If you do contact this friend's parents, your son's friends at school will realize that their parents would do exactly what you are doing. He is trying to protect himself and his friend. You are now faced with the challenge of acting responsibly as a parent in the face of discovering risky and illegal behavior on the part of your son's friend and most likely your son. I doubt that you will scare him out of using drugs simply by contacting this friend's parents.
This incident opens the door for you to begin discussions with your son about using drugs. Threats and scare tactics should not be used during the ongoing discussions you have with your son about using drugs and being in the company of kids who are using drugs. He needs your understanding, your values, and your support as you help him make good decisions when it comes to using and selling drugs. Don't make this a one-time angry lecture on drug use. Keep talking with him about this. Ask him about the peer pressure that he might be feeling to use drugs and brainstorm some ways that he can keep away from drugs and still maintain friendships and a healthy social life. He has shown you a red flag. Now you must respond with good sense and love, allowing him to learn from the natural consequences that follow his actions.