1. INTBUS FROM LEGAL HIGHS
705
TO LEGAL REFORM
A Case Study on Matt Bowden: Stargate International
Developed for International Business 705 Assessment at the University of Auckland
By Jess Maher, Øyvind Bjørnsmoen, Chelsea Griffin & Samira Ibrahim
22 November, 2010
EXECUTIVE SUMMARY
Stargate International was established by Matt and Kristi Bowden. After witnessing a variety of
horrific incidents and effects of the use of methamphetamine, Matt recognized an opportunity to
provide a safer legal alternative for drug addicts. In this case study, we retrospectively explore two
initial attempts Matt had at cracking this industry. The first began in 1997 when he began
distributing legal alternative pills in New Zealand by both order/delivery based sales and then
eventually also retail stores began stocking his products. Matt was met with many legal &
competitive issues throughout his time in the industry. After spending some time in Australia after
his first failed attempt, Matt returned to New Zealand in 2000 at which time, he began producing
and distributing party pills with the chemical Benzylpiperazine (BZP). In 2005, the Misuse of Drugs
Amendment Act created a new class of recreational drugs in New Zealand, however later in 2008
the Government decided to change their minds. His first stint lasted six months but Matt’s second
attempt catalyzed the growth of a successful industry and an eight and a half year business. Matt’s
overarching goals of harm minimization continue to prevail, despite the legislative reclassification
of BZP to an illicit substance. This case talks about opportunity recognition and legal reform in the
party pill industry of New Zealand. It explores how a social entrepreneur can drive change in a
small economy, upholding a strong sense of motivation and determination in the face of adversity.

2. Matt Bowden: A Case Study
Introduction
Those who have not had the chance to meet Matt Bowden may perceive him and the
industry he is affiliated with negatively, as they get away with the unthinkable, literally selling
you legal speed. However, this is a far cry from Matt’s vision; which is evident in the
charismatic persona he exudes not to mention his passion for social change. He is now a stay
at home family man who works with what he is truly passionate about, his music and his
children. Yet the experience and stories Matt shares of his initial years in the business paint a
rather tumultuous picture of his involvement with the recreational drug industry. With
various tales of drug abuse, violence, prostitution, crime and even death, Matt found himself
reaching some alternative understandings and perspectives on the matter of drug reform
which continue to act as one of main elements of opportunity recognition in his career. Matt
is a true social entrepreneur who believes that he was put on the earth to achieve a purpose
which has overrode a lot of the obstacles and challenges he has faced in his life.
Background: The first pursuit of the legal drug alternatives
In the midst of 1997 – 1998, Matt was advertising for Performance Car Magazine when
a client with a business proposition approached him. This was the first opportunity point in
Matt’s entrepreneurial expedition. The product was a stimulant that upon testing, Matt
realized was not your everyday pill. Matt instantly saw an opportunity, realizing that this pill
had a purpose and could be used. He saw it as a potential safer legal alternative to drugs in a
society where a methamphetamine explosion and an accompanying surge in violence was
prevalent. This idea came to fruition when he began importing merchandise from England
and distributing it to his known target market, those suffering from drug addictions. He began
by advertising on websites and on the radio, with call centre and courier deliveries set up to
facilitate sales and distribute the product. A support line and a F.A.Q were also set up.
To spark retail interest Matt offered businesses such as The Hemp Store a 100% mark
up on the pills. This strategy saw Matt’s product rapidly become a significant contributor to
their cash flow, to the point of reliance on it for profit. At this point the venture began to
attract media attention. He was approached by a journalist, named Greg Boyd who
conducted an interview with Matt regarding his new venture. Unfortunately this first media
contact was not the ideal coverage he was hoping for. His statements regarding the
substance he was marketing were taken out of context and a misrepresentative story was
portrayed to the public. The power of editing demonstrated statements being made about
what the pills were capable of doing. This became problematic for Matt as under the
Medicines Act 1981 law, it was illegal to make any claims regarding the effects of a substance.
Media pressure drove the Ministry of Health to take the issue to the courts. Matt
substantiated his claims with both legal and scientific facts. However on investigation, the
pills were found to contain a substance called ephedrine and a nationwide recall of the
product ensued. Matt’s first attempt at cracking into a legal drug substitute market was only
a six-month stint, but a profound interest was sparked in the legal side of this industry.
