Richland County Sheriff Leon Lott said he couldnt ignore the photo but defended his investigation.
Michael Phelps is truly an American hero ... but even with his star status, he is still obligated to obey the laws of our state, Lott said.
The photo showed Phelps smoking from a marijuana pipe at a party in November when he visited the University of South Carolina.
Phelps has called his judgment bad and said he would learn from his mistake.
USA Swimming suspended Phelps for three months in the wake of the photo, and Kellogg Co. said it would not renew its endorsement deal with him.
The photo surfaced in a British newspaper, News of the World, on Feb. 1. The swimmer, who won a record eight gold medals at the Beijing Games, did not dispute its authenticity.
News of the World said the picture was taken during a party while Phelps was visiting the university. During that trip, he attended a football games and received a big ovation when introduced to the crowd.
The party occurred nearly three months after the Olympics, and Phelps' actions should have no impact on the eight golds he won at Beijing. He has never tested positive for banned substances.
This isnt the first embarrassing episode for Phelps after an Olympic triumph. In 2004, a few months removed from winning six gold and two bronze medals in Athens, the swimmer was arrested on a drunken driving charge at age 19. He pleaded guilty and apologized for the mistake.