High standards: an introduction to the application process for medicinal cannabis licences under Commonwealth law
Through the Narcotic Drugs Amendment Act 2016 (Cth) and its amendments to the Narcotic Drugs Act 1967 (Cth) (NDA), the Coalition Government commenced the legalisation of medicinal cannabis products in Australia under federal law in 2016. The Commonwealth Parliament’s legislation is in line with a trend towards medicinal legalisation across the developed world in recognition of a growing medical consensus concerning the therapeutic role that “cannabinoids” (chemical compounds derived from plants of the genus cannabis) can play in treating disease and illness.
The production, refinement and sale of medicinal cannabis (which is typically low in the psychoactive compound tetrahydrocannabinol, otherwise known as THC) is a high-growth industry and a lucrative emerging market. Nonetheless, the authorisation process under the NDA to lawfully manufacture a medicinal cannabis product remains complex. Medicinal cannabis in Australia is regulated under a mixture of changing international, federal and state laws. Unless manufactured or sold in accordance with the NDA or state licensing regimes, cannabis remains an illegal drug in Australia.
This update is the first in a series on the authorisation process and provides a general introduction to the Commonwealth medicinal cannabis product licensing and permit application regime. In particular, it considers the basic elements of an application under the NDA for a licence to produce or manufacture medicinal cannabis products.
Chapter 2 of the NDA establishes a federal licensing regime for medicinal cannabis in Australia, which is administered by the Commonwealth Office of Drug Control (ODC). There are two types of licences (Cannabis Licences) available to prospective medicinal cannabis producers under the NDA:
In addition to a licence, a prospective medicinal cannabis producer will also require a medicinal cannabis permit. Educational institutions, pharmaceutical companies and other scientific organisations can obtain, separately, a cannabis research licence.
As a threshold requirement before commencing an application for a Cannabis Licence, an applicant must be able to demonstrate to the ODC that the medicinal cannabis product will be produced for the purpose of either:
Consequently, applicants seeking to produce medicinal cannabis products for sale into the general consumer market will also need to consider registering their product under the TGA.
In an effort to combat organised crime and/or the abuse of medicinal cannabis crops, the NDA imposes an exacting character test on prospective applicants. Applicants (including corporate applicants) will need to satisfy the ODC that:
The fit and proper person obligation extends not only to the applicant, but also to “relevant business associates”, who are required to demonstrate they are fit and proper persons “to be associated with the holder of a medicinal cannabis licence”. Although no definition of “fit and proper” is provided in the NDA, the phrase has a well-established meaning at general law that involves a consideration of the honesty, good character and integrity of a person - including an assessment of any fraudulent and criminal behaviour or disregard for the law.
The ODC has broad discretion to investigate any business associates of an applicant whom it is “reasonable” to take into account in the course of an application. An applicant’s relevant business associates may include:
Therefore, both corporate and individual applicants will need to give serious consideration as to the reputation and standing of any persons to be involved in the enterprise that will be the subject of the Cannabis Licence.
The NDA also requires an applicant to satisfy the ODC, that they will secure and closely regulate any cannabis in their possession under the Cannabis Licence. This includes demonstrating there are reasonable grounds for the ODC to be satisfied that the applicant will:
Accordingly, any applicant should have a comprehensive risk management strategy and/or appropriately planned and monitored facilities to mitigate security risks before commencing an application. The ODC expects applicants demonstrate that they have given thorough consideration to:
Each form of security should be demonstrated as an “end-to-end process”, including storage, handling, transport and engagement in third party controlled processes (such as analytical testing of extracts and/or products).
Any Cannabis Licence applicant will also need to obtain a medicinal cannabis permit. A medicinal cannabis permit specifies the amount of cannabis-derived drugs that the applicant can manufacture and hold in stock, and the period in which they may do so.
Finally, an applicant may also be subject to state-based laws and regulations depending on the jurisdictions in which they intend to operate. These obligations can be in addition to the requirements imposed by the Commonwealth through the NDA and the TGA. Although Victoria is presently the only state with legislation governing the manufacture, sale and distribution of medicinal cannabis, other states will likely follow suite in legislating their own regimes in the near future.
The issues discussed above provide only a general summary of the licence application process, and do not address the nuances or complexity likely to arise in an individual application.
Cannabis Licence applications can be a costly and demanding undertaking and sophisticated legal and pharmaceutical advice is recommended before any prospective applicant commences the process.
For more information or discussion, please contact a member of HopgoodGanim Lawyers’ Corporate Advisory and Governance team.