However, this was not last both the government and the industry would see of Matt Bowden.
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3. Matt Bowden: A Case Study
A socially inspired return
Later Matt was approached by an Australian investor who suggested marketing a
product that was in an area of Matt’s expertise. After careful consideration and advice from
his accountants, Matt decided to move to Sydney in 1999. There he pursued the idea of again
providing a cheaper and legal alternative to harmful drugs. While amidst this environment he
was exposed to a darker, unregulated side of the industry that shocked and moved him. He
witnessed a number of terrible incidents involving methamphetamine, some concerning
people close to him. This was the motivation he called upon to return back to the industry he
had previously failed in.
He was inspired to try to find some form of safer stimulant that didn’t result in the
horrific effects seen with methamphetamine use. With the strength of his convictions Matt
Bowden believed that “if we could meet the consumer need without the harms, we could
build a better society”. Adopting the motto that “if you believe in something strongly
enough, you can do anything” he began to pursue this idea.
Bringing BZP to the market
While still in Australia, Matt aligned himself with a neuro-pharmacologist and together
they began to search for an alterative drug that they could use to fill this niche. Soon they
discovered the drug Benzylpiperazine, a non-addictive euphoric stimulant and so they began
the pursuit to transfer this into a marketable product. Known colloquially as BZP this
substance had been scientifically tested through clinical trials and was proven not to be a
danger to consume. Research also indicated that in 1973 trials that were conducted with
amphetamine users, they had indicated a liking of the drug BZPi. They knew that with this
compound they might have been on to a winner in their search for a legal alternative
substitute. They attempted to approach the Australian government, but they were not
receptive to it.
In order to tackle the escalating methamphetamine problem that was in existence in
his home country, Matt returned to New Zealand in 2000. He was then able to gain access to
the substance BZP and began to make some pills. He decided to “make a product for people
that are choosing psychostimulants like amphetamines and give them a safer alternative”.
Soon Stargate International’s new product had became a social, legal substance that was
been taken by current drug users. Matt’s product was meeting the same stimulant need to
keep them awake between the desired hours of 12 am and 6 am in the morning. It became
evident that consumer and behavioral trends were changing, seeing a shift away from the
intake of harmful drugs. Research was reporting the pills to be a success, with around 20
million tablets consumed in New Zealand and no reported fatalitiesii.
Media and government pressures
While the business seemed to be flourishing there were other political issues that
needed to be addressed. One of Matt’s major retailers The Hemp Store was part owned by a
member of the Green party, Nandor Tanczos. The Sunday Star Times published an article that
involved Matt and his business, with the main goal of “having a go” at Nandor Tanczos. The
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4. Matt Bowden: A Case Study
article attempted to discredit the politician by associating him with selling drugs that were
illegal overseas. The media had its own agenda regarding the politician and thus Matt became
once again caught in the middle of media and political cross fire. The New Zealand
government and the Ministry of Health again got involved with the claims and started an
investigation. This time around Matt had learnt a bit about how to deal with the media and
government and attempted to go straight to the source of the problem. Matt and his wife,
Kristi, traveled down to Wellington and explicated his mission.
Matt & Kristi spoke to the government ministers stating; “This is what we are trying to
do, a lot of our friends are addicted to methamphetamine, some of them are actually dying
around us… as methamphetamine users, we can't really put up our hands and ask for help
because we are technically criminals now... Society’s way of dealing with our problem is to
lock us up in a cage and we think that’s wrong, so what we are doing about it is we are
making a safer alternative”.
The laws of supply and demand
The objective of Stargate International and Matt’s focus has been on harm
minimization, with a stated aim at addressing the drug demand reduction strategies; his
product was a addressing demand reduction. This aligned with the New Zealand National
Drug Policy, which has three pillars, Matt felt that short comings of this policy was identified
ultimately at demand reduction, which his product was addressing harm minimization.
