The clip, which was released today, shows the three-year-old sat with bundles of cash on his lap.
A man, who is believed to be the boy’s mum’s boyfriend, asks him ‘are you already high?’
He later adds: ‘Is it nice? If it’s nice, you must ask for this next time, okay? Are you feeling high? Good, stay that way.’
Footage shows the child holding the device, which is commonly used to inhale methamphetamine, known locally as shabu or syabu.
The disturbing footage was seen by a relative and passed to the boy’s grandmother who contacted police in Kedah, Malaysia, on Sunday.
Officers have now launched an investigation to track down the family amid fears for the youngster’s welfare.
He said: ‘The complainant is unsure whether her grandson was drugged by the man or not.
‘She is however, worried for his safety. She wants to claim custody of the boy from his mother.
‘We have launched an operation to arrest the suspect and to rescue the boy.’
The boy’s mother is understood to have been divorced from his father for a number of years.
She then moved in with her new boyfriend and took custody of the child.