When I was younger, I had a very good friend. We both grew up, but she eventually gained another friend. She was a terrible influence, but her parents did nothing. For years, my friend became what her bad friend stood for. Eventually she realized that her friend was a bad influence, but by then it was too late, and her friend had already changed her life forever.
I don't say this to scare you. You see, for your son, its going to be hard to explain why. Excuses aren't going to work. You need to get down to the point, and break it to him that he cant see his friend anymore.
The sooner the better. If hes at a new school, he may become more clingy to his old friend, rather than make new ones. This is the last thing you want.
If you're still unsure, take out a piece of paper. Make a line down it. Right on the left side, good, on the right side bad. Think of all the possibilities for your son seeing his friend for each. Eventually you'll see that my answer is proven. If not, it is still your disgression. Good luck!