Queenstown Lakes District Council Mayor Clive Geddes said the arrests did not necessarily mean Queenstown had a drug problem.
Detective Sergeant Grahme Bartlett said Wednesday night's arrests, carried out by Cromwell police, followed further search warrants in Cromwell, with the offenders remanded to appear in the Alexandra District Court on July 1.
Four of the seven face charges of procuring LSD; one faces a charge of possessing LSD and two face charges of possessing cannabis and possessing utensils.
The four people who appeared in the Invercargill District Court on Wednesday in relation to Operation Dove were all remanded on bail.
Shay Gibson (26), of Queenstown, faces three counts of offering to supply LSD.
Timothy Kevin Fox (29), of Lake Hayes, is also charged with three counts of offering to supply LSD.
Megan Joan Kelly (24), of Cromwell, faces one charge of supplying LSD.
Michael James Douglas Cockburn (26), of Cromwell, is charged with selling LSD and faces one charge of offering to supply LSD.
Gibson, Fox and Kelly have been remanded to appear in the Queenstown District Court on June 29, while Cockburn was remanded to appear in the Invercargill District Court on June 26.
None of the group entered pleas on Wednesday.
Mr Geddes said part of the attraction of Queenstown was its "party town" reputation, but the resort catered to a wide range of people "who expect from it a wide range of activities".
"Part of that are the younger people who come here . . . to basically have a good time and enjoy the activities.
"That ranges from bungy jumping to sitting up and drinking until 4am.
"That has really, for the last 15 years, been very much part of the nature of the attraction of Queenstown."
While the council was aware there was an increasing problem with drinking in the resort, which was proven by increases in alcohol-related crime, there was no evidence to suggest a similar problem with drugs.
"I've not seen any information ever put in front of me that hard or soft drugs are a greater problem in Queenstown today than they have been in the last 10 or 20 years.
"It's been a fact of life for about that time . . . with a highly transient population there are levels of drug use."
However, he commended the Queenstown Police for their efforts in the latest operation and hoped they would continue to carry out operations on a "regular basis".
"I'm not aware that Queenstown is creating a drug-use problem.
"What creates it are the people who seek to make profit from supplying drugs to people in this area.
"I hope [Queenstown Police] continue [operations] on a regular basis to make sure those seeking to make money from selling drugs [are stopped]."
