1 November, 2019
Final report of medicinal cannabis framework under the Narcotic Drugs Act 1967 (Cth)
What you need to know
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The final report of the review of Australia's medicinal cannabis regulatory framework under the Narcotic Drugs Act 1967 (Cth) was tabled in Parliament on 5 September 2019.
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The report makes a number of recommendations which aim to reduce the regulatory burden on the medicinal cannabis industry, including the replacement of the current three licence structure with the issue of a single licence. Importantly, the Australian Government has accepted all recommendations and a two-stage reform process has been proposed to ensure appropriate implementation.
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In this update, we explore the current framework for the regulation of medicinal cannabis in Australia and analyse some of the key recommendations included in the report.
On 5 September 2019, Professor John McMillan AO's Final Report of the review of Australia's medicinal cannabis framework under the Narcotic Drugs Act 1967 (Cth) (Final Report) was tabled in Parliament. Professor McMillan's review was conducted on the amendments made in 2016 to the Narcotic Drugs Act 1967 (Cth) (ND Act) which established a regulatory framework for the cultivation, production and manufacture of medicinal cannabis in Australia.
The Final Report contains 26 recommendations to improve the regulatory framework for medicinal cannabis in Australia. A link to the Final Report is available here.
Current regulation of medicinal cannabis
The licensing and regulation of cannabis cultivation for medicinal and related scientific purposes in Australia is administered by the Department of Health under the ND Act. Cannabis that is cultivated in Australia can be manufactured into products for research, clinical trials (subject to the regulatory and ethics regime which governs such trials in Australia) or use by patients in accordance with the Therapeutic Goods Act 1989 (TG Act). The ND Act and the TG Act are administered by the Office of Drug Control (ODC) and the Therapeutic Goods Administration (TGA), respectively.
Regulations under the TG Act
The TGA regulates therapeutic goods in Australia to ensure they are of an acceptable standard. Cannabis had previously been listed in the Standard for the Uniform Scheduling of Medicines and Poisons as a "prohibited substance" under schedule 9. In July 2015, the TGA re-classified medicinal cannabis as a "controlled drug" under schedule 8.
Generally, medicines supplied in Australia must be approved for general use via entry in the Australian Register of Therapeutic Goods (ARTG). However, the TG Act provides several pathways for "approved access" to medicines, including medicinal cannabis, that are not entered on the ARTG. These pathways include:
- medical practitioners who are Authorised Prescribers under the TG Act may prescribe a medicinal cannabis product for a class of patients in their immediate care;
- Special Access Scheme – Category B, an application pathway where a registered health practitioner may apply to the TGA for approval to prescribe a medicinal cannabis product for a specific patient; and
- clinical trials.
Manufacturers of medicinal cannabis products must also comply with additional regulations under the TG Act. First, all therapeutic goods intended to be supplied for human use must comply with the Guide to Good Manufacturing Practice (GMP Guidelines). This means that all medicines including medicinal cannabis, supplied in Australia must be manufactured in compliance with the GMP Guidelines by a manufacturer that either:
- holds a current licence to manufacture therapeutic goods (if located in Australia); or
- is covered by a current GMP clearance (if located overseas).
Second, manufacturers must also comply with the Therapeutic Goods (Standard for Medicinal Cannabis) (TGO 93) Order 2017, which sets out quality requirements for medicinal cannabis products in Australia. This regulation applies to medicinal cannabis products manufactured in Australia and any ingredients used in the manufacture of those products and any imported medicinal cannabis products supplied in Australia.
Licences and permits under the ND Act
The medicinal cannabis licensing scheme under the ND Act applies to the cultivation of cannabis plants, production of cannabis and cannabis resin and manufacture of medicinal cannabis. The process of applying to the ODC for a licence to cultivate and/or produce medicinal cannabis is separate and distinct from the process of applying to the TGA for approval to manufacture medicinal cannabis.
In the context of the ND Act, "cultivation" refers to the growing of the cannabis plant, such as sowing the seed, planting or harvesting, or grafting or dividing a plant. "Production" refers exclusively to the separation of cannabis and cannabis resin from the plants from which they are obtained and placing in a container for the purposes of manufacture or research. As such, "production" is a separate step and followed by "manufacture". "Manufacture" consists of carrying out any process by which a medicinal cannabis drug may be obtained and includes the refining of a drug and the transformation of one drug into another drug.
