30 September 2016

Cannabis is an illicit narcotic drug in Australia. Cultivation for any purpose other than that explicitly allowed for through the licence and permit schemes under the Narcotic Drugs Act 1967 as amended by the Narcotic Drugs Amendment Act 2016 (the Narcotics Drugs Act) (or under state/territory industrial hemp licence) is a criminal offence.

Multiple regulators

The Office of Drug Control regulates to prevent the risk of diversion of medicinal cannabis. This web page is about the licences and permits that ODC grants for cultivation and production (but not manufacture) of cannabis for medicinal purposes.

As a medicine, medicinal cannabis products are regulated by the Therapeutic Goods Administration, who regulate:

  • access to therapeutic goods
  • quality of therapeutic goods.

Both the Office of Drug Control (ODC) and the Therapeutic Goods Administration (TGA) are part of the Australian Government Department of Health. Together they make up the Health Products Regulation Group.

The Australian Government has sole responsibility for regulating the cultivation and production aspects of cannabis for medicinal and related scientific purposes. Manufacture of, and patient access to, medicinal cannabis products is however a joint responsibility of the Australian Government and the states and territories.

This web page does not cover manufacture. For manufacture, you need:

  • a licence and a permit from ODC
  • appropriate permission from your state or territory
  • if intended for human use (in contrast to laboratory research), you probably also need a GMP licence from the TGA.

Obligations under the United Nations Convention

The amendments to the Narcotic Drugs Act that allow for the cultivation, production and manufacture of medicinal cannabis products are designed to ensure that Australia can satisfy its international obligations under the United Nations Single Convention on Narcotic Drugs 1961 (the Single Convention).

This means that Australia must ensure that the risk of diversion of narcotic drugs (such as cannabis) is minimised and that the use of cannabis is strictly reserved for medical and scientific purposes only.

Under the Single Convention, cultivation for medicinal purposes can only occur under licence issued by the Australia Government. Permits allow the Government to restrict how much is cultivated (and manufactured), thus meeting a key obligation of preventing accumulation of narcotic material.

ODC licences and permits

You (or your organisation) must have a medicinal cannabis or cannabis research licence (an ODC licence) to obtain the right to lawfully cultivate cannabis for medicinal purposes. Further, once you have a licence, you must obtain a medicinal cannabis or cannabis research permit (an ODC permit) before you can cultivate a crop. The permit sets out the specifics of that crop, such as how much and what type can be grown.

A patient cannot be legally provided with medicinal cannabis that has not been through a manufacturer: labelling a medicinal product is a manufacturing step.

Licences

An ODC licence allows you to legally cultivate and/or produce cannabis for medicinal or associated research purposes.

All licences will have conditions that require that any cannabis cultivated or produced is done in accordance with a permit. Once you have a licence, you can apply for a permit, which outlines the amounts and types of cannabis you can cultivate or produce.

A licence combined with a permit allows you to obtain cannabis material (such as equipment, seeds and nursery stock) and covers associated cultivation and production purposes.

Permits

A licence does not allow for the cultivation or production of cannabis unless accompanied by an associated permit, which will outline:

  • the types of cannabis plants that can be cultivated
  • the quantities that can be produced
  • the timeframes in which authorised activities can occur
  • the next party in the supply chain (specific manufacturer or researcher).

Cultivation and production

We grant licences and permits for cultivation and production:

  • Cultivation includes all steps up to, but not including, harvest.
  • Production consists of harvest and placing in a container for the purpose of manufacture or research.

ODC will grant the following medicinal cannabis cultivation and production licences:

  • Medicinal cannabis licence (for supply for human medicinal use), covering either cultivation, production or (most likely) both.
  • cannabis research cultivation licence (for solely research purposes: use in humans prohibited), covering either cultivation, production or (most likely) both.

Most of the time, applicants will apply for a combined cultivation and production licence and permit. However, the ability to grant licences for just production allows for the harvesting function to be separated from the cultivation function.