“If you reduce the supply without reducing the demand, the quality comes
down, or the price goes up. Now once you put the price up and it's worth
more, then even though you might have been thinking about the fact that it's
a couple of years in jail if you get busted, you might think more about that it
might be worth it. The demand's going to stay there, because users are going
to run out and want more...eventually you're going to get to the point where
it's worth it to crank out a few more grams, if they're worth thousands of
dollars each... When these pressures exist the quality of the drugs is reduced
and therefore more health risks emerge for people. This trend happens all
around the world, these laws or trends are basic laws of economics. They are
as set in stone as the laws of gravity and so politicians trying to ban
substances and effectively start a drug war have proven to be a totally
ineffective policy” (Matt Bowden, 2010).
He also identified another document, which aligned with his purpose. The
Methamphetamine Action Plan was an initiative, which invited community groups to come
forward with solutions regarding demand reduction. Matt proceeded to identify himself as a
representative of the “dance community” a group who don’t like to drink alcohol but instead
prefer to take stimulants and socialize from late in the night until early in the morning. He
indicated that this community would not be able to stop and believed that the use of a
demand reduction strategy for them was offering a safer alternative. They responded by
researching further into the topic.
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5. Matt Bowden: A Case Study
Research showed that people had stopped taking illegal drugs and in fact were using
Stargate International’s product instead. 44.1% of party pill users who also used illegal drugs
stated that they now mainly used party pills insteadiii. Because of these newfound trends
which supported Matt’s argument, the Government decided to not prosecute and to instead
move toward changing the laws to accommodate Matt’s vision.
The turf war begins
Competition arose when rival industries such as liquor stores began to feel an
economic sting. The booming party pill trend was seeing in some cases, that half the money
usually being spent on alcohol going into the pockets of Matt’s industry. At the same time as
this Matt states that “Research started coming out from the fingers of the liquor industry,
alcohol advisory groups and so on, saying party pills and alcohol shouldn`t be combined”.
A turf war was happening between the party pill and liquor industry. However with
Matt’s excellent legal representation he again fought back. “A rival industry, missing out on
its revenue started pushing back and silently behind the scenes driving the whole campaign
that party pills are dangerous, they’re bad, they’ve got to go” (Matt Bowden, 2010). This was
substantiated with the valid argument that no one had died from taking party pills, a statistic
that the liquor and tobacco industry could not claim. They recognized that Matt’s industry
had sold 26 million pills in New Zealand, which were consumed over eight and a half years by
400,000 consumers with no deaths and no lasting injuriesiv.
Matt then withdrew some of his brands from the market, having disagreements with
his distributors in the process. This was because the industry became too widespread with
pills being sold in dairies and to the general public, no longer just to his original target market.
As he had not put any patents on his intellectual property, the marketplace had exploded
with competitor products. He had begun to feel that it was working contrary to the original
mission. His original mission was still strong in his heart and so he identified a way to
continue with this while not having his products sold within the industry. He approached all
his competitors and negotiated arrangements so that they would help establish a collective
fund to pay the legal fees for the industry, as Stargate had effectively been dealing with the
government on behalf of the whole industry, not to mention that the industry was based on
intellectual property developed by Stargate.
Establishing ‘Class D’
In return he hoped to stop the government from shutting the industry. At this point the
industry was facing an imminent shut down with the government preparing for a nationwide
recall of the products due to the pills apparently breaking food safety regulations. The food
safety authority was arguing that the pills were not classified as a food group. Matt’s defense
was that this was not the case and ingeniously relabeled the products as “social tonics” and
wrote on the back that this is a harm minimization initiative so that it was really clearly
labeled not as a food or dietary supplement. They were lacking in a category for them so they
wrote one up and put it in place.
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6. Matt Bowden: A Case Study
As a result of this action it became apparent that the industry didn’t fall under a
specific jurisdiction and instead needed a new category with the Misuse of Drugs Amendment
Act 2005. By taking this action, the NZ Government accepted that there was a clear need for
ensuring that some kinds of standards and regulations were to be in place. In 2005 the
restricted substance category or Class D was put in place, as a regulatory tool for lower risk
substances deemed not harmful enough to be illegal. Class D could regulate it being illegally
sold to someone under the age of 18, not being allowed to advertise on the TV, radio or
magazines. Yet after creating the laws, they still continued to foster a type of no man’s land
for the product where no formal regulations were in place.