The following three licences may be granted by the ODC under the ND Act:
- 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.
Importantly, an ODC licence must be accompanied by an associated permit which authorises the licence holder to engage in cultivation, production, research or manufacture. These are the "medicinal cannabis permit", "cannabis research permit" and "manufacture permit".
These permits specify the types of cannabis plants that can be cultivated, the quantities that can be produced, the timeframes in which authorised activities can occur and the next party in the supply chain (i.e., the specific manufacturer or researcher).
The Final Report and major recommendations
Section 26A of the ND Act required a review within two years of the operation of the amendments to the ND Act which established a regulatory framework for medicinal cannabis in Australia. The Minister for Health, Hon Greg Hunt MP, appointed Professor McMillan to inquire into and report on the operation of the ND Act, including considering whether the measures implemented were working efficiently and effectively or could be improved for the benefit of affected parties (being the applicants, regulated entities, and the department administering the ND Act).
Minister Hunt has accepted all 26 recommendations in the Final Report which aim to improve the existing regulatory framework and a two-stage reform process has been proposed to ensure appropriate implementation.
The recommendations seek to simplify and streamline the licence application process, reduce the intensity of the ODC's focus on risk minimisation and clarify uncertainties in the legislative standards.
Major recommendations in the Final Report include:
- The current three licence structure in the ND Act to be replaced with the issue of a single licence that authorises some or all of cultivation, production, manufacture and research.
Under the existing regulatory framework, a licence applicant is required to submit separate applications for each type of licence they wish to acquire. However, the Final Report found that this process is time-consuming and duplicates some of the information required in each application, creating inefficiencies for both applicants and the ODC. Furthermore, the scope of permitted uses covered by each licence category is sometimes unclear.
The Final Report recommended a single licence structure which would reduce the regulatory burden imposed by the current structure and remove any uncertainty surrounding the scope of each licence category.
The ODC to develop a risk management framework to reassess its current regulatory approach towards risk aversion.
The current framework, including the ODC's regulatory approach, focuses heavily on minimising the risk of criminal incursion in the industry. This is reflected throughout the licensing regime, from the burdensome amount of information collected in applications to the constraints imposed by licensing and permit conditions. However, the ND Act operates alongside other legislation which seek to minimise these risks and licence holders have a strong commercial interest in abiding by existing laws. The Final Report concludes that the intensity of the framework's focus on risk aversion is no longer necessary.
The ODC to publish more extensive guidance on the meaning of "manufacture" and "research", as well as how "manufacture" relates to other terms in the ND Act.
The type of licence that an applicant would seek depends on whether their proposed use of cannabis falls within the meaning of "manufacture", or "cultivate" and "production". However, the Final report found that there is some ambiguity as to the definition of "manufacture" in the ND Act and its relationship with these other terms. This is further complicated by the fact that the definition of "manufacture" depends on its usage in the ND Act, the TG Act or the word's ordinary meaning. Further guidance to clarify the word's meaning within the ND Act and its relationship to other terms will address these concerns.
Other major recommendations that could affect the licensing scheme included reducing the number and breadth of conditions imposed on licences and permits and specifying a maximum term of five years for each licence granted with the option to renew.
Next steps
As of 30 June 2019, the ODC had received 246 applications for licences under the ND Act and granted 63 licences. This includes 24 medicinal cannabis licences, 16 cannabis research cultivation licences and 23 manufacture licences. In addition, 33 permits have been granted to licence holders. The Final Report notes that the number of licence applications has been far higher than expected, pointing to a strong commercial interest in the Australian medicinal cannabis industry.
The recommendations in the Final Report aim to streamline the application processes and allow for flexibility in the administration of the legislative regime that governs the industry. If implemented, these changes are expected to improve patient access to medicinal cannabis products and better support scientific research in this area. It remains to be seen whether the recommendations will support growth in the rapidly increasing market for medicinal cannabis in Australia.
For further information, please contact:
Anita Cade, Partner, Ashurst
anita.cade@ashurst.com