Number of licences and permits

There is no limit to the number of medicinal cannabis licences that can exist. However, a licence will only be granted if the cultivator or producer will be supplying to a manufacturer who holds an ODC medicinal cannabis manufacturing licence or to a researcher holding appropriate authorisation.

Similarly, there is no limit to the number of permits that can exist. However, the types and quantities of cannabis required for the manufacturing process will be dictated in contractual arrangements by the manufacturer (or researcher for research purposes) and stipulated in the permit.

You may have multiple permits issued under a single licence.

Preconditions

There are preconditions that apply to making an application for a licence. We will not accept your application if your application does not meet the preconditions.

Licence preconditions

It is a precondition of applying for a licence that you are able to demonstrate that the cultivation and production of the cannabis is for the purposes of either:

  • supply to the holder of a medicinal cannabis manufacturer licence
  • research relating to medicinal cannabis or medicinal cannabis products

If you apply for a cultivation-only licence, your requirement would be to demonstrate supply to the holder of a medicinal cannabis production licence.

It is a further precondition that your licence application must be effective before it can be accepted for assessment. An application will be considered to be effective when:

  • all fields of the application form are filled in
  • all required documents are present.

If you provide an application that does not meet the preconditions above, we will advise you and offer you the opportunity to rectify or otherwise. Your application will not be further considered until these preconditions are satisfied.

Note that an application received with incomplete documents, or inaccurate information within application fields, may still be considered effective, but will then require further information exchanges in the assessment process. All applicants should note that Sections 137.1 and 137.2 of the Criminal Code Act 1995 create offences for providing false or misleading information or documents to a Commonwealth entity (which includes the Department and all parts of the Department).

Once an application is considered effective, an associated application fee becomes payable. The formal assessment process begins once payment is received. This formal assessment process will consider the sufficiency of the responses to the information requirements.

Permit preconditions

It is a precondition of applying for a permit that you are able to demonstrate that the cultivation and production of the cannabis is for the purposes of either:

  • satisfying your contractual arrangements for supply to the holder of a medicinal cannabis manufacturer licence
  • research relating to medicinal cannabis or medicinal cannabis products.

It is also a precondition of a permit application that you have been granted a licence!

Licence requirements

There are an extensive set of requirements that must be met to be granted a licence. These include your suitability as the applicant to hold a licence and the suitability of your associates (business, familial, or otherwise) to be associated with a medicinal cannabis business, and the security design and location of any proposed cultivation site.

We require extensive information around these and other issues in support of a licence application. The purpose of such requirements are to allow us to make comprehensive assessments of the suitability of licence applicants and their associates, as well as adequacy of security and other processes around the cultivation of medicinal cannabis.

Fit and proper persons requirements

Please carefully read and consider the implications of Part 2 of the Narcotic Drugs Act (fit and proper person requirement) and the associated regulations (once available). Being able to satisfy the fit and proper person test for both yourself and your relevant business associates is a critical step in successfully obtaining a licence.

The medicinal cannabis licence fit and proper person test is quite strict and will seek a substantial amount of information about you and your associates. The purpose of this rigour is to ensure that you are an individual of good repute who can be entrusted with the cultivation of a high value narcotic drug with a street dollar value; and to similarly ensure that your associates are not in a position to unduly influence you into diverting cannabis onto the black market.

Note that the consideration of an applicant’s fitness to hold a licence is a holistic one that considers a range of criteria. Failure to satisfy a single criterion of the requirements may not necessarily be grounds for exclusion from holding a licence (with the exception below under criminal background).

Criminal background

You will be asked for details of your history of criminal convictions. This includes all convictions, spent or otherwise.

You will also be asked whether you have engaged in conduct that would constitute a serious offence in the last 10 years. These are defined in the Narcotics Drug Act and include drug offences and offences involving dishonesty or fraud with a maximum penalty of not less than 3 months; or any other offence with a maximum penalty of not less than 5 years.

Please note that this is a mandatory exclusion criterion. If you have engaged in conduct that would constitute a serious offence in the last 10 years, you are ineligible to hold a licence unless you can satisfy the decision maker that you are eligible for an exemption for special or extraordinary circumstances.

