However, a minority of the ASA complaints board disagreed, finding advertisements for the herbal smoking products in the unnamed store had not met the due sense of social responsibility to consumers and society as required under the advertising code of ethics.
In her complaint, Ms Nader-Turner said the dairy was beside Dunedin's largest primary school, there was an intermediate along the road and "a high school further down".
It had a large stand with spotlights on the product and at the counter there was a laminated product range poster, she said.
The posters were around the ice cream machine, at children's eye level behind both counters and around the "heavily trafficked" children's areas where lollies, ice cream and hot chips were sold.
Ms Nader-Turner said she realised this was a legal product and had asked the shop if it could be more thoughtful about its advertising and the heavy use of it.
A television screen with images of the product was taken down, but more posters had been put up, she said.
The shop was known as the place to go to get Kronic by all youth in Dunedin who used the product.
In her complaint, she alleged the dairy was selling Kronic to under-age pupils and had sold it to uniformed school children.
She told the board there were many angry parents, teachers and members of the community, some of whom who had also approached the dairy.
The complaints board, at its meeting on June 14, considered whether there had been a breach of the code of ethics principle relating to social responsibility.
The dairy owner said it had reviewed its in-store advertising of herbal smoking products and over the next three weeks would contact its suppliers and try to get new posters.
"When we place them, we will attempt to keep them above children's head height, and away from child-focused products."
The store said it had a "very strict" R18 policy on the sale of cigarettes and herbal smoking products. Its staff were fully trained and when products were scanned a "check ID" warning was displayed on its point of sale system.
The complaints board, the members of which are not named in the decision, acknowledged the herbal smoking products were legal and could be advertised.
It noted the shop owner's comments on its policy and that the policy was also reinforced on the product stand.
The board also noted Ms Nader-Turner's complaint related to the placement of the posters, not their wording or content.
A majority of the board considered the slogans such as "Super High Me" and "Purple Haze" were not likely to be understood by young children as indicating the properties of the products.
A minority considered the cumulative effect of the amount of the posters, coupled with their placement, encouraged smoking among minors.
The minority also considered the dairy had been socially irresponsible regarding the amount of advertisements and their placement, given the numbers of children among its customers.
