An overview of the current and proposed medical cannabis regulatory regime in Australia

The Australian Government is currently considering streamlining some aspects of this regulatory regime.

In this article we provide an overview of the major regulatory schemes covering medicinal cannabis production and the licences and approvals required to operate in this rapidly growing industry, and the proposed changes.

Commonwealth regulations

Two main legislative schemes operate to regulate medicinal cannabis at a Commonwealth level – the Narcotic Drugs Act 1967 (Cth) (ND Act) and the Therapeutic Goods Act 1989 (Cth) (TG Act).

Narcotic Drugs Act

The ND Act was introduced in 1967 to give effect to Australia’s obligations under the United Nations Single Convention on Narcotic Drugs 1961 (Convention), establishing a strict licensing regime for the manufacture or supply of certain drugs. In 2016, the ND Act was amended¹ to introduce a medicinal cannabis licensing scheme at Federal level. This scheme is administered by the Office of Drug Control (ODC), which is part of the Health Products Regulation Group of the Department of Health.

The ND Act’s cannabis regulatory scheme provides for a two-part authorisation process, requiring both licences and permits. A licence provides a general authorisation for the licence holder to engage in particular activities (e.g. cultivating cannabis) at a certain site. A licence holder must also obtain a relevant corresponding permit before commencing any of the licenced activities.

Three types of licences are currently available under the act: a medicinal cannabis licence; a cannabis research licence; and a manufacture licence.

Medicinal cannabis licence: authorises cultivation, production of cannabis (i.e. the flowering heads) or resin for medicinal purposes and associated activities such as supply, transport or storage of cannabis and cannabis plants.

Cannabis research licence: authorises the same activities as a medicinal cannabis licence, but only for the purpose of research relating to medicinal cannabis.

Manufacture licence: is a general licence under the ND Act to manufacture a regulated drug, which may include cannabis, and undertake related activities such as packaging, supply, or transport. A manufacturing licence relating to cannabis products cannot be granted unless the drug is for medicinal cannabis research, use in a clinical trial, or supply to patients under a special access scheme (discussed further below).

As noted above, a corresponding permit must be applied for in relation to each type of licence. The permit specifies in detail the particular activities the licensee intends to undertake (e.g. a medicinal cannabis permit will include the number, type, source and THC concentration of any plants to be cultivated). Multiple permits may be held under a single licence.

Licences and permits may be varied on request of the licensee, or by the ODC. Variations can include changing licence conditions, or the activities authorised under the licence; however, it is not possible to transfer a licence. As a result, business sale or restructuring may require applying for a new licence.

Therapeutic Goods Act

The TG Act regulates all therapeutic goods supplied in Australia or produced for export. ‘Therapeutic goods’ include all goods presented for, or likely to be taken to be for therapeutic use in humans, including medicinal cannabis products. The TG Act is administered by the Therapeutic Goods Administration (TGA), which is also part of the Health Products Regulation Group of the Department of Health.

All therapeutic goods supplied or used in Australia must be approved by the TGA and placed on the Australian Register of Therapeutic Goods (ARTG) or provided as unapproved therapeutic goods under the Special Access Scheme (SAS) or Authorised Prescriber (AP) system. Other than 2 drug products (which we discuss further below), the vast majority of medicinal cannabis products in Australia have not been registered on the ARTG, so are provided under the SAS or AP schemes, following a case-by-case approval by the TGA.

The TG Act classifies drugs according to the Poisons Standard, which separates drugs into nine different Schedules (Schedules 2-10), based on the risk posed to the public. State and Territory legislation regulates and imposes restrictions on the sale, supply manufacture and use of drugs based on their Schedule classification (which we discuss further below). Currently cannabidiol products are classified as Schedule 3 (Pharmacist only medicine) or Schedule 4 (Prescription only medicine), all other cannabis products are classified as Schedule 8 (Controlled drug).

Carrying out any step of the manufacture of therapeutic goods for human use without a licence is subject to civil and criminal penalties.²

Applications for therapeutic goods manufacturing licences are made to the TGA and must specify the type(s) of substance, the specific manufacturing steps to be carried out, the manufacturing site or sites and the details and qualifications of the people who will have control of the manufacturing process.

Manufacturing under a therapeutic goods manufacturing licence must comply with the manufacturing principles and standards set out in the TG Act or specified by the TGA. Currently this includes the major pharmacopoeias and good manufacturing practice (GMP) as set out in the “Guide to Good Manufacturing Practice for Medicinal Products” published by the Pharmaceutical Inspection Co-operation Scheme (PIC/S)³. The TGA will conduct a site inspection to assess compliance with the relevant standards, including GMP, as part of the licence application process.

Unlike licences issued under the ND Act, therapeutic goods manufacturing licences may be transferred, including as part of a business sale, merger or takeover.

Export or import of medicinal cannabis products

Additional requirements apply under Federal legislation if a manufacturer wants to import or export cannabis products.

A manufacturer wishing to export cannabis products must hold a licence and permit under the ND Act which specifies export as the end use for the products. This can be obtained, either by submitting a new licence application, or by applying to have an existing licence varied to include export.

Anyone wishing to import or export Schedule 8 drugs must also hold a licence under the Customs (Prohibited Imports) Regulations 1956 (Cth), or the Customs (Prohibited Exports) Regulations 1958 (Cth), respectively. These licences are obtained by application to the ODC and require evidence that the importer/exporter holds all other relevant State, Territory or Commonwealth licences.

Any drugs exported in final form, must be approved by the TGA and listed on the ARTG as export only products.

State and Territory regulation

In addition to the Federal regulation, each State and Territory has legislation regulating the manufacture, possession, and supply of drugs and precursors. All States and Territories adopt the classification of substances in the Poisons Standard; however, the treatment of drugs in each schedule varies in each jurisdiction.

Each State and Territory, with the exception of the ACT, requires that a manufacturer of a Schedule 8 drug, including cannabis, must hold a State/Territory licence in addition to the various licences required at Federal level.

Changes on the horizon and other recent developments

On the 3rd February 2021, the Narcotic Drugs Amendment (Medicinal Cannabis) Bill 2021 (Bill) was introduced into the Australian Parliament. The Bill aims to streamline the current regulatory scheme for cultivation, production, research and manufacture of medicinal cannabis.

Key aspects of the Bill include changes to:

• reduce the burden of the licence assessment process, by providing for a single medicinal cannabis licence to replace the suite of licences currently required for cultivation, production, manufacture and research activities; and
• provide that the majority of licences to be permanent.

In another key development, a medicinal cannabis drug product was listed on the Government subsidised Pharmaceutical Benefits Scheme (PBS) on 1 May 2021.

Epidyolex^® is used combination with at least two other anti-epileptic medicines to treat Dravet syndrome – a genetic epileptic disease that gives rise to seizures that doesn’t respond well to standard medications.

Epidyolex^® is the second medicinal cannabis drug registered for supply in Australia and the first to be listed on the PBS.

Around 116 patients will benefit from this listing. Previously, they would have had to pay more than $24,000 per year for treatment but now will pay only $41.30 per script or $6.60 if they have a concession card.

This listing is a pivotal development, the first to allow greater access to medicinal cannabis drug products in Australia.

¹Narcotic Drugs Amendment Act 2016 (Cth).
²See Therapeutic Goods Act 1989 (Cth), ss 35-35C.
³See Therapeutic Goods (Manufacturing Principles) Determination 2020, s 6 and Schedule 1.