Once it was determined to be neither cocaine, nor lookalike cocaine, but in fact powdered sugar, the kid should have been told by someone not to do that anymore, and that should have been the end of the story.
Determined by who and how? Do schools have drug testing kits? Should taxpayers fund these?
Why test at the school? The kid already broke the look-alike drug school policy and state statute. The substance can be tested at the police station, and the kid re-charged if it turns out to be positive for cocaine.