Walmart said the sweater was sold online in Canada by a third-party vendor and has been removed.
To really drive home the point that Santa was engaging in an illicit act, the sweater - which was marketed on Walmart.ca under the third-party seller FUN Wear - was accompanied by an incredibly lengthy description stuffed with painfully overt nods to cocaine.
The description that was included with the Santa sweater on Walmart's website left not-so-subtle hints that this Santa Claus was meant to look as if he was about to snort cocaine.
Similar sweaters, including one showing Santa being probed by aliens, are still available to purchase from FUN Wear's website.
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"We're removing these types of items pending review of our marketplace policies", Walmart said in a statement at the time.
"He packs it in flawless lines on his coffee table and then takes a big whiff to smell the high quality aroma of the snow". "We apologize for any unintended offense this may have caused".
The sweater did not appear to be available as of Sunday night.
Walmart has faced similar issues before.
Other designs include Santa sitting on the chimney as if it was a toilet, Santa's trousers appearing to rip as he struggles down the chimney, and one that shows Santa delivering the middle finger underneath the word "Naughty".