The Narcotic Drugs Amendment Bill 2016, seeking to establish licensing and permit schemes for the cultivation and production of cannabis and cannabis resin for medicinal and scientific purposes, has passed both houses of parliament today.

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A “state or territory government agency” will be authorised to undertake cultivation and production of cannabis and manufacture of medicinal cannabis products. An amendment will also be made to the Therapeutic Goods Act 1989.

The new law will “provide a legislative framework that will enable cannabis cultivation in Australia and provide Australian patients in need with access to medicinal cannabis for therapeutic purposes,” the bill reads.

“These amendments will also ensure that when cultivation and production of cannabis and manufacture of cannabis products for medicinal purposes begin, Australia will remain compliant with its international treaty obligations as defined in the United Nations Single Convention on Narcotic Drugs, 1961.”

The bill explanation reads:

The Commonwealth currently has laws to regulate the import, export and manufacture of cannabinoids and cannabis raw material, but these do not allow the cultivation in Australia of cannabis plants for medicinal purposes. The manufacturing provisions in the Narcotic Drugs Act 1967 are considered inadequate to properly manage the risks associated with the potential for diversion of medicinal cannabis products and other narcotic drugs.

The Commonwealth is unable to grant licences for the production of locally cultivated cannabis for medical use and remain compliant with the obligations contained in the Single Convention. As a signatory to the Single Convention, Australia agrees that the licit use of narcotic drugs must be tightly regulated to ensure that public health is protected from the risks of diversion into illicit markets.

Cannabis sativa (cannabis) is a narcotic drug that is tightly controlled in Australia. The cultivation, production, manufacture, import, export, distribution, trade, possession, use and supply of cannabis and cannabis derived products are regulated by a number of Commonwealth laws, including the Narcotic Drugs Act 1967, which addresses the manufacture of narcotic substances (including cannabis).



The amendments to the Narcotic Drugs Act 1967 will ensure that any therapeutic product, including medicinal cannabis, also meets Australia’s strict international obligations safe-guarding its production, manufacture and distribution for medical and scientific purposes only.

The amendments will establish a licensing scheme for the cultivation of cannabis for medicinal and related scientific purposes. The key features of the cannabis cultivation licence scheme include:



• Two cannabis licences, one that authorises the cultivation of cannabis for manufacture into medicinal cannabis products; the second that authorises research into the cannabis plant that is to be used for medicinal purposes. This could include research into growing conditions, cannabinoid yields from different strains, ensuring consistency in yields and other matters related to ensuring a safe, predictable raw material.



• A strict ‘fit and proper person’ test that will be applied to the applicant and relevant business associates and involve consideration of a range of matters including criminal history, connections, associates and family, financial status, business history and capacity to comply with licensing requirements. Licence holders will also be expected to remain ‘fit and proper’. This test is explicitly designed to ensure the exclusion of criminal elements, including organised crime, which may be tempted to use the licence scheme as cover for illegal activities.



• A need to demonstrate a supply arrangement exists with a licensed manufacturer, in order to get a licence.



• A permit system for controlling how much cannabis can be produced. This will assist in meeting a key obligation of the Single Convention to prevent over-production. Other than in the case of research, a permit will not be granted for production unless a contract exists between the licence holder and a licensed manufacturer.



• Conditions applying to the licence that ensures security of the crop so that it is not diverted to illicit uses.



• Substantial penalties for offences for breaches of conditions and for undertaking unauthorised activities.



• A comprehensive suite of regulatory controls including: powers to give directions to licence holders; of inspection, monitoring and investigation; to issue infringement notices and seek civil penalties; to accept enforceable undertakings and to seek injunctions – all to assist in ensuring the integrity of the system.



The existing manufacturing provisions are also to be updated to mirror the cannabis licence provisions. Where a cannabis licence holder must demonstrate a business relationship with a licensed manufacturer, the licensed manufacturer must be able to demonstrate a legitimate supply chain to patients consistent with provisions of the Therapeutic Goods Act 1989. In effect, this will limit production and supply to legitimate demand.



Demand will be determined by suitable medical practitioners, in accordance with provisions in the Therapeutic Goods Act, such as clinical trials, authorised prescribers and the Special Access Scheme. Importantly, the Secretary of the Department of Health will have the power to order the destruction of cannabis produced by a licence holder. This allows the Secretary to control the level of production and prevent accumulation (or rectify accumulation, if it has occurred).



The Bill confers decision-making powers on the Secretary (previously the Minister) so that an internal review provision, undertaken by the Minister, can be facilitated. This gives applicants and licence holders subject to adverse decisions a more timely and less expensive option than seeking review by the Administrative Appeals Tribunal directly.

