Townshend was mixing, packaging and selling clenbuterol and other anabolic steroids from his Christchurch home, mainly through the website clenbuterol.co.nz. The site was shut down but not before information on his client database was made available to DFSNZ.
The first case was heard this week but due to the vast number of cases, the backlog is not expected to be cleared for at least six months.
The New Zealand Sports Tribunal and NZ Rugby's judiciary will hear cases involving a large number of athletes who were recreational sportsmen and women. No Super Rugby players or All Blacks are believed to be involved.
In a statement, NZR general manager rugby Neil Sorensen said like all other sports signed up to the World Anti Doping Code, they supported all efforts to remove doping from the game.
"It's a pretty simple message – there is no room for doping, steroids or illegal drugs in rugby or in any sport in New Zealand. The vast majority of players work hard to juggle work, school, training and life to earn their spot in a team, and they do it without cheating," he said.
"We work hard to ensure that the game is clean at all levels and tough responses to anti-doping violations are an important part of enforcing that message.
"We are already on record as saying that we will not accept doping at any level within our sport and anyone involved should know we will work with DFSNZ to identify and prosecute them."
Drug education is a major priority for NZR which has expanded its programmes in partnership with DFSNZ in recent years.
"We think the game in this country is relatively clean compared to other countries, but we take nothing for granted and we'll continue to improve the guidance we provide young players so we can create a great culture for rugby free of drugs."
Jim Lonergan, chief executive of College Sport and president of New Zealand schools rugby, indicated teenagers could purchase steroids for a range of reasons, including insecurities around self-image.
"It's a total concern," Lonergan said. "It's brilliant Drug Free Sport have started to put education in the schools. If they are buying over the internet and they're not educated and don't know some of the stuff they're buying is really dodgy.
"It was quite prevalent in certain professional sports in the '80s and '90s but everyone turned a blind eye. Studies show aggression and trends like that developing in particularly teenagers but even males in their 20s – they become far more violent and have more mood swings and that's a real worry.
"I would seriously doubt if things happen within schools but there are a lot of gyms, personal trainers and individuals accessing stuff through the internet which has no real controls."
Lonergan predicted this latest case, coupled with testing last September at the top four first XV rugby competition, would result in an influx of schools taking up DFSNZ's education courses.
