Few dealers were approved in the month after law was passed and regulations for the industry might not be ready until June

Health officials' delays in creating rules for the new legal high market are a bonanza for approved dealers of now-lawful drugs.

The delay has frozen out potential competition not approved to import, make or sell legal highs in the 28-day grace period after the law was passed in July.

Regulations which would open up the industry were promised a "few months" after the interim licences were granted when the Psychoactive Substances Act became law.

Those in the industry have now been told it could be June before the regulations are made public.


The legal high trade has already created a top-tier of tycoons who feature as those with the most products cleared under interim licences.

Star Trust general manager Grant Hall said the industry had been told the full regulations would not be available until April and would then go out for public consultation. The effect was to lock the market in place for those who had interim licences.

"It's like a monopoly for those people now."

NZ Drug Foundation executive director Ross Bell said the regulations gave shape to the law - it guided dosage limits, the testing system, packaging and health warnings.

"All the things that will make the law work properly haven't been passed."

He said community anger over the sale of legal highs - such as that seen in Hawke's Bay in September - was sparked by factors which would be addressed through regulation.

28 Dec, 2013 10:30am
3 minutes to read

The lack of regulation meant there was no way to address the issues in a way which responded to community concern.

The opportunity to make a fortune is illustrated in the mark-up on BZP, a popular drug outlawed in 2008.

A former importer of the substance, speaking anonymously, said he bought the product for as little as $50 per kg from China. It would be sold wholesale about $4 a gram, and packs of the pills containing the same amount would sold for up to $20.

This could turn the $50 outlay into $200,000.

The economics of the business are now more constrained, with the number of outlets down from an estimated 3000 to about 170. The drop is largely because the new law makes it illegal to sell legal highs in dairies, service stations and through some other retailers.

The number of products available is also about a quarter of what it was.

Those in the business also face the cost of regulation. The 47 interim products would have cost suppliers $10,000 each to register.

StarGate Operations' Matt Bowden, considered the godfather of the legal high industry, dismissed talk of a monopoly, saying there was "a clutter of brands and plenty of competition".

"It is not a 'quick bucks' industry. We had to fight government and public misconception for many years to get here, and now we are at a place where it will cost millions to test each product, will there be returns? Maybe, but it is still a high-risk venture."

He said the legal high industry would emerge as a safer alternative to alcohol.

"The adverse events we are seeing are generally a lot smaller in magnitude to those seen with alcohol. No deaths for instance."

The Ministry of Health's Dr Donald Hannah, who is overseeing the Psychoactive Substances Regulatory Authority, said the regulatory regime was taking longer than expected.

"While the regulations in the act are still under final development, the new law is already showing signs of having an effect.

"As we noted earlier, those regulatory powers have curtailed what was before an unregulated market, limiting both outlets and products.

"It is now possible for the effective monitoring and regulating of that market to occur and to be strengthened over time as further regulations come into effect."

Dr Hannah said that under the full regulations the interim products would be put through a testing process similar to that required for medicines.

A draft manufacturing code had been released for industry comment and a permanent standard would be introduced by mid-January.

He said local councils were also developing policies for retail outlets.

The new (legal) drug lords

They are the new kings of the drug industry - thanks to legislation which allows drug manufacturers and retailers to sell their products until regulations are drawn up. David Fisher found some were happy to be publicly identified but others still shun the limelight

Matt Bowden - Auckland | Stargate Operations
Considered the godfather of the legal high industry, Mr Bowden has preached harm minimisation while leading the market with products which have kept him ahead of the competition. He's fought hard to establish the regulated market, been a strong mover behind the Star Trust industry body - and become extremely wealthy. Communicates to the media mainly through his colleague Grant Hall on the Star Trust.
Licence for: 4:20 (only legal high pill on the market), SGT-24.

