The judge, who often sits at Naas court in County Kildare, last night released a statement in which he said he believed the shop to be an "alternative medicine centre".
The embarrassing situation is forcing the judge to turf out his tenants as criticism grows.
Judge Coughlan said that he didn't have any problem with the store initially, but now plans to boot out the lodgers.
"It has been drawn to my attention that a premises I let to a commercial tenant, the site of my former legal practice, has been operated as a place of trade commonly referred to as a 'head shop'," he said in a statement
"I had agreed to allow the premises be used as a venue for an alternative medicine centre and had no idea of its current use.
"The moment I realised this I contacted my auctioneer who reached an agreement immediately with the operators of this shop that they will vacate the premises and seek accommodation elsewhere."
The Happy Daze head shop, located on South Main Street, Naas, was rented out to Dubliner Anthony Daly by the judge last year.
Mr Coughlan is a native of the area and previously operated a solicitor's practice with offices at that building and also in Newbridge prior to his judicial appointment. He had said previously that he had no problem with the store because the activities within were completely legal.
"I know the gardai are satisfied with it. I cleared it with the gardai and all that is sold and done at the shop is perfectly legal," he said
The judge has hit the headlines in the past for all the wrong reasons.
In December 2008, a fellow judge criticised him for making "derogatory comments" about a decision he had made and warned that he would "not accept" his conduct.
"His use of language in the administration of justice is absolutely appalling," said Judge John Neilan.
Judge Coughlan also caused a stir during a trial in 2006 for the use of colourful language when he claimed that a 27-year- old had "beat the sh*t out of his girlfriend".
Local Fine Gael councillor Darren Scully is annoyed that people can buy something "to give them a trip" right across from a legal building.
Happy Daze has drawn criticism from sections of Naas Town Council.
"The whole issue surrounding head shops is taking on a life of its own, the one in Naas is quite peculiar, because it's straight across from the courthouse," said Councillor Scully.
Gardai in Naas have said that they have received no formal complaints about the head shop but admitted that they were keeping a close eye on the establishment.