As we have previously discussed, the Narcotic Drugs Act 2016 (Cth) (Act) establishes a licensing and permit scheme for the cultivation and production of cannabis and cannabis resin for medicinal and scientific purposes and revises the licensing scheme for the manufacture of narcotic drugs generally, including with regard to medicinal cannabis products. For more information regarding the operation of the Act, see our previous article here.

Since the Act was passed in February 2016, numerous related legal changes have occurred. For example, Queensland, New South Wales and Victoria have introduced legislative instruments addressing the regulation of supply of medicinal cannabis products to patients within their respective states. Furthermore, on 31 August 2016 the Medicines Scheduling Delegate gave notice of the final decision to down-schedule medicinal cannabis from Schedule 9 to Schedule 8, with effect from 1 November 2016

The Narcotic Drugs Regulation 2016 (Regulation) which was released publicly on 17 October 2016 is another of the important pieces of legislation necessary to establish a complete legal framework within which persons and companies can begin to carry out medicinal cannabis cultivation, production or manufacturing activities (medicinal cannabis activities) legally in Australia. However, the application requirements set out in the Regulation are substantial and numerous, and it is likely that most applicants will require far more than a few weeks to practically comply with the legal framework, which is intended to be operational as of 31 October 2016.

Licence applications

The information which an applicant must provide when applying for a cannabis licence includes basic identification information concerning the applicant and, more specifically, details of the medicinal cannabis activities which the applicant wishes to undertake, the location where those activities will likely take place and any arrangements which will be in place to ensure the safety, security and proper disposal of any cannabis plants, cannabis, cannabis resin or medicinal cannabis products, including arrangements with emergency services, police and local government authorities.[1]

In addition, as we have previously foreshadowed, applicants will be required to demonstrate end-to-end supply by providing details of all other licensees under the Act with whom the applicant will interact in the course of their business. This might include details of the production licence holder who will receive cannabis plants from a cultivation licence applicant, or details of the manufacturing licence holder who will receive cannabis or cannabis resin from a production licence applicant. Notably, later in the Regulation it is provided that, where a contract of this kind ceases to exist, potentially because one licence holder has had their licence suspended or otherwise ceases to operate, in order to retain their licence, the remaining licence holder has only 4 months to arrange a new contract.

The requirement under the Act for information demonstrating that a licence applicant is a fit and proper person (or corporation) is reiterated in the Regulation, as are the requirements for applicants to provide information regarding their proposed record-keeping procedures, employment policies and procedures, and additional security measures for employees.

In addition to the information above, applicants are also required to provide a series of documents including:[2]

  1. Identification documents concerning the applicant;
  2. Financial records which demonstrate a sound and stable financial background;
  3. A site plan showing where the medicinal cannabis activities will take place on particular land;
  4. A floor plan of the premises and facilities at the location where the activities will be undertaken;
  5. A copy of the standard operating procedures and policies which will be used to undertake the activities; and
  6. A risk management plan that will be used to manage risks associated with the activities, including risks posed to the health and safety of people, or to the environment.

Despite the requirements being largely identical for all cannabis licence applications, a research licence applicant must also include details of the type of research which will be conducted, and how it relates to medicinal cannabis.[3]

Furthermore, a manufacturing licence applicant must additionally provide details of the medicinal cannabis products which are proposed to be manufactured and the proposed end use of those products (for example, for research, supply in clinical trials, manufacture of other therapeutic goods or supply to patients in accordance with State and Territory law). Also, a manufacturing licence applicant must provide a national police certificate in respect of each person employed by the applicant to carry out activities authorised by the licence.

Permit applications

The information which an applicant must provide when applying for a cannabis permit includes the “the licence number of the medicinal cannabis licence held by the applicant”. Therefore, it will not be possible to apply for, nor receive, a cannabis permit until after a cannabis licence has been granted. [4]

Permit applications must contain more specific information regarding proposed medicinal cannabis activities than licence applications. A cultivation permit, for example, must contain details of the type and strain of the cannabis plants proposed to be cultivated (proposed plants), the concentration of tetrahydrocannabinol (THC) and cannabidiol (CBD) (and any other cannabinoids) that will be in the proposed plants, the maximum size of the crop which will be cultivated, the proposed term of the permit and details of the source of the cannabis plants or seeds (which may be in Australia or any other country).

A production permit must contain details of the maximum quantity of cannabis or cannabis resin that is proposed to be produced, the maximum quantity of cannabis or cannabis resin that it will be necessary (in the opinion of the applicant) for the applicant to possess or control for the normal conduct of business (including for the lawful supply of cannabis or cannabis resin) and the proposed term of the permit.

The particular documents which an applicant must provide on application for a cannabis permit include[5]:

  1. copies of all relevant contracts between the applicant and any other licence holder(s) under the Act; and
  2. evidence of the type and strain of the proposed plants, including the concentration of all cannabinoids contained therein. The Regulation proposes that this could be in the form of “a certificate issued by a government authority, a government accredited laboratory or the supplier of the cannabis plants”.

Fees

Finally, Schedule 1 to the Regulation provides the fees for licence and permit applications (for commercial and research purposes), as follows:

Application / fee type

Fee ($)

Licence (new)*

5290

Licence (variation)*

4150

Permit (new)*

1830

Permit (variation)*

1730

Inspection (required for every application marked by *)

470 / hr / inspector

Notably, regulation 53 provides that the Secretary may reduce a cannabis licence application fee for one of two applications by up to 75% where an application for a cannabis licence for commercial purposes, and for research purposes, is made simultaneously. This provides an incentive for potential cultivators and producers of medicinal cannabis to apply to carry on medicinal cannabis activities for both commercial and research purposes, if they are so equipped.

For further information about the Regulation or for further clarification regarding the specific requirements that companies interested in entering the medicinal cannabis industry will be required to satisfy in order to meet the requirements for a cannabis licence or permit under the developing framework, contact:

Piper Alderman, of course, continues to assist clients in navigating this complex area.