Police said they suspected the 1.6g of white powder he was caught with was heroin or cocaine - an offence that carries with it a maximum of 12 years in prison.
Kuta police chief Wayan Sumara said the powder turned out to be a mixture of painkillers, caffeine, cold and flu medication and cough medication.
Describing Murphy as "very lucky", he said the teen had bought it off a man on the street who told him it would "make him feel good".
"I don't want to say whether he is stupid or not."
Sky Garden apologised for the "excessive force" used during his detainment.
They said the security guard involved in the teenager's detainment has been "reprimanded" and will undergo further training.
- AAP