Commercialising cannabis in Australia: a budding industry

When commercialising cannabis crops up in conversation, Australia is not the first country that springs to mind. However, recent changes are bringing new opportunities for a domestic industry.

So how will an Australian marketplace for cannabis actually work?

The regulatory regime in its current form has traps for new players. Given that in most circumstances cannabis remains an illicit drug, a comprehensive understanding of the regulatory landscape is critical before attempting any commercial activities.

Therapeutic products

There has been a recent string of amendments to existing legislation to facilitate a medicinal cannabis industry in Australia. These amendments establish a regime at both the Commonwealth and state/territory level with multiple regulatory agencies involved.

Cultivation and manufacture: you may require multiple licences

The Narcotic Drugs Act 1967 now provides for a licensing and permit scheme for cultivation of any cannabis plants and production of any cannabis resins and other products for medicinal or medicinal research purposes.

However, the Narcotic Drugs Act licence will only get you so far - the Therapeutic Goods Act also regulates and provides for licensing of the quality manufacture of medicinal cannabis according to the code of good manufacturing practice.

Further, state or territory laws where your manufacturing premises are located may place additional requirements on cannabis cultivation and manufacturing. For example, in New South Wales, manufacturers of medicinal cannabis products need an additional licence under Part 8 of the Poisons and Therapeutic Goods Regulation 2008 (NSW).

Supply is a state/territory game with the Commonwealth playing

Much of the supply route to the consumer is governed by state and territory law but the Therapeutic Goods Administration remains a key regulator.

Generally, before supply, a medicinal cannabis product must be registered on the Australian Register of Therapeutic Goods. Under the Therapeutic Goods Act 1989 and its regulations, supply of unregistered medicinal cannabis products may occur by registered medical practitioners under an Authorised Prescriber Scheme, Special Access Scheme (Category A or B patients), or for the purpose of clinical trials.

State and territory regimes may then require additional licences and authorities for supply to end consumers. The way a state or territory deals with supply of medicinal cannabis often depends on how products are categorised in a state’s poisons and therapeutics regime. Many states adopt the Commonwealth Standard for the Uniform Scheduling of Medicines and Poisons which now categorises certain therapeutic cannabis products in schedules 4 “Prescription Only Medicine” and 8 “Controlled Drug”.

Non-therapeutic products

Some states have a regulatory regime governing the cultivation and manufacture of industrial hemp plants and products. Industrial hemp is generally defined as a plant from the genus cannabis that has a low concentration of tetrahydrocannabinol (THC) or any product derived from such a plant. The amount of permissible THC varies between states and territories.

A hemp industry licence may not cover the field of activity

Hemp Industry licences are granted for limited purposes. In the NSW legislation (Hemp Industry Act 2008), a licence may be granted for cultivation or supply of low-THC hemp for the purpose of commercial production, use in any manufacturing process, or scientific research, instruction, analysis or study.

State or territory drug laws governing the supply of prohibited drugs or plants often have carve-outs for activities relating to industrial hemp, but these may vary. For example, a carve-out for acts done pursuant to a Hemp Industry Act 2008 authority (see eg, Drug Misuse and Trafficking Act 1985 (NSW), s 8A), will not extend to supply for retail sale of low THC-Hemp as authorities under the NSW Act are not granted for this purpose.

Industrial hemp must also steer clear of poisons and therapeutics legislation

Dealings with industrial hemp may also be limited by state or territory poisons regulatory regimes. Under the Commonwealth Poisons Standard, non-therapeutic cannabis and tetrahydrocannabinol appear in schedule 9 “Prohibited Substances” with limited exceptions. The recent decision of the scheduling delegate proposes to further narrow the exceptions for non-therapeutic cannabis and THC to bring the poison’s schedule in line with the Narcotic Drugs Act 1967 (Cth). These amendments to the poisons schedule have implementation dates of 1 October 2017 and 1 June 2018 and will result in only certain low-THC hemp fibre and low-THC, low-cannabinoid hemp seed oil (with specific warning labels remaining exempt from the “Prohibited Substances” classification of non-therapeutic cannabis) and tetrahydrocannabinols.

If a particular non-therapeutic cannabis product falls within a schedule 9 entry, the ultimate implications of commercialising or dealing with a schedule 9 substance will depend on whether and to what extent a state or territory has adopted the Commonwealth Poisons Standard and how schedule 9 substances are governed under state or territory legislation.

Conclusion

As the cannabis industry develops, the practical implications of the provisions governing medicinal cannabis and industrial hemp products will likely become clearer, generating strong commercial opportunities for interested and well-armed pioneers.