Update on the regulation of medicinal cannabis in Australia – cultivating, importing, manufacturing and supplying

Overview of federal, state and territory legislation

Medicinal cannabis is regulated at both a federal, and state and territory level in Australia by multiple pieces of legislation. At a federal level the two main acts are the Narcotic Drugs Act 1967 (Cth) (ND Act), which regulates the cultivation and manufacture of medicinal cannabis, and the Therapeutic Goods Act 1989 (Cth) (TG Act), which regulates the supply, import, export, manufacturing and advertising of medicinal cannabis. The Customs Act 1901 (Cth) also regulates the import and export of medicinal cannabis.

At a state and territory level, a variety of Medicines and Poisons Acts regulate access to medicinal cannabis by reference to the national Standard for the Uniform Scheduling of Medicines and Poisons (Poisons Standard). The Poisons Standard is maintained by the Therapeutic Goods Administration (TGA). Medicines and poisons are classified into ten schedules in the Poisons Standard according to the degree of control recommended to be exercised over their availability to the public. The relevant schedules which apply to cannabis are:

• Schedule 9 Cannabis (prohibited substances, the manufacture, possession, sale or use of which should be prohibited by law except when required for legitimate medical or research purposes);
• Schedule 8 Cannabis (controlled drugs which should be available for human therapeutic use, but require restriction of manufacture, supply, distribution, possession and use); and
• Schedule 4 Cannabidiol (prescription only medicine, being products where the cannabinoid content comprises at least 98% cannabidiol).

In order to obtain, possess, manufacture, sell or supply medicinal cannabis products which fall under the above schedules in any state or territory in Australia, additional state or territory based licences are required, which are granted by the various Departments of Health.

Cultivation and production

The cultivation of cannabis plants and production of cannabis resin and flower for medicinal purposes is regulated by the Office of Drug Control (ODC) pursuant to the ND Act. The ND Act requires any person seeking to undertake cultivation of cannabis plants or production of cannabis resin and flower to obtain:

1. a medicinal cannabis licence (MCL), which grants a general authority to lawfully cultivate and/or produce cannabis resin and flower for commercial purposes; and
2. a medicinal cannabis permit (MCP), which authorises specific instances of cultivation and/or production activities.

For the purposes of these licences, cultivation covers the growing of cannabis plants and includes all steps up to, but not including, harvest. Production covers harvest, resin production, and the placing of cannabis resin and flower in a container for the purpose of manufacture or research.

To be granted a MCL, an applicant must satisfy the ODC that:

1. the cultivation and/or production is for the purpose of supply to the holder of a medicinal cannabis manufacture licence (MCML);
2. the applicant is a “fit and proper person” to be granted a MCL; and
3. the applicant’s proposed security arrangements for its activities and the location of the proposed premises are adequate.

The MLC confers on the holder the right to apply for one or more MCPs. To be granted a MCP, an applicant must hold a MCL and satisfy the ODC that:

1. the security arrangements for its activities have been effected in accordance with any MCL conditions; and
2. the cultivation and/or production is to be undertaken for the purpose of satisfying the licence holder’s contractual arrangement with the holder of a MCML.

Manufacture

In order to manufacture extracts or tinctures of cannabis from cannabis flower or cannabis resin in Australia, the ND Act requires a person to hold both:

1. MCML; and
2. a medicinal cannabis manufacture permit (MCMP).

To obtain a MCML and MCMP, applicants must provide the ODC with similar information to that provided for MCLs and MCPs. An application for a MCMP is to be submitted following the grant of a MCML, however a MCMP will not be granted until the manufacturer has also obtained any applicable state or territory licences required to conduct manufacturing activities (see below). Each MCMP specifies certain global terms and conditions which apply to the MCMP.

In order to manufacture medicinal cannabis in such forms as may be administered to patients, a manufacturer must also hold a Licence to Manufacture Therapeutic Goods or Good Manufacturing Practice (GMP) licence or certificate issued by the TGA.

