Legal high industry's massive profits

The legal-high industry made massive multimillion-dollar profits during the Government's brief fling with regulation.

In a rare insight into the legal-high industry, the Ministry of Health estimates the industry was making a 1000 per cent profit on every packet of synthetic cannabis sold.

Chemicals were imported in bulk from China, processed into synthetic cannabis for about $2 a packet and sold for $20.

Since the Government set up the regulated market in July last year, it is estimated that 3.5 million packets of synthetic cannabis were sold in New Zealand.

Ministry officials have said the sheer scale of the industry caught them by surprise. With estimated sales of about $140m a year, it dwarfed the BZP party pill craze at its height a decade ago.

As of a minute past midnight this morning, interim licences for all legal highs were revoked, making it illegal to possess, supply or manufacture the drugs.

The amendment passed on Tuesday night marks a U-turn for Parliament, which voted only last year to set up a regulated market for the drugs, licensing the industry and giving health authorities the power to pull unsafe products.

The U-turn was praised in many communities affected by synthetic cannabis, but others have condemned it as a knee-jerk political reaction in an election year.

Even the Ministry of Health has warned that banning legal highs outright will push the products underground into the unregulated black market. It has estimated between 150 and 200 people are now so addicted to synthetic cannabis that they would need medical help to withdraw. "People who use these products are expected to stockpile them for their own personal use and the black market is assumed to stockpile to supply future demand," ministry officials said.

"Because these mechanisms will provide for the continued supply of these products, irrespective of legal status, use and associated harms amongst dedicated users is expected to continue."

Kai Guo, who owns the Naenae T in Lower Hutt, said yesterday he had been selling about three times as much synthetic cannabis as usual, with some customers bulk-buying up to $100 worth at a time.

He feared the ban would create a "tinnie house boom" as users embraced the traditional black market for marijuana to get their fix.

Legal-high pioneer and manufacturer Matt Bowden will have to recall and destroy thousands of packets of synthetic cannabis during the next few weeks, all of which he claims are safe. He said he had already heard reports of criminals setting up low-grade "garage labs" for synthetic cannabis.

"It's a bit of a kick in the guts to see the market handed to criminals with no code of practice or hygiene standards at all. It will be like buying from a meth lab instead of a pharmacy."

Bowden said selling legal highs was not as profitable as it looked, with retailers, research and development, and safety testing taking a big chunk.

"Maybe if you are buying from overseas and not doing any safety testing, it is [highly profitable]."


Timaru retailers are labelling the immediate pulling of all legal highs off shop shelves an election-year stunt.

Dizzy Spells owner-operator Megan Devries said she was extremely angry about the law change, in view of what she sees every day.

She believed it would push the substances underground.

"With it taken away from the licensed stores, it makes it easier for young people to get it and they will be exposed to harder drugs," Devries said.

She considers the legislation an election-year stunt, not a sensibly thought through decision.

"What are they [users] going to do now? Petrol and glue are both legal. They are worse for you to take, but easy to get hold of."

She felt television coverage showing "undesirables" lining up to get into stores for the highs did not reflect the average person who bought them.

"That's just not our clientele.

"They are just like you and me."

She said she operated within the guidelines and always asked people for ID before they were allowed to make purchases.

"We're not exploiting being able to sell these substances.

"I care what I am selling."

Devries said she had even worked with an addict who had come into the store and asked to be trespassed so he could not purchase the highs.

"He came in and asked to be trespassed, so I said sure and got on the phone and called the police."

Devries said she had been receiving daily updates from the two companies who supplied her, and was well informed on what could and could not be sold.

In anticipation of the new legislation, she had not stocked up on the substances and had only a small amount left to sell yesterday.

However, she believed it would not be long until something else came out.

She suggested all fines resulting from the change in legislation should go to rehabilitation facilities.

Karmec Creations owner Aaron Wilson-Jones said prohibition had not worked in the past and would not work in the future.

"This is a public health issue and people should be educated on harm reduction.

"Knee-jerk reactions in election years are not the answer," Wilson-Jones said.


It is now an offence to possess, supply or sell synthetic highs.

The penalty for possessing a small amount is a $500 fine.

Possessing a large amount with intent to supply could bring two years' jail or a fine of $500,000.

Unlicensed importers of psychoactive substances will continue to face a maximum two years' jail.

Licensed importers can still import active ingredients, but in practice they will now be only for testing and research purposes.