A Christchurch-based distributor, In2herbs, circulated Sky to retailers in Auckland this week as a giveaway to customers.
Sky packaging notes the product is intended for potpourri or aromatherapy, and warned against human consumption.
In2herbs owner Michael Thorman said he did not advocate people smoked the product, but said he knew people did. "It's been through New Zealand Customs declarations, they wouldn't let it into the country if it was illegal," he said.
Thorman said there was nothing dangerous about the product he sold, but admitted it had not been tested in New Zealand.
"I personally don't use any of it. I have never smoked," he said.
"We cannot do anything about what people do with it.
"As a company, we have to be careful to protect ourselves."