High time for medicinal cannabis cultivators and manufacturers

What you need to know

• The Narcotic Drugs Amendment (Medicinal Cannabis) Act 2021 (Act) received Royal Assent on 24 June 2021. 
• The Act amends the Narcotic Drugs Act 1967 (ND Act) to reduce the regulatory burden on industry participants in the medicinal cannabis scheme.  In particular, the Act:
  
  • replaces the current three-licence structure for activities relating to cultivation and production, manufacture and research with a single licence;
  • allows for licences to be granted in perpetuity; and
  • defers the need for provision of evidence of a supply chain from the licence to the permit stage, thereby allowing applicants to assess required supply chains later in the application process.
• The amendments will commence within the next six months, on a date to be proclaimed by the Government, the latest being 24 December 2021.  This delay in commencement is required to make the necessary changes to the Narcotic Drugs Regulation 2016 and to prepare administratively for the new framework.

What you should do

• The ODC will be holding information sessions for stakeholders in the coming months, prior to commencement of the amendments.  Stakeholders may wish to attend these sessions as the ODC is likely to clarify how it will practically administer the new framework. 

Background

In 2019, the McMillan Review identified a number of issues relating to the regulatory framework for medicinal cannabis, which the Australian government is addressing in a staged reform process.  The reforms aim to reduce the regulatory burden on the medicinal cannabis industry.  Ashurst has previously reported on the McMillan Review and the reforms (see articles here, here, and here).  

The most significant of the reforms are those implemented by the Act, which received Royal Assent on 24 June 2021.

Single licence framework

The key change implemented by the Act is the replacement of the current three-licence structure, with a single medicinal cannabis licence. 

The current three licences that may be granted by the Office of Drug Control (ODC) under the ND Act are:

• a medicinal cannabis licence, covering cultivation, production or both, which is required where cannabis is to be supplied for human medicinal use;
• a cannabis research cultivation licence, covering cultivation, production or both, which is appropriate where cannabis is to be used solely for research purposes (supply for human use is prohibited); and
• a manufacture licence, covering manufacture of a medicinal cannabis product that is a drug.

Under the existing framework, an applicant is required to submit separate applications for each type of licence they wish to acquire.  This process is time-consuming and duplicates some of the information required in each application, creating inefficiencies for both applicants and the ODC.

The Act streamlines and consolidates the existing licensing structure to a single licence structure.  This consolidation will remove duplication and reduce the regulatory burden imposed by the existing structure.  

Importantly, the single licence does not permit every licence holder to cultivate, produce and manufacture.  Rather, each licence will specify the activities which are authorised.  Licensees will also still require a corresponding permit.

Perpetual licences

Another key change implemented by the Act is the introduction of perpetual licences, that is, licences without a fixed end date.  It is anticipated that most licences will be granted on a perpetual basis.  However, the ability to grant a time limited licence will be preserved for appropriate circumstances, including, for example, licences that authorise non-commercial research.   

Licensees will still be able to surrender licences and the ODC will remain able to suspend or revoke licenses.  Permits will continue to be time limited.

Determining supply chains

Under the existing regime, applicants are required to demonstrate that their activities will be for the purpose of supply to an identifiable holder of a relevant licence. 

By way of example, when applying for a licence which authorises production, applicants are required to demonstrate that production will be undertaken for the purpose of supply to an identifiable holder of a licence which authorises manufacture. 

This  requirement has been heavily criticised by industry stakeholders, primarily on the basis that supply pathways are often unknown at the licensing stage.  That is, stakeholders often apply for medicinal cannabis licences well ahead of identifying supply pathways, and constructing the facilities at which activities will be undertaken. 

The amendments introduced by the Act permit applicants to provide this information at the permit stage, as opposed to the earlier licensing stage. 

Other changes introduced by the Act

Other changes which will be implemented by the Act include:

• amending the object clause of the ND Act to include a clear statement of the patient focus of the regime, intended to be an assurance that medicinal cannabis products are available to patients for therapeutic purposes; and
• clarifying the activities that, and persons who, are authorised by a medicinal cannabis licence, and the persons who may be considered business associates of a licence applicant for the purpose of the regulator considering their fitness to be a licensee.

Next Steps

The amendments will commence within the next six months, on a date to be proclaimed by the Government, the latest being 24 December 2021. This delayed commencement is to allow for amendments to the Narcotic Drugs Regulation 2016 and for the ODC to prepare administratively for the new framework. 

In the meantime, the ODC will be holding information sessions for stakeholders.  Stakeholders may wish to consider attending these sessions as the ODC is likely to clarify how it will administer the new framework. 

Stakeholders otherwise continue to await an update from the ODC in respect of several key proposed changes to the current permit framework.  These proposed changes are addressed in detail in our April 2021 article here.

Authors: Anita Cade, Partner; Stevie Gough, Senior Associate; and Stephen Klimis, Lawyer