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Several terms used throughout the ND Act serve to delineate its scope and operating principles. Some terms are defined in the ND Act, while others are not. Some definitions adopt or refer to definitions in the Single Convention.
The Discussion Paper invited comment on whether key terms are appropriately defined in the ND Act, having regard to Australia's obligation to adhere to the requirements of the Single Convention. The submissions drew attention to ambiguity or inconvenience in some definitions. Some definitional questions will be answered if the licensing and permit regime is restructured as recommended in Chapter 6, but other issues may warrant amendment of a definition in the ND Act or the publication by the ODC of extended guidance on the meaning of key terms in the ND Act.
The terms 'cannabis', 'cannabis plant' and 'cannabis resin' are used extensively in the ND Act and provide the basis for the medicinal cannabis licensing and permit regime. A medicinal cannabis or cannabis research licence can authorise the cultivation of cannabis plants and the production of cannabis and cannabis resin for medicinal purposes;[106] and a manufacture licence can authorise the manufacture of a 'drug' as listed in the Single Convention or prescribed in the ND Regulation (see below).[107] A related term in the ND Act is 'medicinal cannabis product' that is used in outlining the authorised uses of manufactured drugs.[108]
The terms are also relevant to the offence and civil penalties in the ND Act and other Acts. It is an offence under the ND Act for a licence holder to obtain or cultivate a cannabis plant to produce cannabis or cannabis resin that is not authorised by their medicinal cannabis or cannabis research licence.[109] It is equally an offence to breach a licence condition.[110]
The ND Act adopts the definitions of 'cannabis' and 'cannabis resin' in the Single Convention:[111]
The ND Act contains a definition of 'cannabis plant' that expands the definition in the Single Convention:[112 cannabis plant means the following:
Different cannabis expressions are used in other instruments. As noted in Chapter 3, the Single Convention requires State parties to control the use of drugs listed in Schedule I of the Convention, for example, by requiring a licence to manufacture, import or export any such drug.[113] Schedule I includes an entry for 'cannabis and cannabis resin and extracts and tinctures of cannabis'. Examples given in Chapter 2 of other references in Commonwealth, State and Territory laws to derivatives of the cannabis plant included: Chapter 2 of the Criminal Code, which includes cannabis in the list of controlled drugs that cannot be manufactured, cultivated or possessed, unless authorised by a law such as the ND Act;[114] the Poisons Standard, which lists cannabis, cannabis resin and THC in Schedule 8 and CBD in Schedule 4; and the Customs Export Regulations and the Customs Import Regulations, which list the same products, respectively in Schedule 8 as drugs that require export approval, and in Schedule 4 as drugs that require import approval. There is discussion below of another reference to cannabis products in reg 4A of the ND Regulation.
Three aspects of the cannabis definitions in the ND Act have attracted both comments and controversy:
It is often observed that the Single Convention was formulated in 1961 and contains terminology that reflects the thinking of that time. Now, it is said, over fifty years later, there is a different understanding of the nature, composition and therapeutic uses and psychoactive effects of cannabis.
There is little that can be drawn from that observation so far as this Review is concerned. The observation is usually a forerunner to a different point about how the law should apply to cannabis. A common criticism is that cannabis as defined in Australian legislation is classified as an illegal narcotic drug that is tightly controlled by legislation such as the ND Act, the TG Act and the Criminal Code.
As already noted, the object of the ND Act is to give effect to Australia's obligations under the Single Convention.[115] That can only be done by adopting at least the substance of the definitions in the Single Convention. The ND Act does that, subject to two points below about CBD and the seeds of the cannabis plant.
There are proposals under consideration at the international level, as discussed in Chapter 3, to reschedule cannabis products in the Single Convention. Those proposals have not reached a definitive stage, which again means that little can be drawn from that development for the purposes of this Review. There is no certainty that the rescheduling will be adopted, and if it is, this will not occur until after this report is tabled in the Parliament, and possibly no earlier than 2020.
It is relevant nonetheless that the WHO has not recommended that 'cannabis' and 'cannabis resin' be removed from the schedules in the Single Convention, or that the definitions of those terms be changed. The central proposals are to delete references to cannabidiol and extracts and tinctures of cannabis, from Schedule I of the Convention; and to list THC only in Schedule I (and not Schedule IV). This rescheduling would differentiate between cannabis components that are psychoactive and those that are not (respectively, THC and CBD).
There are two important differences between the provisions of the ND Act and ND Regulation and the terms of the Single Convention.
