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The review by Healthcare Inspectorate Wales (HIW) found the Welsh government's strategic drugs policy is not being "consistently attended to or delivered".
Waiting times for drug treatment facilities are said to be a "significant barrier" to getting treatment in some parts of the country.
A lack of mental health support to users was also cited as having a negative impact on the recovery of those addicted to drugs.
The report's author Dr Brian Gibbons said the study is the first to fully address the issue of substance abuse in Wales.
It will provide those working in drug treatment services with a platform to develop more effective policies, he added.
HIW has made 34 recommendations to tackle the problems it identified and improve substance misuse treatment.
Alan Andrews, manager of the Choose Life drop-in centre in Llanelli, said he hoped to see more investment in services, which help users come off drugs.
He explained: "Addicts have long-term issues that need to be addressed if they are to stay clean."
Yesterday (August 25th) saw the government announce it is to ban so-called legal highs.
Three substances are to be made illegal, including the chemicals BZP and GBL as well as herbal mix Spice.
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