Exemptions for special or extraordinary circumstances

The Narcotic Drugs Act contains specific clauses designed to allow persons who may have previously been involved in the use or supply of cannabis for compassionate or medicinal purposes only to participate in the medicinal cannabis scheme. These exemptions allow an applicant to participate in the scheme even where that applicant may otherwise fail the test around conduct that would constitute a serious offence. The exemptions deal with activity constituting an offence related to cannabis cultivation or supply.

When filling in the application form, you will be prompted to indicate whether you wish to make a declaration that might attract this exemption. If you respond in the positive, we will separately approach you under Section 14J(1) of the Narcotic Drugs Act inviting you to make such disclosures. The purpose of this separate approach is to ensure that any such disclosures attract the privilege against self-incrimination arising from giving such information under Section 24B of the Narcotic Drugs Act.

Please note that this protection against self-incrimination only applies to action the Department of Health might take in relation to information or evidence provided in relation to an offence. This protection does not extend to evidence or information separately collected by law enforcement entities in the course of their activities.

Civil penalties or previous regulatory non-compliance

You are required to disclose any civil penalties regardless of type imposed on you within an Australian jurisdiction.

You are also required to disclose any regulatory non-compliance (such as breaches of licence) that has attracted a revocation or suspension of a licence or permit and that relates to the prohibition or regulation of drugs.

Your business associates, connections and family

You will be asked for details of your business associates, your immediate family and any connections that we should be informed of, or which if they come to light at a later point, might give rise to a potential revocation or suspension of your licence.

Specifically, your:

  • business associates are those who have the ability to influence the conduct of your enterprise, either due to having a financial interest or through other means
  • immediate family includes parents, siblings, partner and children (those above 18 only)
  • connections are those persons who have the ability to influence your business decisions.

Please be aware that your relevant business associates will also come under substantial scrutiny and must satisfy the fit and proper person test independently. It is the licence applicant’s responsibility to facilitate such processes and failure to do so may affect your ability to obtain and retain a licence.

Business experience and financial stability

You will also be asked to demonstrate your ability to conduct a stable business. The purpose of this is to prevent financial instability leading to the risk of diversion into the black market.

This requirement will look at your finances and funding arrangements, as well as your previous business experience.

Security requirements

It is important to remember that one of the key principles of the Narcotic Drugs Act is the prevention of diversion of cannabis for illicit use. Consequently, the security requirements for a licence applicant are robust and will require your careful attention.

Security is made up of a number of key components:

In addition, security must be considered as an end-to-end process and therefore must cover storage, handling, transport and engagement in third party controlled processes (such as testing of crops).

The successful licence applicant (the licence holder) is responsible for all elements of security for activities conducted under licence or under permit. In the event of a security breach, regardless of how it occurred, the licence holder is responsible for satisfying the Department of Health that security principles and practices in place are sufficient to allow the continuation of licence related activities.

It is important to remember that security is only as good as the weakest link in your systems, so it may be valuable for you to consider the effectiveness of your security solutions holistically.

How you satisfy the following elements will be a matter for your own judgement, but should meet the principles outlined in the ODC guidelines on security (once available).

Physical (site) security of crops and equipment

Physical site security deals with access to the premise/location, as well as controls around movement within the location and access to cannabis products.

Physical security will consider elements such as intruder resistant design, access controls between areas within the location, access to cannabis by staff or contractors, monitoring and recording of such access, alarms and guarding solutions and other elements of physical security designed to prevent diversion.

Note that information around where cannabis is being cultivated and the details of security arrangements around such sites may be attractive to criminals. Consequently it is important to ensure that your location is not readily identifiable as a cannabis cultivation site.

Similarly, it should not be obvious to a passer-by what activity is occurring at any given location, nor should signage indicate the nature of the business either directly or obliquely.

Information security including records management

Information security is important to ensure that your detailed security arrangements are not accessed by third parties.

Consequently, your information and records should be kept under close control. Note also that part of the ODC inspection function will include the perusal of records relating to activity conducted under licence, which must be complete and detailed.

