Even as it was making its way to the statutes, New Zealand’s Psychoactive Substances Bill was the talk of the drug reform world. It was seen as a bold, visionary bid to deal with the proliferation of new drugs that fell outside existing laws and address the harms of an unregulated market.

It was all the more remarkable that the reform was being championed by a former drug warrior in Associate Health Minister Peter Dunne. When our Parliament passed the Psychoactive Substances Act last year with but a single vote against, it seemed New Zealand had taken a remarkable initiative.

And then, only months into the new world, the government rushed through an amendment that cut off a protracted interim licensing phase, halted the legal sale of all psychoactive substances and made any future approval much more challenging. It happened so quickly that one journalist landed here with a story commission from a major American magazine, knowing reform had been cut short after she’d booked her flights.

It is reasonable to ask now whether the new law even has a viable future, given the turn in the political mood. The answer to that question depends on how you ask it.

On one hand, things are falling into place. The long-awaited regulations defining the requirements for manufacturing, importing and research and product approvals were signed off by Cabinet in July and recently came into force. Regulations for wholesaling and retailing approved products are on track for the second half of 2015, in plenty of time for any newly approved product.

It appears there will be an industry of some sort prepared to play by the Act’s rules. And the Psychoactive Substances Authority, beleaguered for much of this year, has been moved to a more supportive part of the Ministry of Health.

But there’s an elephant in the room. In rushing through the amendment in May, MPs not only repealed the parts of the original Act providing for interim product licensing, they also added wording that stipulated that “the advisory committee must not have regard to the results of a trial that involves the use of an animal”.

There is an exception: the advisory committee and the authority may act on an overseas animal trial that finds a psychoactive product “may pose more than a low risk of harm to individuals using the product”. But they are forbidden to consider any animal trial evidence in deciding that a product poses only a low risk of harm.

In short, they may only pay heed to evidence from animal trials to ban a product, not to approve it.

“Our overarching assessment, not just in the offices of the Psychoactive Substances Regulatory Authority but also on our expert advisory committee, is that, at this point in time, it is not possible to have a product approved without animal testing,” says Stewart Jessamine, group manager at the clinical leadership and product regulation branch of the Ministry of Health and effectively the personal link between the Psychoactive Substances Regulatory Authority and its new neighbour, Medsafe.

“Obviously, that’s a major barrier to new products entering the market.”

Other interested parties speculated to Matters of Substance about possible workarounds, but as of now, the situation is this: the process created to approve and license psychoactive products – thus taking manufacture and sale out of the hands of the unregulated black market – cannot possibly approve or license any product.

To understand this strange situation, it’s useful to look back on the Psychoactive Substances Act’s difficult infancy.

The interim licensing period provided for in Schedule 1 of the Act was a relatively late addition to drafts of the Bill. From August 2013, it allowed manufacturers to seek interim approval for their existing products until the necessary regulations were published and for retailers to seek their own licences. The thinking was that the Act’s process needed an industry, and that might not happen if the whole market was abruptly outlawed.

But writing the regulations proved tough going. Uruguay is finding the same thing as it tries to get its pioneering regulated cannabis market in place, and its government is only writing for a market that is yet to start. New Zealand’s officials were introducing regulation to a market that had been raging for years. Further, an under-resourced Psychoactive Substances Regulatory Authority failed to perform. It made few decisions, acted slowly and all but seized up from January 2014 onwards.

That left an interim licensing regime to carry more weight, for longer, than the Act’s designers had ever anticipated in a legal environment that was still a work in progress. While Customs conducted some testing at the border, that was simply to check that the contents of shipments from Chinese labs matched the label and not for purity as the Act required. A Code of Manufacturing Process stipulated for December 2013 was not fully implemented until April, and all parties to the process found obtaining and delivering certificates of analysis a challenge. Towards the end of the regime, it was difficult to say exactly what was in some products – the very opposite of the purpose of the Act.

“The difficulty – and it became more and more of a difficulty as time went on – was that, conceptually, it’s very difficult to reconcile having an interim approvals regime with the fundamental core of the Act, which is that you’re supposed to be able to provide evidence that your products pose no more than a low risk of harm,” says Chen Palmer’s James Dunne, who has acted for the industry.

“The standard that was being applied for interim licences was basically ‘nothing bad has happened in the three months preceding the enactment of the legislation’, but that was unsatisfactory for a number of reasons. For the manufacturer – because you had to explain away adverse reports that you actually had no idea about because the reporting system wasn’t really in place. From a broader public health perspective – because you were approving products without really understanding what their risk profile was.

“That would have been fine, I think, if the interim regime had lasted for three months, but when it became clear it was going to drag on and on, it was only a matter of time before it was going to be brought to an end, sooner rather than later.”

That ending was motivated largely by a storm of media coverage about the harm being wreaked by the products given interim approval, which were all cannibomimetics: synthetic cannabis.

Objectively, the Act had sharply curtailed a market that had sprawled on unregulated for years. According to the Ministry, the number of retail outlets for legal highs was slashed about 95 percent after the Act, from as many as 4,000 to fewer than 170 licensed premises nationwide. The number of products was cut from around 200 to fewer than 50. There was also evidence that the number of severe presentations to emergency departments and severe issues reported to the National Poisons Centre had reduced since the Act came into force.

But the purge had the paradoxical effect of magnifying attention on the remaining outlets, which were largely unwelcome in their communities. They made a newsworthy focus for media and concentrated problems in the neighbourhoods where retailers had been licensed to continue. Some of the licensed retailers looked sketchy when media came to visit.

