Cousins publicly fell from grace following a string of off-field incidents and substance abuse problems.
The now 36-year-old Cousins was suspended from the AFL for one year in 2007 for bringing the game into disrepute but made a comeback with Richmond, before retiring in 2010.
Malthouse said he was largely ignorant about drugs during his playing career and his early days as a coach, and never had a clue a much younger Cousins had begun his habit during the 1990s while he was coaching West Coast.
"I was probably as naive as anyone, because even when I've come over here to coach Collingwood and then they said about Ben Cousins, I was first of all absolutely shocked. Totally shocked," Malthouse told Melbourne radio station SEN.
"And then when he did his interview and said, `I started dabbling in 1996 or `97', or whenever it was.
"I thought, `I was coaching then. I didn't know that. Why didn't I know that? I don't know whether all the players knew that. And if they did know that, no one was talking'."
Coaching games record-holder Malthouse said he's become far more aware that some players have taken illicit drugs in the off-season, but described the use of both illicit and performance-enhancing substances in the AFL as "absolute madness".
"I might be old hat but I'm saying they're bloody stupid," he said.
"To run the risk of two years of your playing career out just to see if you can get by and get a bit better."