Personnel security of staff and contractors

A weakness of any security system is that it must take into account the actions of staff, contractors, visitors and other people who will have access to the site. While physical security can handle elements such as visitor logs and access controls for temporary access instances, a more rigorous personnel security model is necessary to support broader security measures.

It will be a condition of your licence that you take reasonable steps to ensure that your employees and contractors are suitable persons. This is not the same requirement as your own fit and proper person test, but in some ways is designed along similar lines.

You must have in place mechanisms to ensure that your employees and contractors can meet the expectations outlined under Section 10F of the Narcotic Drugs Act and the associated regulations.

At a minimum this is likely to require review of the prospective employee’s criminal history and employment history. It is also likely to require that you to ask questions of prospective employees around drug use and dependencies.

Storage, handling, transport and engagement for third party processes

Security in the storage of cannabis, its transport and when necessary, in engaging third parties to assist in processing or destruction, are significant potential weak points in an overall security model.

For storage, it is likely that refined product (such as extracted dried flower product) will attract a greater diversion risk than other elements of a facility. Additional controls around access may therefore be appropriate.

For handling, the licence holder may see value in using specific controls around the internal handling of cannabis product to prevent employee diversion.

Transport and engagement with third party processes require your specific attention as the controls around site security are no longer effective. It is your responsibility to demonstrate how security might be met in such processes. This may include reliance on other sub-contracted entities to assist in transport, or on the security arrangements in place at other facilities where third party activity may occur.

Other considerations

In addition to the licence requirements discussed above, there are a range of other issues you may wish to take into consideration:

  • Undertakings you make in relation to your security arrangements will (if accepted) be transferred into conditions on your licence. In other words, if you describe a set of security parameters in your application, we will hold you to those.
  • There will be an expectation that you will transfer your security planning into operational procedures and demonstrate how this will take effect.
  • You will find that there are relevant state, territory and other Commonwealth laws that have effect within a medicinal cannabis enterprise. It is your responsibility to consider these and, if necessary, seek advice on your business model from the relevant agency. Some examples might include (but are not limited to):
    • workplace safety and workers compensation
    • local planning permits
    • licencing around heavy machinery
    • required qualifications or training for key staff.
  • In describing your capacity to undertake the enterprise, it may be relevant for you to submit your business plan and we will ask you to have formally undertaken an assessment of critical risks. For research licences in particular, your business plan should include your research outline and any associated approvals from the relevant sponsoring entity (if applicable).
  • It is likely that as you develop your site, pragmatic issues may arise that will require you to seek to vary the conditions of your licence. It is important that you communicate these clearly and swiftly with us to support dialogue for resolution. In doing so, note that any proposed modifications must at least meet (if not exceed) the risk mitigations outlined in your risk assessment.

How to apply for a licence

To apply for a licence, please fill out the application form (once available), attach the relevant documents and submit to ODC. You may apply for more than one type of licence at the same time. However, you need to have been granted a licence before you can apply for a permit.

Prior to applying for a licence there are preconditions that you must satisfy and a variety of documents that must be prepared to accompany your submission.

Please be alert to the importance of carefully satisfying the requirements outlined for the licence application process: there is no ‘licence queue’; submitting an application early will not result in faster consideration of your application.

We strongly recommend that you carefully read both the Narcotic Drugs Act 1967 and (once available) the Narcotic Drugs Regulations 2016 to support your application process.

Processing time

There is no statutory processing time for licence application assessment, but we seek to assess applications within 20 working days.

This does not include the time it takes for law enforcement or other state and territory licencing agencies or regulatory authorities to respond to requests for information; nor does it cover the time you might take in responding with further information or documents.

With that in mind, be aware that an application assessment is likely to take significantly more than 20 days.

ODC will provide you an update on progress on your request, but will only do so in relation to ODC activity. We will not comment on processes underway in other entities, nor will we provide you feedback on information provided from law enforcement or other state or territory authorities.

Fees and refunds

The fee for applying for a licence will be prescribed under the Narcotic Drugs Regulation 2016. This fee must be paid on our acceptance of an effective application.

