the options: a formal police cautioning scheme for all drug types, the issuing of infringement notices - with fixed fines - for "less serious" drugs, and other options that could see offenders referred for assessment and counselling.

In cases where personal use charges went to prosecution, the report suggests greater use of police diversion, and court-ordered drug assessments and supervision.

Currently, the courts have a presumption that class-C cannabis offenders will not be sent to jail. The report suggests that presumption be extended to possession for personal use cases for all drug types.

It also suggested a revamp of the three-tier system of class A, B and C offending categories to just two-levels: possession and aggravated possession.

But the report's suggestions have been ruled out by Justice Minister Simon Power.

"There's not a single, solitary chance that as long as I'm the Minister of Justice we'll be relaxing drug laws in New Zealand.

Though he was "interested" in submissions on regulations limiting the supply of new drugs - including party pills - he had "no intention of changing the current rules".

"I'm happy to hear what the submissions have to say but I have advised the Law Commission that I have other things on my work agenda."

The commission also recommended the use of medical marijuana "in limited circumstances", and the licensing of cannabis growers.