First, the term 'drug' is defined in reg 4A of the ND Regulation as including cannabidiol (or CBD), as follows: 4A Prescription of substances
For the purposes of … the definition of drug in subsection 4(1) of the [ND] Act, the following substances are prescribed:
The manufacture licence provisions in the ND Act apply to the substances prescribed in reg 4A. In effect, those substances are treated as narcotics to be controlled in the manner required by international conventions to which Australia is a party. THC and dronabinol are appropriately prescribed as they are listed in the Convention on Psychotropic Substances, 1971, which has been given force in Australia by the Psychotropic Substances Act 1976 (Cth).
Cannabidiol, in a pure form, is not listed (or scheduled) as a narcotic drug in the international drug control conventions to which Australia is a party. Further, the Expert Committee on Drug Dependence of the WHO recommended after a review of cannabis scheduling in June 2018 that 'preparations considered to be pure CBD should not be scheduled within the International Drug Control Conventions'.[116]
In summary, CBD should not be separately prescribed as a drug to which the manufacture licence provisions of the ND Act apply. The inclusion of CBD in reg 4A imposes controls on its manufacture that are unnecessary and can impede the development of synthetic cannabinoid medicines. The ND Act would continue to apply (in accordance with the Single Convention) to cannabis extracts (such as resins) that include both THC and CBD.
Recommendation 2 (below) is that CBD is deleted from the definition of 'drug' in reg 4A of the ND Regulation. This would be consistent with other Australian practice. For example, as noted in Chapter 3, the TGA re-classified CBD in July 2015 from being a 'prohibited substance' in Schedule 9 of the Poisons Standard to being a 'prescription medicine' in Schedule 4 of the Standard.[117] Second, the ND Act requires a licence (among other things) for 'the cultivation of cannabis plants'.[118] As noted above, 'cannabis plant' is defined in the ND Act s 4(1) to mean:
The definition of 'cannabis plant' in the Single Convention refers only to paragraph (a) of that definition and not paragraph (b).[119]
A consequence is that a medicinal cannabis licence or cannabis research licence may extend to and impose controls on the seeds of the cannabis plant, in a manner not required by the Single Convention. This can introduce an unnecessary administrative burden or complexity in the administration of the ND Act.
Recommendation 2: The Narcotic Drugs Regulation 2016 be amended by deleting paragraph 4A(b) (specifically, 'cannabidiol (including all isomers and salts)').
Recommendation 3: The Narcotic Drugs Act 1967 be amended by deleting paragraph (b) from the definition of 'cannabis plant' in section 4(1) of the Narcotic Drugs Act 1967 (specifically, '(b) any part of a plant of the genus cannabis including, but not limited to, the seeds, stems or leaves of the plant').
A vexing issue in Australia has been the possible application of Commonwealth laws, including the ND Act, to the cultivation and commercial sale of low-THC hemp.
As noted in Chapter 2, low-THC hemp is an extract from the cannabis plant, but is not a psychotropic substance. It is increasingly cultivated in Australia, in accordance with State and Territory laws, for industrial and horticultural purposes and as a food ingredient.[120] Hemp is generally grown outdoors and is not subject to the strict security requirements that apply under the ND Act to cannabis products that are narcotics.
The Single Convention differentiates between narcotic drugs to which the Convention applies and non-narcotic substances of a related kind that may fall outside the Convention when certain conditions are met. This intention is expressed in two articles of the Convention that were referred to in Chapter 3:
The distinction drawn in those Articles of the Convention is indirectly affirmed in ss 7 and 7A(1) of the ND Act. Those sections purport to save the operation of State and Territory laws that are not inconsistent with the ND Act and do not authorise the cultivation or production of cannabis products 'for medicinal or related scientific purposes'.[121]
A complaint aired during this Review in submissions and consultations is that Commonwealth law including the ND Act can have an overlapping and inhibiting effect on the cultivation and commercial sale of low-THC hemp. Three examples were given.
The first was that the manufacture licence provisions of the ND Act can apply to pure cannabidiol as a result of it being included in the definition of 'drug' in the ND Regulation, reg 4A. Recommendation 2 (above) was that reg 4A be amended to remove the reference to cannabidiol.