Please be aware that under the Narcotic Drugs Act, the application fee is not refundable [Section 8E(4)].

Lodgement process

ODC prefers electronic lodgement through secure web-based application forms (once available).

Where it is not possible to submit electronically, then please print out the application form and submit physically.

submitting physically, there are likely to be quite a number of attached documents. If possible, ODC would prefer those to accompany your application form in a digital media format (on a CD or USB).

The address for manual lodgement is:

Office of Drug Control
Department of Health
Licence application section
Post Office Box 100
Woden, ACT

Should you require assistance on the lodgement processes, please direct enquiries to MCS@health.gov.au.

Application assessment and communication

Once we have received your application, we will check that you have met the preconditions. If you have, we will send you an invoice. If you application does not meet the preconditions, we will advise you of this and offer you the opportunity to rectify. Your application will not be further considered until these preconditions are satisfied.

Following receipt of the application fee, we will issue you a receipt and formally accept your application.

This will initiate the assessment of your application. We will assign each application a case officer who is responsible for the initial assessment process, including communicating with you and seeking additional information where necessary. Note that to support consistent decision making and avoid improper dealings, your case officer will not be the person making the eventual decision on the grant or otherwise of a licence.

Information and documents

The information requirements for a licence application are complex and broad. It is quite likely that in assessing your application, your case officer will need to seek further information or clarification of material provided. Your responses to such requests will facilitate the pace of application assessment.

ODC will also ask for additional information from state and territory law enforcement agencies (including, and beyond that contained within, normal criminal history checks) and from other state and territory licencing agencies or regulatory authorities.

These information checks are to support that the applicant and his or her relevant business associates meet the stringent fit and proper persons test under the Narcotic Drugs Act and other provisions.

In requesting such information, either from you, or from other parties, it is likely that such processes will require additional time to complete.

Limits on requests for further information

While we will work with applicants to facilitate appropriate licence applications, the onus remains on you as the applicant to assist us in this process. Where we request further information, you have 14 days to respond (unless the request specifies a different period of time).

If you request further time, we may accommodate that request, or otherwise, at our reasonable discretion.

How to apply for a permit

A medicinal cannabis cultivation or research permit (permit) specifies the amount, type and timing of crops grown under your medicinal cannabis cultivation or research licence (licence).

The purpose of using a permit system in tandem with licencing is to ensure the controlled supply of cannabis to manufacturers and researchers. Such controlled supply is critical in ensuring that Australia can continue to meet international obligations around narcotic drugs.

To apply for a permit, please fill out the application form (once available), enter your licence number, attach the relevant documents and submit to ODC.

Prior to applying for a permit there are preconditions that you must satisfy and a variety of documents that must be prepared to accompany your submission.

Processing time

There is no statutory processing time for permit application assessment, but we seek to assess applications within 20 working days.

Fees

The fee for applying for a permit will be prescribed under the Narcotic Drugs Regulation 2016.

Please be aware that under the Narcotic Drugs Act, the application fee is not refundable [Section 9N(3)].

Application assessment and communication

Following receipt of the permit application fee, we will issue you a receipt and formally accept your application.

This will initiate the assessment of your permit application. We will assign each application a case officer who has responsibility for the initial assessment process, including communicating with you and seeking additional information where necessary.

Information and documents

The information requirements for a permit are not as extensive as those for a licence, because having successfully obtained a licence, you have already provided the information needed and been assessed against the licence criteria.

You will be asked to outline the following characteristics of any proposed cultivation or production under your permit:

  • types and strains of cannabis - including the concentrations of particular cannabinoids
  • size of crop and number of plants
  • period of cultivation/production, and
  • details of the source material (seeds/cultivars/germplasm etc.)
  • details of next party in the supply chain.

Note that while the information requirements for permits are less than those for a licence, we may still need to ask additional questions.

Limits on requests for further information

While ODC will work with applicants to facilitate appropriate permit applications, the onus remains on you as the applicant to assist us in this process. Where we request further information, you have 14 days to respond (unless the request specifies a different period of time).

If you request further time, we may accommodate that request, or otherwise, at our reasonable discretion.