Changes on the horizon for regulation of medicinal cannabis in Australia?

What you need to know

• Australia's Office of Drug Control (ODC) recently sought feedback on its proposal to streamline the process for medicinal cannabis permit variations (see here).  The ODC's proposal is part of a broader suite of reforms being implemented by the Australian government in response to Professor John McMillan AO's final report of the review of Australia's medicinal cannabis framework under the Narcotic Drugs Act 1967 (Cth) (McMillan Review).
• Of particular interest to stakeholders will be the ODC's proposal to: 
  
  • simplify the information required in an application for a permit authorising cultivation;
  • standardise supply pathways by referencing categories of entities with which supply can be undertaken; and 
  • allow permit holders to periodically report on actual and forecast cultivation, production, and manufacturing activities, instead of providing that information at the permit application stage.
• Australia's Therapeutic Goods Administration (TGA) is also seeking feedback on a suite of proposed reforms (here) for imported medicinal cannabis products.  The proposal would require foreign manufactured products to be held to the same GMP standards as locally produced products.

In 2019, the McMillan Review identified a number of issues relating to the regulatory framework for medicinal cannabis, which the Australian government is addressing in a staged reform process.  The reforms aim to reduce the regulatory burden on the medicinal cannabis industry, including the replacement of the current three licence structure with the issue of a single licence.  

Ashurst reported on these reforms in October 2019 (here) and June 2020 (here). 

In November 2020, the ODC released the "Consultation paper: Medicinal Cannabis Permit Reform" (here).  The paper aims to address another key criticism of the regulatory framework identified in the McMillan Review, namely that medicinal cannabis permits are overly prescriptive and licensees are frequently required to seek onerous permit variations or otherwise breach their permits.  

At the same time, the TGA is seeking feedback on its proposal to introduce GMP licensing for overseas manufacturers (here).  The TGA's objective is to provide greater assurance for medical practitioners and patients regarding the quality and safety of medicinal cannabis products that are imported and supplied in Australia, and to further clarify labelling and packaging matters.

Part A – ODC's Consultation paper: Medicinal Cannabis Permit Reform

The McMillan Review identified a number of issues relating to permits, including that:

• the level of detail required in permit applications is impractical and constricting; 
• some detail is difficult to estimate prior to cultivation or manufacture occurring.  This is particularly true of cannabis strains, supply pathways, and cropping and production schedules; and
• the level of detail required is likely to trigger the need for variation applications.  Under the current model, permit variations must be granted prior to any major change in business operations during the permit period for cultivation/production and supply activities.

Consistent feedback from industry stakeholders indicates that the current, highly prescriptive permit arrangements inhibit commercial and operational flexibility for individual permit holders, thereby impeding the development of the industry as a whole.

Key changes proposed to the current permit framework

The ODC proposes the following key changes.

1. Permits will no longer include details of each strain to be cultivated.  Instead, permits will specify the number of plants, or other cannabis material, in the low THC or high THC categories.  Cultivation and production schedules will no longer need to be provided at the time of application.
2. Removal of strict supply pathways from permit conditions.  Instead, permits will specify standardised categories of entities to/from whom supply can be undertaken.  Licensees will no longer be required to obtain permit variations if their supply chain changes (provided that any new entity is included within one of the standardised categories). However, permit holders will be required to conduct their own due diligence and, if found to be non-compliant, may be subject to compliance action.  
3. Permit holders will periodically report on actual and forecast cultivation, production and manufacture activities, in lieu of detailed information being provided at the application stage and prescribed in the permit.
4. Licence holders will be required to periodically report on the actual and forecast activities conducted under the permit instead of providing detailed information at the time of permit application.

Notwithstanding the proposed changes, it is not expected that the permit application process itself will change significantly.  Instead, permit holders will have greater flexibility to manage operations, but must do so within the maximums specified in their permits, or could be subject to compliance action.

Part B - Potential reforms to medicinal cannabis manufacturing, labelling and packaging requirements

At the same time, the TGA is seeking feedback on a suite proposed reforms principally intended to introduce equivalent Good Manufacturing Practice (GMP) requirements for imported and domestic medicinal cannabis.

Requiring equivalent GMP for imported and domestic medicinal cannabis

Currently, a GMP licence is only required to manufacture medicinal cannabis product at Australian manufacturing sites. Most overseas manufacturers, however, are only required to comply with the Therapeutic Goods Order 93 – 'Standard for Medicinal Cannabis' (TGO 93). The reason for this is that overseas manufacturers are exempt from GMP if their products are manufactured outside of Australia, and supplied through the Authorised Prescriber Scheme, the Special Access Scheme or through clinical trials.  The regulator's concern is that most medicinal cannabis products are supplied through these pathways, and the TGO 93 does not contain any GMP requirements.

The regulator has tabled three options for consideration.

• Option 1 is to maintain the status quo.
• Option 2 is to amend Item 1 of Schedule 5A to the Therapeutic Goods Regulations to include a condition requiring imported medicinal cannabis to be manufactured with equivalent GMP.
• Option 3 is to incorporate GMP requirements for imported medicinal cannabis in TGO 93.

We note that in relation to Option 2, the exemption in Item 1 of Schedule 5A does not apply where an approval or authority under the Special Access Scheme and/or Authorised Prescriber Scheme already exists prior to importation and supply.  Therefore, any condition for GMP compliance in Item 1 of Schedule 5A would not apply for those two pathways.

Removing exemptions for compounding medicinal cannabis products

Compounding pharmacies do not require a GMP-licensed facility or a medicinal cannabis manufacturing licence.  TGO 93 applies to the ingredients that compounding pharmacists use as well as the preparations they dispense to patients.  The TGA's concern is that there would be practical difficulties with verifying compliance with a modified TGO 93.

It has proposed the following Options 1 to 3.

• Option 1 is to maintain the status quo.
• Option 2 is to exclude medicinal cannabis products from the exemption.
• Option 3 is to require medicinal cannabis compounding medical practitioners and pharmacists to hold a GMP licence.

The consequence of Option 2 would be that medical practitioners and pharmacists could not extemporaneously compound medicinal cannabis at all.

The TGA also expressed concern that, currently, the TGO 93 does not require sponsors to specify the species name, Cannabis sativa, or identify the part of the plant from which the product is manufactured.  Accordingly, the TGA proposes a requirement that sponsors do so.

Final note

The McMillan Review identified a number of issues with the regulatory framework for medicinal cannabis, which the Australian government is addressing in a staged reform process. On 3 February 2021, the Narcotic Drugs Amendment (Medicinal Cannabis) Bill 2021 was introduced to the Australian Parliament.  The Bill will amend the Narcotic Drugs Act 1967 to support the implementation of a number of the recommendations of the McMillan Review, including in particular to:

• streamline and consolidate the licensing structure in the Act into a single licence replacing the current three-licence structure for activities relating to cultivation, production, manufacture and research; and
• create a perpetual licence and periodic permit structure for the majority of activities for which a medicinal cannabis licence is required 

Proponents for change of the Australian regulatory landscape will hope the bill will be agreed to by both the House of Representatives and the Senate and will be presented to the Governor-General for assent in the near future.

Authors: Anita Cade, Partner; Eoin Martyn, Senior Associate; and Stephen Klimis, Lawyer.