The second example concerned the operation of the Customs (Prohibited Export) Regulations 1958, which can prevent the grant of a licence to export a product that has been produced or manufactured from low-THC hemp in accordance with State or Territory law but not under an ND Act licence. The customs laws are beyond the scope of this Review, but their interaction with the Single Convention raises a common issue. Regulations 10, 10A and 10C of the Customs (Prohibited Export) Regulations 1958 have the combined effect that a drug listed in Schedule 8 of the Regulations cannot be exported from Australia unless export permission would be consistent with the requirements of the Single Convention. This applies to cannabis, cannabis resin and extracts and tinctures of cannabis, to which the Single Convention applies. A low-THC hemp substance can be a cannabis extract that falls within that description, even though it may be an ingredient of a product that is for a non-therapeutic use such as a cosmetic product. The licensing controls envisaged by the Single Convention and implemented by the ND Act may have to be satisfied before an export licence can be granted.
A third example was that an entity licensed under State and Territory laws to cultivate low-THC hemp cannot harvest and sell the cannabis flower tops to an ND Act licence holder without also holding an ND Act licence. The flower tops must be destroyed - and a potential commercial benefit squandered.
It is not possible to take that example further in this Review as the issues it raises are not straightforward. The impediment to sale may originate both in Commonwealth and State and Territory laws - in Commonwealth law, because flower tops fall within the definition of 'cannabis' in both the Single Convention and the ND Act; and in State and Territory laws, because the authority to cultivate and process low-THC cannabis may relate only to non-therapeutic use and apply only to a plant that is substantially free of leaves and flowering heads.[122] As a practical matter it may also be the case that a particular variety of low-THC cannabis may have little medicinal or scientific value for an ND Act licence holder.
Australian law and the Single Convention are framed on the understanding that the rigorous requirements of the Convention do not apply to non-narcotic substances that are derived from the cannabis plant if used for industrial and horticultural purposes and not for medicinal or scientific purposes. That understanding is broadly reflected in Australian laws that differentiate between cultivation and manufacture of cannabis products to which the ND Act applies, and low-THC hemp production that is regulated by State and Territory laws.
It is important that those distinctions are not blurred. While this Review is concerned only with the ND Act, the terms and operation of the Act are centrally important to a faithful implementation of the Single Convention in Australia. This broad issue was under consideration within the department during the course of this Review, and it is important that consideration of the issue continue.
Recommendation 4: The Australian Government Department of Health continue to monitor and advise Government on options (if any) for altering the operation of the Narcotic Drugs Act 1967, consistently with the provisions of the Single Convention, to remove any unintended obstacles to the cultivation and commercial sale of low-THC hemp under State and Territory law.
Different procedures in the ND Act apply to the licensing of 'cultivation' and 'production' (jointly), 'research' and 'manufacture'.[123] The meaning of those terms is therefore an important element of the medicinal cannabis scheme. The term 'research' is discussed in the next section of this chapter; the other three terms are discussed In this chapter.
The terms 'cultivate' and 'production' are defined in the ND Act. In summary form, cultivation refers to the growing of a cannabis plant, while production refers to harvesting the cannabis flower or plant resin. The specific definitions in the Act are as follows:
Little turns, in a practical legal sense, on the difference between cultivation and production. A medicinal cannabis licence can authorise either or both, as well as associated activities such as obtaining a cannabis plant, storage, packaging, transport and disposal of cannabis product.[127] The definitions are relatively broad in nature; the definition of cultivation is not exhaustive; and the list of associated activities that can be authorised by a medicinal cannabis licence is not exhaustive.
The scope of 'manufacture' is important both individually and in contrast with other terms in the Act. Section 4(2) of the ND Act provides the following explanation of the meaning of 'manufacture':
For the purposes of this Act, the manufacturing of a drug consists of the carrying out of any process by which the drug may be obtained, and includes the refining of a drug and the transformation of one drug into another drug, but does not include the separation of opium, coca leaves, cannabis or cannabis resin from the plants from which it is or they are obtained.
That provision has to be read with reg 4A (quoted above) which lists THC, CBD and dronabinol as being 'drugs' for the purposes of the ND Act and for which a manufacture licence can be granted under the ND Act. The ND Act also provides a non-exclusive list of activities that can be authorised by a manufacture licence - including the supply, packaging, transport, storage, possession, control, disposal and destruction of a drug.[128] The ND Act provisions can also be read alongside the definition in the Single Convention:
"Manufacture" means all processes, other than production, by which drugs may be obtained and includes refining, as well as the transformation of drugs into other drugs.[129]
There was a view aired in the submissions to this Review that the definitions in the ND Act are unclear and in practice can lead to confusion in the licensing process. Issues that were noted included the meaning of 'transformation' of a drug, whether the ordinary meaning of 'manufacture' includes analytical and research activities, and whether extraction processes fit within production or manufacture.
