Toulon owner Mourad Boudjellal believes James O'Connor is "a kid with troubles" and said his contract will not be extended after he was reportedly charged with being in possession of cocaine.
Former Australia utility-back O'Connor and ex-New Zealand international Ali Williams were jailed after being arrested in Paris early on Saturday.
Toulon released a statement saying O'Connor's alleged use of drugs "conveys a negative image far from the values that the club defends" and Boudjellal said the 26-year-old will be sanctioned by the Top 14 side.
O'Connor, who this month spoke of his desire to make a Wallabies comeback, is in the final year of his contract and looks set to move on at the end of the season.
"He won't escape a suspension," Boudjellal told Le Figaro. "He's a kid with troubles, he's 26. I'm not going to kill him either."
"Whatever decision I take, I will take everything into account, and I'll try not to damage the kid."
With regards to his contract situation, Boudjellal stated: "We're not at a stage where we would extend it. We'll try to manage this season, but I do not want to overburden him."