2020 is shaping up to be an interesting year for cannabis in New Zealand. A medicinal cannabis regulatory regime will take effect from April and, in the September general election, New Zealanders will vote in a referendum on the legalisation of recreational cannabis. These developments result from the current coalition government's health-based approach to drugs and global trends towards the deregulation of cannabis.
Following the launch of our dedicated global cannabis practice, this article provides an overview of the incoming medicinal cannabis regime. It is the first in a series of articles on different aspects of New Zealand's opening cannabis market.
In December 2018, New Zealand amended the Misuse of Drugs Act to provide a defence for terminally ill people to possess and use cannabis; change the classification of cannabidiol products containing less than 2% THC so that they are no longer controlled drugs;1 and grant a regulation-making power allowing the government to set minimum quality standards for products containing controlled drugs.
The Misuse of Drugs (Medicinal Cannabis) Regulations 2019 were subsequently made with the stated purpose: " to enable the research, manufacture, and supply of medicinal cannabis products and related ingredients, and the cultivation of cannabis for the products and ingredients." The Regulations will take effect from 1 April 2020.
The Regulations impose minimum quality standards for medicinal cannabis, ingredients and products as well as a licensing regime for activities involved in the production of medicinal cannabis products.
Statutory defence for the terminally ill
The amended sections 7, 8 and 13 of the Misuse of Drugs Act 1975 provide a defence for terminally ill people who use or possess cannabis or cannabis utensils. The defence only applies to people diagnosed by a doctor or nurse as requiring palliative care.
This has been described as a compassionate policy decision acknowledging that some terminally ill people use cannabis to relieve their symptoms and that the usual concerns about product safety, quality and long-term risks do not apply to the terminally ill in the same way as the general population.2 The statutory defence signals that there is little public interest in pursuing convictions of this nature, particularly while the government is establishing a medicinal cannabis scheme.
A Medicinal Cannabis Agency (administered by the Ministry of Health) will be operational from 1 April 2020. From 1 April, applicants can apply for a licence for one or more activities and further activities can be added as required — the activities are cultivation, nursery, research, possession for manufacture, and supply. Medicinal cannabis licences will be required in addition to licensing requirements from other regulatory regimes, such as licences to import and export controlled drugs, or to manufacture or sell medicines.
There will be a number of eligibility requirements for applicants seeking a licence. Individual applicants or company directors must be at least 18 years old, resident in New Zealand and they must have the expertise and resources to comply with the regulations relating to their activity. They need to be entitled to carry out the licensed activity at the location specified in their application and that location must have adequate security arrangements. Unless the Minister gives special approval, an applicant will not be eligible for a medicinal cannabis licence if they have ever had a licence revoked or a conviction under the Misuse of Drugs Act 1975.
Once issued, the licence is valid for one year and can be renewed on application. Licence holders must handle cannabis responsibly, make locations available for inspection, maintain secure control of cannabis and report any unauthorised removal of cannabis. All surplus cannabis must be destroyed and there are record-keeping requirements for each activity.
Medicinal cannabis licences can be suspended or revoked if licence holders provide false information or breach the terms of the licence. Further, it is an offence to knowingly provide false information in an application, to supply cannabis to unauthorised persons or to breach the conditions of a licence. These offences are punishable with a maximum fine of $500 with additional daily fines for ongoing offences.
Minimum quality standards
The Regulations impose minimum quality standards, labelling and packaging requirements for medicinal cannabis products. However, the standards do not apply where cannabis is supplied under licence for a research activity or where it is prescribed by a doctor for a particular patient, under the Medicines Act 1981.
The standards prescribe maximum levels of various contaminants and active ingredients permitted in medicinal cannabis products. Licence holders need to submit their products to standardised testing carried out by certified laboratories. The products must be unadulterated and contain active ingredients extracted only from cannabis, not other varieties or synthetic products. Any product decontamination must not affect product quality and only certain approved pesticides can be used. Further, products cannot be produced in a form intended for smoking or in sterile forms such as injecting or eye dropping.
You can find more information, including application fees, on the Ministry of Health website. Licence applications can be submitted from 1 April 2020.
There is significant potential here for growth in this industry in light of recent changes. DLA Piper has already provided advice to entities on the regulatory regime applying to medicinal cannabis products in New Zealand. For more information, please get in touch.
1Tetrahydrocannabinol or THC is the main psychoactive compound in cannabis.
2Report of the Health Select Committee July 2018: https://www.parliament.nz/resource/en-NZ/SCR_78856/c8e00c5ea12f9ae59420e76d94c4dd32a5b8c840.