More than a thousand "supercharged" vapes have been sold to buyers who were potentially unaware they were laced with a substance 200 times more potent than morphine.
Police have announced the arrest of a 20-year-old man and seizure of 2.1kg of nitazene after raiding a home at Revesby, in Sydney's southwest, on Friday.
Sam Al Roubaye had allegedly been running a sophisticated distribution of nitazene since March, police said on Wednesday.
About two millilitres of the highly addictive substance can be lethal, NSW Police Drug Squad Commander John Watson said.
The vials seized by police had a 10ml capacity.
Police confirmed more than 1200 laced vials were sold, marketed on social media to hundreds of customers as "supercharged".
"There is no question in my mind that the buyers potentially would not have even realised that they're taking nitazene," Detective Superintendent Watson said.
He said suppliers laced the vape liquid with synthetic opioids to deliberately create dependency, ensuring repeated business.
More than $500,000 in profit was allegedly made from the vial transactions.
Al Roubaye was refused bail at Parramatta Local Court on a commercial drug supply charge after items including a safe containing 1.8kg of nitazene were seized during a search on Friday.
"(The arrest) demonstrates a disturbing evolution in the illicit drug trade, but our squad is constantly adapting to meet these emerging threats head-on," Det Supt Watson said.
It's the first time someone in Australia has been charged with supplying vape liquid laced with nitazene.
Law enforcement and health experts say the substance is more potent than fentanyl, a synthetic opioid which has led to more than 100,000 deaths in the United States.
The NSW government had not done enough to prevent an opioid overdose crisis unfolding in the state, Unharm chief executive Will Tregoning said.
"It's already happening in other places around the world, and it's terrifying," he told AAP.
NSW Health's chief addiction medicine specialist Hester Wilson urged those using recreational drugs to carry naxolene, a life-saving measure which can reverse an opioid overdose.
It is available free of charge at selected pharmacies.
The nitazene bust comes as some of Australia's toughest penalties for selling illegal tobacco and vapes are introduced into NSW parliament.
A new offence for commercial possession of illicit tobacco, carrying a maximum penalty of seven years in prison or a $1.5 million fine, will be created while selling any tobacco unlicensed could warrant a $660,000 fine.
Health inspectors will also be granted substantial powers to close premises found to be in breach of the new rules.
Steep increases in the federal tax on legal tobacco had fuelled massive growth in the black market and current punishments were not dissuading anyone, Premier Chris Minns said.
"I won't allow NSW to be a dumping ground for illegal, illicit behaviour in the state," he said on Wednesday.
