They have pleaded not guilty.
Mr Peters said he met with Cochrane to talk about stocking the company's products in the South Island shop.
He was introduced to John Feenstra, sales manager of a related company called Headquarters, which supplied paraphernalia and party pills to the Switched on Gardener shops.
Mr Peters said Mr Feenstra gave him sex pills to try out. In the recorded conversation played to the court, Mr Feenstra is heard saying: "They will go like a rocket in Greymouth."
He described in detail the effects that the pills had on men. The description caused some members of the jury to laugh.
He also gave the officer "blunts" which he later told the court were tobacco leaves used to smoke marijuana.
As well as warnings about the sandflies, Mr Feenstra also cautioned Mr Peters about what he could say to his customers.
"If any customers come in and say: 'I want to grow some cannabis', shut them down because they could be an undercover cop."
He said the New Zealand law did not allow entrapment as a defence and Mr Peters should be careful.
"You can tell when an undercover policeman comes in because they do one big mistake."
Mr Peters asked what that mistake was.
Mr Feenstra responded: "They don't change their shoes."
He said he used to work at a Switched on Gardener shop and undercover cops never changed their shoes.
Earlier, the court heard a conversation between Mr Peters and Cochrane.
Nirvana's Smells Like Teen Spirit was playing in the background when Mr Peters and Scott turned up at the company's headquarters in West Auckland.
Cochrane said the company didn't want someone opening a shop in their garage and only stocking $5000 worth of equipment.
"We want someone committed to spending $40-$50,000."
Cochrane said he would be willing to open an account for Mr Peters and described his proposal as "serious".
Under cross-examination from Cochrane's lawyer, Matthew Dixon, Mr Peters confirmed he did not get any follow-up calls from the company about his Green Room proposal.