With the passing of the Narcotics Drugs Amendment 2016, medicinal cannabis may be grown and distributed in Australia. It is unlikely to be in the hands of prescription-carrying patients for at least a year, however.

The next six months will be spent drafting the rules that will govern licensing, cultivation, production, distribution, taxation and security arrangements. More than anything else, those regulations will shape the new industry.

One thing is clear already, though; legal cannabis will be tightly regulated, so that Australia may remain in compliance with the United Nation’s Single Convention on Narcotic Drugs 1961, to which it is a signatory.

What we know so far

States or territory government agencies will be the only entities authorised to undertake cultivation and production of cannabis and manufacture of medicinal cannabis products. Individual entrepreneurship may only take place within that framework.

Cultivation and distribution of marijuana for recreational purposes remains strictly illegal.

Two kinds of cannabis licences will be issued: one that authorises the cultivation of cannabis for manufacture into medicinal cannabis products; and a second that authorises medical research.

Applicants and relevant business associates must meet a strict ‘fit and proper person’ test that is designed to exclude criminal elements and organized crime.

A cannabis licence holder must demonstrate a business relationship with a licensed manufacturer, who must, in turn, 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 and prevent the diversion of cannabis to illegal activities. To enforce these limits, the Secretary of the Department of Health will have the power to order the destruction of excess cannabis produced by a licence holder.

The regulatory system is designed to be self-funding. A cost-recovery scheme will cover costs associated with:

  • the administration of licence applications;
  • site inspections;
  • post-licence inspections;
  • sampling and testing; and
  • the acquisition of law enforcement data to allow determinations related to ‘fit and proper’ person test, as well as other compliance and law enforcement activities.

The manufacture of medication may not begin until a medicinal formulation of cannabis is identified. Clinical studies into the efficacy of cannabis for the treatment of severe epilepsy, chronic pain, and nausea associated with chemotherapy are currently under way at the University of Sydney. Childhood epilepsy research will also soon commence at the University of Melbourne.

What we don’t know yet

It is not yet clear what conditions cannabis may be prescribed to treat and how much discretion physicians will have in their ability to prescribe. It is also unknown whether growing will be limited to greenhouses or whether outdoor growing will be permitted, and in either case, whether all strains may be cultivated. States may also restrict access to medicinal cannabis beyond the limits imposed by the national government, so it is not clear if cannabis will remain unavailable in some areas of the country.

The cost of drugs available to qualified patients will, of course, be subject to the costs and limits on production. Potential producers and manufacturers are also anxious to learn more about the process and cost of applying for a licence and maintaining compliance with the yet-to-emerge regulatory scheme.

What you should do

If you have questions about the future shape of legal medicinal cannabis, either as a possible patient or a businessperson, we urge you to contact the attorneys at Owen Hodge Lawyers at 1800 770 780 as soon as possible. We are watching developments in this new industry closely and would be happy to share our insights.



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