But perhaps the real damage to public safety was done in the whack-a-mole years before the Act, when the early synthetic cannabis products were progressively banned by order of the Minister. New Zealand Drug Foundation Executive Director Ross Bell says he doesn’t believe cannibomimetics per se were poor candidates for approval.

“I think absolutely the final bunch of synthetic cannabinoids that we’ve seen in the last few years were pretty bad,” says Bell. “But when BZP was around [in the mid 2000s], there was a very benign synthetic cannabis product on the market, and by all accounts, it was very effective, very much like natural cannabis. And we had no [adverse] reports at all for years. Then ESR determined that it was so much like THC that it was automatically prohibited under the analogue provisions in the Misuse of Drugs Act.

“If products like that had been allowed to stay, and even the early JWH-based products that weren’t causing a tonne of problems, it would have been less likely that we’d have seen the harmful ones. We took away all the good ones and left the bad ones.”

Dunne says the harm from the interim products was “an issue at least in the public mind, and probably if what had been sold was dance pills or something like that, people would have been a lot less exercised about it. But the reality was, if you looked at what people actually wanted to buy, there was no doubt that it was synthetic cannabinoids – in enormous quantities.”

At the end of April 2014, the government rushed to trump a competing bill from the Labour Opposition and announced its urgent amendment to the Act, changing everything.

One element of the Act that will help the chances of a viable regime remains. Approvals under the Act are for products to market, not their constituent ingredients – and one applicant cannot free-ride on research submitted for a competitor’s product. That means the first successful applicant would have the market to itself.

“If you had something that you could get across the line in New Zealand, particularly if you were first, I think you would probably recoup the costs of developing, testing and getting it approved pretty quickly,” says Dunne. “There’s no doubt there’s a significant demand out there for psychoactive substances.”

Compliance in New Zealand would also be a valuable precedent if and when other countries adopt similar regimes.

“That’s been the goal all along, to essentially present a working model here in New Zealand that other countries can follow,” says Stargate’s Matt Bowden, who effectively created the legal high industry and has spent much of the time since calling for regulation.

Bowden is keen to distinguish Stargate from most of the other companies in the industry as it was. Most were, he says, “essentially marketers” who relied on “chemical engineers in China”.

“We and possibly others are going down the route of essentially setting up a pharmaceutical company. So we do drug design. We designed hundreds of different molecules, and we tested them. We were designing for the longer-term game. There are a handful of other players globally who are going down the same track, but that’s it.

“I’m really quite motivated to keep working at it, because I know it is going to work here in New Zealand, and other countries will follow suit. And the beauty of it is that, if the regulations are standardised across a number of markets, then intellectual property developed here has an opportunity to be marketed globally and cover costs more easily.”

But that leaves the presently intractable problem of the animal testing ban.

Jessamine says that, in defining a standard for product approval, the authority and its advisory group have looked at existing manufacturing and safety standards, taking over-the-counter medicines as a starting point.

“That takes us into a series of international guidelines that say, ‘If you wish to introduce a new substance into an over-the-counter medicine, here is all the testing you have to do. It starts with simple stuff: how is it absorbed, how is it metabolised, how is it excreted? What is a toxic dose, what is a safe dose? Does it cause reproductive problems? Does it cause genotoxic problems?

“It then sets out a series of tests you can use to demonstrate those things. Those tests are set by boards of international regulators, which have animal welfare input as well. And some of the testing is still animal-based. There are a number of key issues where animal testing is still an essential part of the assurance of the safety of the substance.

“Our assessment here is that, whilst there’s a whole bunch of new technologies coming along that have been assessed and validated as accurate predictors of risk (as old-fashioned animal tests) and have been accepted into the standards required for medicines, foods and chemicals, there are some areas where there are no non-animal testing validated tests available at this point in time.”

He grants that there could “possibly” be a workaround where the authority could consider evidence from human testing that followed animal testing – all of it overseas – but suspects there would still be ethical roadblocks.

As to what kind of product would be a candidate for eventual approval, it’s safe to assume that no smokeable product would pass muster. Jessamine notes that “vapouriser-type solutions” are already appearing in other markets. Dunne expects that any approved product would be far less strong than those sold under the interim regime.

Bell is keen to emphasise that he believes Peter Dunne acted in good faith in developing the Bill and that it was not set up to fail. But meanwhile, he says, the substances banned by the government amendment, and others, remain available.

“Even the Police say they’re still finding and seizing these products. Synthetic cannabinoids are being sold as incense, and there have been some pills and powders being sold as plant food – which is exactly what these things are being sold as in other parts of the world.

“What we are also seeing is people just buying whatever they want online and having it shipped over. That kind of stuff will continue. The Auckland City Mission has noted that, since synthetic cannabis products disappeared, a lot of their clients have reverted to huffing glues and solvents. There are lots of substitutes for these things – alcohol, natural cannabis, butane. People are still going to get high.

“I think we need the Psychoactive Substances Act to help mitigate all this weird, unknown stuff being available online. If you give New Zealanders an approved, legal substance, they’ll go for it.”

Dunne ventures that the current impasse may ease when the environment around psychoactives is less heated and when all Local Approved Products Policies are in place.

“But if they’re going to get this to work here, what New Zealand will have to convince manufacturers of is that if a product is proven to be low risk, it’s not going to be banned as the result of some moral panic driven by the New Zealand Herald.”

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This story appears in the November 2014 issue of the New Zealand Drug Foundation magazine Matters of Substance, which will be published next week. You can find out more about Matters of Substance here.

NOTE: Submissions on the Auckland City Local Approved Products Plan close tomorrow. If you have any thoughts or observations on what the draft says, please do share them here.