As far as I know, your friend is right. I've heard that about three seconds is all the time it takes for the active substances to get absorbed and after that the risk is greater than the benefit. I don't have a source to cite tho.

In terms of you getting higher with sipping breaths, this is completely unfounded, but maybe additional oxygen helps the substances absorb more effectively? if you're holding your breath you might get slightly hypoxic and hinder absorption. Scientists?