A possible difficulty in delineating the scope of manufacture for the purposes of the ND Act is that the term is differently defined in the TG Act: manufacture, in relation to therapeutic goods that are not medical devices, means:
That definition is framed to deal with the activities regulated by the TG Act, which are different in some respects to those regulated by the ND Act. There are nevertheless potential points of confusion, for example, in that the TG Act definition includes the term 'produce' whereas 'production' is excluded from the Single Convention definition.
A related concern expressed in some submissions is that manufacture of medicinal cannabis products can require separate licences under both the ND Act and the TG Act if the product is for human use.
The application of the ND Act to the manufacture of cannabis derivatives gives rise to several issues.
One is that the definition of 'drug' for which a manufacture licence can be granted under the ND Act includes THC, CBD and dronabinol. Recommendation 2 (above) is that CBD should be deleted from this definition.
A second issue is that there is overlap (and potential duplication) between the ND Act manufacture licence provisions and other laws applying to the manufacture of drugs, specifically the TG Act and State and Territory laws. A manufacture licence holder under the ND Act may have similar compliance obligations under several laws.
There is scope for rationalising the licensing structure in the ND Act, as discussed in Chapter 6. One option is to narrow the scope of the ND Act manufacture provisions applying to cannabis and to place greater reliance on the operation of State and Territory laws in meeting Australia's obligations under the Single Convention.[131] Another option is to replace the present structure of three separate licences with a new structure under which a single licence could authorise all or some of cultivation, production, research and manufacture. Fewer interpretive issues would then arise regarding the distinction between manufacture and other processes.
A third issue, that squarely arises under the present requirements of the ND Act, is that an application for a manufacture licence must provide details of the activities the applicant proposes to take under the licence.[132] This can present a threshold difficulty if the applicant is uncertain as to the range of activities that fall within the scope of manufacture or that require an ND Act licence. It is not clear whether the quandaries about the meaning of 'manufacture' that were raised in some submissions are shared widely by other licence applicants or holders, but they nevertheless point to some gaps in understanding.
This issue should be addressed through elaboration of the current guidance on the meaning of manufacture published by the ODC in November 2016.[133] That guidance, published when the medicinal cannabis amendments to the ND Act were commencing, contains minimal practical examples, and does not deal with the comparison (and interaction) between the ND Act requirements, TG Act requirements and relevant State and Territory laws. The development and republication of this guidance should include consultation with current licence holders and industry associations to ensure the guidance addresses relevant issue of concern to them.
The Office of Drug Control publish more extensive guidance than is currently published on:
The term 'research' is not defined in either the ND Act or the Single Convention. The most that is said in the ND Act is that a cannabis research licence can authorise activities such as cultivation and production of cannabis plants to produce cannabis or cannabis resin for research relating to medicinal cannabis, and associated activities such as packaging, transport and storage of cannabis product.[134] Further, a Note to reg 11 of the ND Regulation (which specifies the form an application for a cannabis research licence must take) comments that a research licence can authorise activities related to cultivation or production, such as testing cannabis to determine the concentration of THC in the leaves and flowering heads of a plant.[135]
The main comment regarding the definition of research that was made in the submissions and consultations is that it can be artificial to attempt to draw a sharp distinction between research, on the one hand, and cultivation, production and manufacture on the other. It was said that activities commonly regarded as research can incidentally arise during production and manufacture, which do not necessarily conform to a pre-determined pattern.
The normal understanding of research is that it can involve elements of investigation, experimentation, evaluation, analysis and generation of new knowledge. Those processes can form part of a quality control and improvement strategy in production and manufacture. As the familiar cognate term 'research and development' suggests, research can be an integral part of production and manufacture in a commercial setting.
A related point raised in the submissions and consultation is that the ND Act distinction between research and other activities potentially precludes separate attention being given during cultivation and production to processes such as plant strain development and improvement of growing conditions. That point is taken up in Chapter 6 in the discussion of whether the ND Act should maintain the present distinction between medicinal cannabis licences, cannabis research licences and manufacture licences.
The absence of a definition of 'research' in the ND Act will be less an issue if a new licensing framework is adopted by which a single licence can authorise all of some of cultivation, production, manufacture and research. That approach would make it unnecessary to spell out what is meant by research. A licence would specify the authorised activities; and any use of the term 'research' in the licence could rely on the ordinary understanding of the term.