Matthew Wielenga - Lightyears Ahead
As Mr Kronic, he had a company reported to be turning over $700,000 a month selling the controversial product in a business relationship with Stargate's Matt Bowden. The decision to sell pre-rolled Kronic joints is blamed by some in the industry as leading to the clampdown which followed the huge rise in Kronic's popularity. It has come with a cost - Mr Wielenga faces charges in Australia of trafficking synthetic cannabis from September to November 2011. He has denied the charges. Mr Wielenga's current products contain Mr Bowden's bespoke compound SGT-24.
Licence for: Giggle, Diablo.

Mark Carswell - Christchurch | Cosmic Corner
One of the long-term kings of the trade, Mr Carswell has dominated the retail outlets through his Cosmic Corner stores. He has long advocated regulation, saying in one interview: "We will only sell stuff we would take". Most product licences are for the only party pills on the market, with caffeine, green tea and taurine as more "natural" compounds than the BZP predecessors. He has nine retail licences.
Licence for: (Pills) Dr Feelgood, Pepe, Nirvana, POW, Pure Go-E, Stargate. (Smoked) Puff Southern Lights, Puff Super Strength.

John Frew, Andrew Broczek - Platinum Marketing
The pair have dominated the adult market for years through the Erox and Peaches & Cream stores, selling sex toys and porn alongside legal highs. They have a wide range of legal highs, covering the breadth of available active ingredients. They have their own retail outlets with almost 20 of the 170 retail licences for selling legal highs.
Licence for: illusion Connoisseur, illusion Massif, illusion Peak, illusion Colossus, Amsterdam Havana Special, Jungle Juice, Blueberry Crush, Amsterdam Long Island Tea, DC-3 Purple.

Evan Stewart - Christchurch | Eversons International
The Christchurch businessman denied involvement in the industry when contacted, but Ministry of Health and Companies Office records show he runs companies which hold interim drug licences. He has operated a vitamin and dietary products company for years - and has been a significant player in the legal high market since BZP days. When contacted about his business, he denied involvement. "I don't know anything about it," he said.
Licence for: Anarchy, Voodoo, Karma, Apocalypse, Outbreak, WTF.

Tony Shipley - Christchurch | Snitchel Holdings
With licences to import and research, Mr Shipley's involvement in the industry extends beyond Weirdos Adult Store in Christchurch. Mr Shipley has been in the legal high trade for years and kept a low profile. His mother Ida is part-owner and would not pass on contact details for her son.
Licence for: XT, White Rhino.

Tim Kelly - Nelson | Gizmo Holdings
The legal-high businessman has the top of the South Island sewn up with shops in Nelson and Richmond. He has been an upfront spokesman for the industry, speaking to local media when called on. He has a licence to import, manufacture, wholesale and retail.
Licence for: AK47.

Mark Asher - Auckland | NZ Gold Parties
A former second-hand goods dealer, Mr Asher got into the business last year - establishing enough of a track record to win product licences when the interim system came in July despite being "minnows". He chatted to the Weekend Herald although he is concerned about the stigma attached to the industry. He says he keeps a "low profile" even among family and friends. "If they don't ask, I don't tell them."
Licence for: Red X, Radiation.

Tony Fearn - Auckland | Funboy Products
The company was set up for other business but the legal-high products have taken over since the product licence was granted. Mr Fearn has been involved behind the scene for years and has come into the industry as it has become regulated. "At the end of the day, it shouldn't have been in dairies."
Licence for: Haze, B-52 Cherry Bomb.

Peter Robertson - Mt Albert, Auckland | Planet Nature
Licence for: Northern Lights Primo and Northern Lights Black Label Skunk.

Jesse Greenslade - Silverdale, Auckland | Herbal Exports
Licence for: Tai High Black, Tai High Code Red, Tai High Bubble Berry, Tai High Afghan Kush, Master Kush.

Warren Skill - Invercargill | 2mindz
Licence for: Mind trip

Stephen Beere - Glendene, Auckland | Orbital Distribution
Licence for: Lemon Grass, Choco Haze.

George Reed and Abi Piggin - Onehunga, Auckland | Simply G Design
Licence for: Ziggy.