A drug operation run in Hamilton has been shut down following an investigation by TVNZ's Close Up.
A new designer drug called Dime has been available online, sold as a capsule containing white powder and marketed as legal.
It has been claimed Dime mimics the effects of LSD and ecstasy, filling a void left by Kronic and other 'legal highs' which were banned last year.
Vonk Ltd, a Hamilton-based company directed by Kurt von Keisenberg, imported the powder from Poland.
Von Keisenberg, a chemistry graduate, told Close Up he came across the drug through scientific journal articles and internet discussions.
He realised he "could purchase the stuff and turn it into something sellable".
Von Keisenberg said while the company imported "the pure white powder" from a Polish company he believed it was made in China.
A friend of Von Keisenberg created a website for Dime and sold the drug online, at $30 for two capsules, making it one of the cheapest synthetic highs on the market.
A user of Dime called Nick (not his real name) told Close Up the new drug, which is snorted, was potent.
"It's very heavy, very intense. You can feel nauseaous for the first half an hour or so. After that you're just enjoying basically everything for at least a good six to ten hours. It's an all round party buzz."
Dime's marketing said the drug brings on an "amazing high", "beautiful visuals" and "increased energy".
But Close Up commissioned the drug to be tested at ESR, the government-owned laboratory.
Tests revealed Dime contains 25C-NBOMe, a Class C drug, which is an analogue - a modified version - of a Class A drug called "DOB".
The drug 25C-NBOMe is a designer hallucinogen which been in the market in Europe and Australia for up to five years, according to Dr Paul Quigley, head of the emergency department at Wellington Hospital.
Vonk Ltd has now accepted it was distributing a Class C drug.
It said it was shutting the company down and destroying anything left of the drug.
Police, Customs and the Ministry of Health are now investigating.
Dr Quigley told Close Up any drug which gives hallucinations can be dangerous.
"With hallucinogens you get this injury rate where people harm themselves either in terror from the hallucination or trying to act out something during the hallucination."
"They get frightened and they run off. But people run off through glass windows, they run across motorways, they get hit by cars."
Associate Health Minister Peter Dunne told Close Up that because Dime contains an illegal substance, it is immediately a matter for police and Customs.
"The important thing now with Dime is that the regulatory authorities like the Police and Customs do their work. Firstly, to see how it gets across the border in the first place and secondly, whether any criminal activity's involved."
Dunne said permanent legislation should be in place by the end of year which means the 51 synthetic highs taken off the market last year will not reappear.
He said temporary bans in place since last August has worked, and evidence showed the "dramatic use of synthetic cannabinoids has virtually evaporated".