Different considerations arise if research licences are retained as a separate licence category in the ND Act. It is then necessary to decide what activities can be applied for and authorised under a research licence - bearing in mind too that lower charges and fees apply to research licences and permits. While it could be helpful for that purpose to amend the ND Act to include a definition of 'research', it does not appear that the absence of such a definition has been a matter of concern for research licence applicants and holders. No submission along those lines was made to this Review.
The counterpart concern raised in this Review - uncertainty as to the research-type activities that can be authorised by a medicinal cannabis licence or manufacture licence - could also be addressed in the first instance at an administrative level without the need for legislative amendment of the ND Act or ND Regulation.
The ND Act does not spell out explicitly the matters that can be authorised by a medicinal cannabis or manufacture licence. Instead, the ND Regulation requires an application for such a licence to provide 'details of the activities the applicant proposes to undertake under the licence, being activities mentioned in' s 8E(1) of the ND Act (as to a medicinal cannabis licence application) or s 11G(1) (as to a manufacture licence application).[136] As noted above, those sections provide a non-exhaustive list of the activities that may be authorised by a licence. The sections also include expansive language as to the activities that can be listed in an application - 'activities relating to such obtaining, cultivation or production' and 'activities relating to such manufacture'.[137] Consistently with this, a note to reg 5(2)(f) in the ND Regulation emphasises the non-exhaustive nature of the licence application requirements:
Note: Under subsection 8E(1) of the Act, an applicant is not restricted to applying for a licence authorising activities expressly mentioned in that subsection and may, in accordance with paragraph 8E(1)(c) of the Act, apply for a licence authorising activities related to cultivation or production. Such activities could include, for example, testing cannabis to determine the concentration of tetrahydrocannabidiol in the leaves and flowering heads of cannabis plants, or the transport of such plants to persons carrying out testing of the plants for the purposes of supply.
In summary, action can presently be taken by the ODC to clarify the scope of 'research' and the activities of a research or product development nature that can be authorised by a medicinal cannabis licence or a manufacture licence. This could appropriately result in more extensive guidance being published by the ODC, building on the information circulars concerning research earlier published by the Office.[138] The need for more extensive guidance may, however, be overtaken by the implementation of other recommendations in this report for legislative amendment of the ND Act and the ND Regulation relating to licence categories.
The Office of Drug Control consider publishing more extensive guidance than is currently published on:
These three terms play a part in the licensing requirements for a licence or permit under the ND Act. Briefly, an applicant must be a fit and proper person to hold a licence or permit; the applicant's business associates must be fit and proper persons to be associated with the applicant for the licence or permit; and the applicant must not have engaged in conduct that constitutes a serious criminal offence in the previous ten years. Each of those terms will now be separately considered.
The ND Act spells out matters that can be considered in deciding whether an applicant or a business associate is a fit and proper person.[139] These include the person's record in relation to criminal convictions, civil penalties, licence revocations or suspensions, connections and associations with other persons, previous business experience, capacity to comply with licence conditions, financial stability, and professional and personal integrity.
There has been no direct criticism of either a fit and proper person test being a licensing criterion or the factors that are to be considered in applying that test. There has been commentary on three associated matters that are taken up in other chapters, but which warrant summary mention at this stage:
The ND Act provides that two or more persons are 'business associates' for the purposes of the Act if each person either:
There has been no direct criticism either of the definition of business associate or of this connection being relevant to a licence applicant's eligibility for a licence. One associated matter is taken up in Chapter 7. Recommendation 19 is that the relationship between a business associate and a licence holder should be a discretionary rather than a mandatory ground for revocation of a licence. One reason for that recommendation is that there is an element of imprecision as to who is a 'business associate', for example, a person with a financial interest in the business who can exercise a 'significant interest' over the business, or a person who holds an 'executive position' in the business.
The term 'serious criminal offence' is defined in the ND Act as including offences involving dishonesty, fraud, drug cultivation or trafficking or that are punishable by imprisonment for five years or more.[142] A serious criminal offence may be disregarded in considering an application for a medicinal cannabis licence or a cannabis research licence if the conviction was for cannabis cultivation or supply and was fully disclosed in the licence application and 'that if the licence were granted, the applicant could comply with all the requirements of the licence' and the ND Act.[143]
No change to that definition is recommended.
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