UNDER INVESTIGATION: NZ Lotteries are looking into allegations surrounding the sale of legal highs at Dharmendra Patel's Haven Road Store.

A Nelson dairy that was busted selling legal highs after its owner claimed to have stopped has been suspended from selling Lotto products.

Haven Road Store and Lotto was exposed by the Nelson Mail selling a $20 bag of Malavi Gold synthetic cannabis to a man last week.

Owner Dharmendra Patel previously promised he had stopped selling those products. An ultimatum from the New Zealand Lotteries Commission required Lotto vendors not to sell legal highs after July 1.

New Zealand Lotteries has now confirmed it has suspended trade of Lotto tickets from the Haven Rd outlet while it conducts an investigation of "allegations in the media".

Lotteries spokeswoman Emilia Mazur said the suspension was a precautionary matter. As this was an unprecedented situation for NZ Lotteries, she did not know how long the investigation would take.

When the Nelson Mail tried to contact the Haven Road Store for comment yesterday an employee feigned a broken connection, before hanging up.

After the sale was exposed last week, Mr Patel initially denied it happened before saying he would have to investigate.

He said his employee would be served with a warning if he found she had sold the product.

"If she did something against my orders she might have to be fired."

He then confirmed the employee was his wife.

In November last year NZ Lotteries barred the Haven Road Store from offering free Instant Kiwi tickets with "legal high" purchases.

Parliament last week passed the Psychoactive Substances Bill that could come into effect this week.

It regulates the importation, manufacture and supply of the psychoactive substances within party pills, energy pills and herbal highs. Dairies, convenience stores, supermarkets, service stations and liquor outlets will all be banned from selling the products.