Hope for Hemp Industry Stakeholders – final decision on the scheduling of cannabis deferred

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By Dr. Teresa Nicoletti, Partner and Heleana Short, Paralegal

A notice published on the Therapeutic Goods Administration (TGA) website yesterday announced that the Secretary of the Commonwealth Department of Health has deferred making a final decision with respect to the scheduling of cannabis and tetrahydrocannabinols (THC). This deferral is a direct result of strong advocacy by Mills Oakley on behalf of its clients in the non-medicinal cannabis industry, who were concerned that the proposed decision would have the effect of making many of their currently lawful products unlawful.

Media attention has recently been focused on the medicinal cannabis framework established in Australia by the Narcotic Drugs Amendment Act 2016 (Cth) and Narcotic Drugs Regulation 2016 (Cth). These instruments permit the licensing of Australian companies to cultivate, produce and manufacture cannabis and cannabis products for domestic medicinal and research purposes.

Importantly, in order for medicinal cannabis products to be made available for patients, it was necessary to amend the Standard for the Uniform Scheduling of Medicines and Poisons (Poisons Standard). Cannabis and THC were previously included only in Schedule 9 (Prohibited Substances) of the Poisons Standard, meaning that, subject to very limited exceptions, they could not be manufactured, possessed or sold by any person other than for authorised research purposes.

Separate to the medicinal cannabis regulatory regime, however, licensing schemes have existed in the States and Territories for 40 years which permit the cultivation of low-THC cannabis plants (referred to as industrial hemp) for the production of fibre, seed, and derivative products (including cosmetics and pet foods). Supply of these products was permitted because the Schedule 9 entries for cannabis and THC in the Poisons Standard contained exceptions (Exceptions) for:

  • processed hemp fibre containing 0.1% or less of THC and products manufactured from that fibre;
  • hemp seed oil containing 50mg/kg or less of THC when labelled “Not for Internal Use” (Hemp Seed Oil Exception); and
  • products containing 50mg/kg or less of THC (Hemp Products Exception).

On the basis of these exceptions, Australian companies have been able to operate in a market for low-THC hemp-based products.

On 31 August 2016, the Department of Health’s scheduling delegate decided to create additional entries for cannabis and THC in Schedule 8 (Controlled Drugs) of the Poisons Standard, theoretically authorising patient access to cannabis products cultivated, produced and manufactured under the new medicinal cannabis framework. Although these scheduling changes did enhance patient access to medicinal cannabis products, they also modified the Hemp Seed Oil and Hemp Product Exceptions, with serious consequences for the non-medicinal hemp industry.

We first raised these issues with the Department in September 2016, prompting the scheduling delegate to re-consider the scheduling of cannabis and THC. Encouragingly, after considering submissions (including our submission), the joint advisory committee recommended to the scheduling delegate that consistent exceptions be included in the revised Schedule 9 entries for cannabis and THC, reflecting those on which the non-medicinal hemp industry had previously relied.

Disappointingly however, the scheduling delegate released an interim decision on 2 February 2017 which modified the Hemp Seed Oil and Hemp Product Exceptions in ways which departed from the joint advisory committee’s recommendations. In particular, the interim decision:

  • removes the term “internal” (in relation to human use) with respect to the Hemp Seed Oil Exception; and
  • removes the Hemp Product Exception altogether.

The effect of these proposed changes would be the inclusion of the following products into Schedule 9 (Prohibited Substances) of the Poisons Standard:

  • low-THC hemp seed oils for any kind of human use including products for external human use such as cosmetics, skin care products and hair products;
  • low-THC hemp seed oils for non-internal use (other than by humans) which contain 50mg/kg or less of total cannabinoids, including 20mg/kg of less of THC; and
  • all other low-THC products derived from parts of the hemp plant other than fibre or hemp seed oil (g. pet foods).

As stated above, substances included in Schedule 9 cannot be manufactured, possessed or sold by any person other than for research purposes. On this basis, all Australia businesses that manufacture and/or supply low-THC hemp seed oils for external human use, low-THC hemp seed oils for non-human use containing between 20-50mg/kg of THC, or any other low-THC product would be required by law to cease all operations immediately if the interim decision became final. In our view, this would effectively eliminate the entire industry for hemp-based cosmetic, skincare, hair care and pet food products currently operating in Australia.

Understandably, Mills Oakley was extremely concerned about the impact that a final decision mirroring the interim decision would have on its clients, many of which have invested significant time, resources and expense in establishing businesses in reliance on the Exceptions. We were especially concerned because the problematic aspects of the interim decision appeared to have been made without comment being sought from all stakeholders, and without a proper basis having regard to the matters which may be taken into account when amendments to the Poisons Standard are proposed. As was acknowledged by the delegates, low-THC hemp products present a low risk for diversion and do not exhibit any of the psychoactive or narcotic effects of illicit cannabis.  This being the case, the safety concerns which would warrant up-scheduling simply do not arise.

To ensure that the interests of our clients and other industry stakeholders were represented, we made a number of submissions in response to the interim decision and also engaged in direct dialogue with the Department of Health to stress the deleterious consequences that the interim decision, if implemented on a final basis, would have on Australian businesses that, up until now, have operated lawfully in reliance on the Exceptions.

We are dedicated to the ongoing representation of our clients’ interests, to ensure that regulators fully understand the issues at stake. We fully support, and have strongly advocated, for a medicinal cannabis framework in Australia, but this should not come at the cost of other market sectors involved in separate cannabis-related activities.

We are relieved that our efforts have stalled a final decision to allow more careful thought and consideration. We will continue to advocate for reasonable, sensible and practical scheduling decisions with respect to cannabis and THC, informed by genuine consultation and discussion between industry and the regulator.

For further information, please do not hesitate to contact us.

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