Obtain, possess, manufacture, sell or supply

In order to obtain, possess, manufacture, sell or supply medicinal cannabis products which fall under Schedules 4, 8 or 9 of the Poisons Standard in any State or Territory in Australia, certain additional State or Territory based licences are required, which are granted by the various Departments of Health.

While these licences vary between jurisdictions, by way of example, relevant licences applicable to medicinal cannabis products in Western Australia include:

1. wholesaler’s/manufacturer’s licences, which permit the manufacture and/or wholesale supply of Schedule 4 Cannabidiol and Schedule 8 Cannabis;
2. indent licences which permit the wholesaling of Schedule 4 Cannabidiol and Schedule 8 Cannabis via third parties (that is, the holder of the indent licence is not authorised to possess the substance, and must do so through a third party holder of a wholesale license); and
3. schedule 9 licences which permit the handling of Schedule 9 Cannabis.

All of these licences are granted by the WA Department of Health in accordance with the Medicines and Poisons Act 2014 (WA) (MP Act) and corresponding regulations, and applicants must, amongst other matters, justify to the Department that they are a “fit and proper person”, have sufficient knowledge of each poison/product to which a licence is to apply, and have sufficient material, human and financial resources to carry out the relevant activity proposed to be conducted under the licence, as well as premises which comply with the regulations.

Import and export

Apart from certain permitted exceptions for hemp products, regulation 5 of the Customs (Prohibited Imports) Regulations 1956 (Cth) (CPIRs) and regulations 10 and 10A of the Customs (Prohibited Exports) Regulations 1958 (Cth) (CPERs) require a licence and a permit to import or export all forms of cannabis, cannabis resins, extracts and cannabinoids into and out of Australia, respectively.

In accordance with the CPIRs, any person importing cannabis products into Australia must be the holder of:

1. a licence to import drugs generally (Import Licence); and
2. a permit or permits to import drugs relating to each specific instance of importation (Import Permit).

In order to obtain an Import Licence for medicinal cannabis, an importer must, among other things, be a “fit and proper person” to be granted the licence and ensure the premises on which the importer proposes to keep the drugs are secure for that purpose.

To obtain an Import Permit, an importer must:

1. if the drug is required by the importer for the manufacture of a drug at the importer’s premises, hold a MCML permitting them to supply medicinal cannabis products and hold an applicable wholesaler’s/manufacturer’s licence under the state or territory laws in which the importer’s premises are located; or
2. if the drug is required by the importer for the purposes of the applicant’s business as a seller or supplier of drugs at the importer’s premises, hold the required State or Territory licence authorising the applicant to sell or supply drugs at or from those premises.

In addition, before applying for an Import Licence, importers need to ensure that any counterparty exporter has appropriate licences/approvals at the overseas federal government level to request export approval of medicinal cannabis products to Australia.

In accordance with the CPERs, exports of medicinal cannabis must be:

1.  in conformance with the ND Act;
2. done under a licence to export drugs (Export Licence);
3. done under a permit or permits to export to a specified country (Export Permit);
4. made to countries that are willing to issue import permission and who are in compliance with the Single Convention on Narcotic Drugs 1961; and
5. listed or registered on the Australian Register of Therapeutic Goods, operated by the TGA.

In order to obtain an Export Permit for medicinal cannabis, an exporter must, among other things, provide an authorisation from the appropriate governmental authority of the country to which the drug is to be exported authorising the importation of the drug into that country.

Conclusion

The cultivation, production, manufacture, supply, import and export of medicinal cannabis are permitted but tightly regulated on all federal and state and territory levels. Industry participants should ensure they have expert, specialised legal assistance to navigate this complex regulatory environment.

This article was written by Geoff Bloom, Partner, Meghan Carruthers, Special Counsel, and Terry Leibman, Special Counsel.