Chapter 1: Why and how this Review was conducted

The Narcotic Drugs Act 1967 (Cth) (the ND Act) establishes a regulatory framework with a dual purpose:

• to prevent the abuse and diversion of controlled narcotics
• to ensure that controlled narcotics are available for medicinal and research purposes within Australia.

The ND Act implements the United Nations Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol (the Single Convention), to which Australia is a party. The operation of the Single Convention is overseen by the International Narcotics Control Board (INCB).

Prior to 2016, the ND Act contained a basic framework for regulating narcotic drugs, principally through licensing the manufacture of narcotic drugs. The main application of the ND Act prior to 2016 was to control narcotic drugs obtained from the opium poppy and the manufacture of licit narcotics, such as morphine.

Other Commonwealth laws at the time regulated the import and export and manufacture of cannabinoids and cannabis raw material. State and Territory laws permitted the cultivation of cannabis plants in Australia for industrial and horticultural purposes. Beyond those limited arrangements, cannabis was generally treated as an illegal narcotic in Commonwealth, State and Territory laws.

The ND Act was amended in February 2016 to establish a national regime permitting the cultivation and production of cannabis and cannabis resin in Australia. The new medicinal cannabis scheme was tailored to the specific objective of making available within Australia a sustainable supply of medicinal cannabis products for therapeutic purposes, and to facilitate scientific research into medicinal cannabis. The existing provisions of the ND Act relating to the manufacture of narcotic drugs were updated to align with the new licence provisions permitting cannabis cultivation and production. New provisions dealt with potential criminal risks of medicinal cannabis products being diverted to unlawful purposes and to criminal infiltration of the industry. A central aim of the 2016 amendments was to ensure that Australia would remain compliant with its international treaty obligations under the Single Convention.

The 2016 amendments required the Minister to initiate a review of the operation of the ND Act as soon as possible after the second anniversary of the commencement of the 2016 amendments.[2] The report of the review is to be tabled in both houses of Parliament before the third anniversary - in effect, by 29 October 2019. The requirement for the review recognises that the new regulatory framework for the cultivation, production and manufacture of medicinal cannabis opened an important but untested field of regulation in Australia.

The Hon Greg Hunt MP, Australian Minister for Health (the Minister), appointed Professor John McMillan AO to conduct an independent review of the operation of the ND Act, commencing in January 2019. Professor McMillan is an Emeritus Professor at the Australian National University and has relevant professional experience in administrative and constitutional law, as a legal practitioner and as a Commonwealth and State agency head. He has held appointments as Australian Information Commissioner, Commonwealth Ombudsman, New South Wales Ombudsman (Acting), Integrity Commissioner for the Australian Commission for Law Enforcement Integrity (Acting) and member of the Australian Copyright Tribunal.

The Minister announced the Terms of Reference for this Review:

Noting that the object of the ND Act, as set out in section 2A, is to give effect to certain of Australia's obligations under the Single Convention, the Review should inquire into and report on the operation of the ND Act, including considering whether the measures implemented are working efficiently and effectively or could be improved for the benefit of affected parties (being applicants and regulated entities as well as the department administering the ND Act).

In particular, the Review should consider and make recommendations on:

1. The efficiency and effectiveness of the structure of the licensing and permit regimes and other restrictions in the Act in controlling the supply of narcotic drugs and options to reduce the regulatory burden on affected parties, whilst still achieving the object of the Act.
2. The efficiency and effectiveness of the obligations in the Act relating to the provision of information and other administrative requirements and options for reducing the regulatory burden on affected parties, whilst still achieving the object of the Act.
3. The appropriateness of the compliance and enforcement regime in the Act, including in relation to the Secretary's functions and powers.

This Review is restricted to a review of the operation of the ND Act. It is not a review more broadly of cannabis regulation in Australia or patient access to medicinal cannabis. Matters that do not fall directly within the scope of the review are the operation of Commonwealth, State and Territory laws dealing with:

• patient access to medicinal cannabis - for example, under the Special Access Scheme (SAS), the Authorised Prescriber Scheme and the Personal Importation Scheme established under the Therapeutic Goods Act 1989 (Cth) (TG Act)
• subsidising the cost of medicinal cannabis products through the Pharmaceutical Benefits Scheme or compassionate schemes
• scheduling of cannabis products by the TGA and adoption of scheduling decisions by State and Territory health departments
• registration of cannabis products as prescription medicines on the Australian Register of Therapeutic Goods (ARTG)
• decriminalisation of cannabis possession for recreational uses.

Those who took an interest in this Review understood that it is limited in scope and would not directly examine the issues just listed. That said, some submissions criticised the limited scope of the review and questioned whether the central purpose of the 2016 ND Act amendments - patient access to medicinal cannabis - was obscured by a limited review.

This report can only deal directly with issues that fall within the terms of reference and that are covered by the ND Act. Broader questions of patient access and the affordability and accessibility of medicinal cannabis are controlled by other legislative and administrative arrangements that would require government initiation of a separate and different process of examination.

A review of the ND Act separately from other cannabis-related issues is an important subject of inquiry. The ND Act contains a new and comprehensive licensing and regulatory regime for medicinal cannabis cultivation and manufacture that has attracted considerable commercial, research and policy interest in Australia and abroad. A great deal has happened in the short period the new scheme has been operating. A diversity of views has been expressed, as captured in this report, about how the scheme should be revised or fine-tuned. Those matters warrant early consideration, which this Review may facilitate.