By 2006 BZP pills were a commercial success with the industry estimated at being
worth £ 8 million annuallyv. After seeing a surge in the number of competitors, the “party pill”
industry grew, broadening markets and uncovering some unfortunate events which were a
result of youth combining the use of alcohol and BZP. As the industry and markets for it grew,
so did the evidence of unethical behaviors. Without restrictions on the strength or quality of
these products, there was evidence of some competitor’s pills being up to 16 times stronger
than Stargate Internationals. Matt formed The Social Tonics Association of New Zealand
(STANZ) to encourage best practices within the industry.
The ongoing unethical and dangerous behaviors of competitors fueled the cause for
media to continue pressuring the government for further attention and enquiry into BZP. A
request for research was arranged which was enthusiastically supported by Matt, mainly
because he had already extensively researched the cost to benefit analysis of this product
and approach. Clearly the lesser harm of the “social tonics” industry products when
compared to alcohol was something he was excited for the researchers and policy makers to
explore.
All the independent research came back confirming that the pills were of very low or as
low as practically possible risk, but one commercial institute with strong ties to government
came back with claims of serious adverse events. Matt suspected that this research was
somehow flawed or misrepresented, which became clear at a later stage when a
whistleblower leaked information about the research. “The research failed at peer review
stage but was used as a political and media tool. The ban happened as part of a lead up to an
election.” Before Matt and his lawyers could counteract this, Jim Anderton passed a new
piece of legislation banning party pills and it was voted through in 2007 and came into force
in 2008.
Onwards and upwards…
Having set backs is not a concept unfamiliar to Matt Bowden. Now days his expertise in
government lobbying and intellectual property on the relative issues of legal alternative drugs
has been in high demand. Other countries facing similar issues such as Canada and the United
Kingdom have called upon him for help. His entrepreneurial actions have transformed New
Zealand into a representative sample. Now other countries are able to learn from New
Zealand in the battle to minimize the harm caused by illegal drugs. He is also continuing to
build New Zealand regulation systems by keeping a safe natural drug within the Class D
category.
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7. Matt Bowden: A Case Study
Matt aims for the industry and government approach to eventually set examples for
international standards around drug policies. He is very proud to have set up his enterprise in
New Zealand, remarking on how cool it is that you can just pop down to parliament and with
time and patience you can have some impact on laws and regulations for the better of the
country. This is not something that can be done in larger countries so he urges people to take
responsibility. He hopes that people try out new policies and do things that are quite
progressive, as we have a small enough infrastructure to allow this to happen.
“That’s my feeling, we have just got to stand up and that for New Zealand as
a country we have to stand up…I feel like in a sense we have done that and I
think that the mission worked in that sense”.
Now in 2010, he is in the process of recording a rock album, which will continue to
carry on his message. He feels that if he has music out there he can be perceived more like an
artist. Then when he makes a media statement he will be seen differently, as there is a
different facet between being a businessperson and a rock star. He believes that having a
commitment to social responsibility through regulating and operating to best safety
standards, you can end up with an industry that is not only sustainable but also beneficial to
society.
Notes
The authors wish to thank Matt Bowden for his valuable assistance in the preparation of
this case. All direct quotations were taken from interview with Matt Bowden, conducted in
his home on the 28 September, 2010 - unless otherwise stated.
i Lynn Theron, Karl Jansen, Jennifer Miles (2007) Benzylpiperizine-based party pills' impact on the Auckland City Hospital. Emergency
Department Overdose Database (2002–2004) compared with ecstasy, Retrieved from: http://www.nzma.org.nz/journal/120-1249/2416/
ii Lizzi May (2006) This Man wants to sell you legal ecstasy, Remix magazine , Retrieved from: http://www.mattbowden.com/Rebirth/wordpress/?page_id=105
iii Chris Wilkins, Melissa Girling, Paul Sweetsur, Taisia Huckle, Dr. John Huakau (2006) Legal party pill use in New Zealand, Centre for
Social and Health Outcomes Research and Evaluation & Te Ropu Whariki, Retrieved from: http://www.shore.ac.nz/publications
iv Peter Cresswell (2008) Retrieved from: http://pc.blogspot.com/2008_03_09_archive.html
v Lizzi May (2006) This Man wants to sell you legal ecstasy, Remix magazine , Retrieved from: http://www.mattbowden.com/Rebirth/wordpress/?page_id=105
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