What does the new medicinal cannabis scheme mean for New Zealand?

16 April 2020

​​​​​​​​​The Misuse of Drugs (Medicinal Cannabis) Regulations 2019 (the Regulations) and Misuse of Drugs (Prohibition on Utensils) Notice 2020 (the Notice) came into force on 1 April 2020, opening up new avenues for patients to access medicinal cannabis, and new opportunities for business.

The purpose of the Regulations is to enable the research, manufacture, and supply of medicinal cannabis products and related ingredients, and the cultivation of cannabis for the products and ingredients, by providing for:

  1. a minimum quality standard for cannabis, ingredients and products, and
  2. a licensing regime that ensures that cannabis intended for other purposes is not cultivated or supplied under the guise of this purpose.

Under the Notice, vaporisers (being utensils designed to heat cannabis or cannabis preparations to a point lower than combustion) that have been approved as a medical device by an overseas regulator are expressly excluded from the prescribed list of prohibited cannabis utensils and may be imported, supplied and offered for sale in New ​​Zealand.

In New Zealand most forms of cannabis are a class B controlled drug. Prior to 1 April 2020 ​​ministerial approval was required to prescribe, supply, or administer medicinal cannabis. Before the medicinal cannabis scheme (the Scheme) was introduced, medical practitioners could prescribe cannabis products, however patients could only obtain these prescribed products from overseas, which was a considerable barrier to prescribing and obtaining these products.

In​ December 2018, the Misuse of Drugs (Medicinal Cannabis) Amendment Bill came into effect, which paved the way for the Regulations, while also making people requiring palliative care eligible for exemption from prosecution for possessing illicit cannabis, and ruling that cannabidiol (CBD) products containing up to 2% of other cannabinoids are no longer controlled drugs, but rather medicines regulated under the Medicines Act.

The Scheme allows for greater access to medicinal cannabis products, and new opportunities for cultivation and research. Medicinal cannabis products are defined in the Regulations as either dried cannabis, or derivatives of cannabis in pharmaceutical dosage form, which have a therapeutic purpose. The products must not contain other prescription medicines or other controlled drugs, and the Scheme does not include medicinal cannabis products manufactured from synthetic cannabinoids. Medicinal cannabis products cannot be in a form intended for smoking, a food, or be in sterile dosage form (for example eye drops). Medicinal cannabis products must also meet the relevant minimum quality standards set out in the Regulations, using testing methods set out in the European Pharmacopoeia, with such testing to be carried out by a GMP-certified manufacturer or laboratory.

All medicinal cannabis products (including products that meet the definition of a CBD product) are now prescription medicines. From 1 April 2020​, all medical practitioners can prescribe approved medicinal cannabis products, or unapproved products that have been assessed by the Ministry of Health as meeting the relevant quality ​standard without ministerial approval. At present only Sativex and CBD products can be prescribed without Ministerial approval, however the range of cannabis products available to patients is expected to increase over time.

The licensing regime allows people to apply for a single overarching medicinal cannabis licence, under which it will be specified what activities can be underta​​ken pursuant to the licence (with each activity subject to its own application and fees). Activities that may be permitted under medicinal cannabis licences include:

  • cultivation,
  • nursery,
  • research,
  • pos​session for manufacture, and
  • supply.

There are strict rules that dictate how each of these activities can be conducted. Depending on the scope of a business' activities, additional licences may also be required; for example, licences to import or export controlled drugs under the Misuse of Drugs Act 1975 and licences to manufacture medicine​​s or sell medicines by wholesale under the Medicines Act 1981.

The Ministry of Health has now published guidance material on its website as to how the Scheme will operate. While further guidance is likely to be published by the Ministry over the next few weeks, it has confirmed that it will continue to assess applications for licences under the scheme during the COVID-19 lockdown period, ​​however if the lockdown period continues for an extended duration then the Ministry's plans for carrying out location inspections as part of the assessment process will be reviewed.

Concurrent with the introduction of the Regulations, a new Medicinal Cannabis Agency has be​​​en established by the Ministry to administer the Scheme and ensure medicinal cannabis products meet the minimum quality standard set out in the Regulations.

The Regulations place considerable emphasis on security, and that there are extensive record keeping, stocktake and audit obligations. ​Applications for licenses must detail arrangements for p​​​hysical security, procedural security, and the security of staff members. Licence holders will be required to effectively guard against the risk of misuse for unlawful purposes, and it will be difficult for applicants to obtain licenses if they have any previous drug convictions.

The Scheme offers considerable opportunities for New Zealand businesses, and may stimulate the New Zealand economy as a whole, as well as offering patients the opportunity to more safely, ea​​sily, and cost-effectively access medicinal cannabis products. There will however be several key issues that businesses in this space will need to have at front of mind.

In particular, businesses will need to consider intellectual property implications as this industry grows in New Zealand. Businesses will need to have an overall plan and strategy in place for how intellectual property will be managed, from trade marks to patents, to plant variety rights applications. It will be important for bu​​siness to adequately protect their own rights, as well as ensuring that they do not infringe on the rights of any existing operators in the local or international medicinal cannabis industry, many of which will be large, well-resourced, and protective of their intellectual property rights.

In addition, it remains unclear how the Regulations will be managed and enforced in practice, including how licence applications will be determined, and the extent of any auditing that ​​​may occur. This uncertainty gives rise to risk. All businesses operating in this space will need to give considerable thought as to how they will demonstrate diligence and compliance with the terms of their licences and the spirit of the Scheme.

It is estimated that the global cannabis market will be valued at USD$66 billion by 2025, and there have been estimates that the national medicinal cannabis national market in New Zealand could ​​be worth NZD$1 billion. While there is still considerable uncertainty as to how the Scheme will operate in New Zealand, there are opportunities for businesses to grow and succeed in this space.

If you have any​​​ questions about the matters raised in this article please get in touch with the contacts listed, or your usual Bell Gully advise​r.​​​

​This article was orginally published by Legalwise Seminars on 10 March 2020​.

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.