This inquiry has nevertheless benefitted from issues raised in submissions that did not fall squarely within the terms of reference. For the most part the views expressed have influenced the discussion in this report, especially in the summary in Chapter 5 of responses to the Key Themes. It is clear from that summary that some submissions felt the objective of making medicinal cannabis more readily available to Australian patients had not been realised. This was for a variety of reasons to do with product cost, complex access pathways, the reluctance of medical practitioners to prescribe medicinal cannabis, delays in approving Australian licences to produce and manufacture medicinal cannabis products and lack of integration of Commonwealth, State and Territory laws and regulatory activities. In one way or another those and similar points are picked up throughout this report.

Consultation both publicly and with key stakeholders was a major element of this Review. The consultation was underpinned by publication of a Discussion Paper[3] on 4 March 2019 that invited submissions by 2 April 2019 on 17 Key Themes and Specific Issues.

The Key Themes have been prominent in all consultations in this Review. They are:

• Does the ND Act establish a suitable framework for ensuring a sustainable supply of safe medicinal cannabis products for therapeutic purposes?
• Does the ND Act establish a suitable framework for ensuring the availability of cannabis products for research purposes?
• Does the ND Act establish a suitable framework for preventing the diversion of controlled narcotics to illegal uses?
• Has the Commonwealth (and in particular the ODC) implemented an efficient and effective regulatory scheme for medicinal cannabis? Is an appropriate and proportionate regulatory burden imposed on those applying for or holding licences and permits? As to medicinal cannabis licences, is there duplication in the processes and information required in applying for a licence and a permit?
• Has an appropriate compliance and enforcement regime been implemented, both in the ND Act and administratively? Are risks being appropriately managed? Is there excessive risk aversion?
• Does the ND Act interact suitably with other Commonwealth, State and Territory laws relating to the regulation of cannabis products and narcotic drugs? Are the intersection points clear? Is there evidence of duplication?

The Specific Issues listed in the Discussion Paper raised similar matters to do with the terms of the ND Act, the licensing and permit scheme, decision-making criteria and processes, regulatory controls, the exercise of compliance and enforcement powers, fees and charges, and the interaction of the ND Act with the TG Act.

Three public consultation forums were held (prior to the publication of the Discussion Paper) in Sydney, Brisbane and Melbourne between 5 - 8 February 2019. The forums were attended by over 120 people including interested members of the public, licence holders and applicants, consultants, researchers, Commonwealth and State officials and health professionals. Senior officials from the department attended and addressed the public forums.

The Review received 25 submissions. Parties could request non-publication of either their submission or their identity. The public website established for this Review publishes 16 submissions (two anonymously) and lists three other parties that made submissions.[4] The submissions principally came from those having a commercial, public health, public policy or patient access interest in the medicinal cannabis scheme.

Other consultation activities the Review undertook included:

• attending three meetings of the Australian Advisory Council on the Medicinal Use of Cannabis[5]
• attending meetings of three Working Groups convened by the department and comprising Commonwealth, State and Territory government officials - specifically, the Medicinal Cannabis Access Working Group, the Cultivation and Production Working Group and the Law Enforcement Working Group
• consulting with Queensland and Victorian Government public health officials about the medicinal cannabis legislation applying in those States, and with Western Australian police representatives
• consulting with two industry bodies - the Medicinal Cannabis Industry Association (MCIA) and the Medicinal Cannabis Council Inc.
• holding numerous consultations with Commonwealth officials from the department, including the ODC and the TGA
• consulting with the Australian Government Solicitor
• visiting the premises of a licensed cannabis cultivation facility
• consulting with a New Zealand Government official about proposed legislation in that country.

The medicinal cannabis scheme based in the ND Act is a new scheme that was operating for just over two years when this Review commenced. A central focus of the Review has been whether the scheme is operating efficiently and effectively.

A clear message in the three public consultation forums held as part of this Review was that many unanticipated issues had arisen in the administration of the medicinal cannabis scheme that were the subject of regular discussion between the department and interested parties. The number of licence applications made to the department was roughly three times higher than forecast by a formal external analysis that was undertaken prior to the scheme commencing. The Government has since acknowledged, through extra funding in the last year and other steps, that constant review is needed of potential administrative practice changes that can be made as required.[6]

Other issues requiring attention that have been highlighted in the first couple of years concern matters such as the interaction of the federal medicinal cannabis scheme with State and Territory laws, and intersection points between the scheme and industry practices regarding the cultivation, manufacture and export of cannabis-derived products.

Views have been expressed to this Review in submissions and public forums about administrative and legislative reforms that could be implemented to address supposed problems with the scheme. The constructive response has been for the department to consider some of those suggestions as they arise (particularly suggestions for administrative reform). There has been ongoing discussion between the department and many parties while this Review was underway. The additional funding the department received enabled it to commission an independent business review of administration within the ODC. The business review is due to be completed before this report will be published and is expected to consider the public submissions that have been made to this Review.

It is in the interest of all parties that necessary improvements be implemented as early as practicable and not await the outcome of this Review. This has implications for the approach adopted in this report. The report summarises all criticisms of the medicinal cannabis scheme that were expressed in submissions and consultations but does not always reach a finding or make a recommendation that could be overtaken in the interim. A substantial number of recommendations are nevertheless made for legislative and administrative reform. The summary of views expressed also provides a reference point for subsequent appraisal of whether effective progress has been made in improving the operation of the medicinal cannabis scheme.

This report does not quote from or refer specifically to individual submissions. Most of the points that are taken up in this report were expressed in multiple submissions, and it can be misleading to refer to one only of them. Often too a point was made in unpublished as well as published submissions.

• [2] ND Act, s 26A.
• [3] Review of the Narcotic Drugs Act 1967, Discussion Paper (Department of Health, 4 March 2019) (the Discussion Paper).
• [4] www.odc.gov.au/consultation-review-narcotic-drugs-act-1967.
• [5] The Council's role is explained in Chapter 2.
• [6] See the Discussion Paper, at p 23.