Draft regulatory guidelines have been released today, shining a spotlight on the country's new medicinal cannabis licensing requirements. Local cannabis business will begin the process of applying for new commercial licenses from 1 April 2020.
In December 2017, the Government committed to establishing a Medicinal Cannabis Scheme to improve access to quality medicinal cannabis products through:
Establishing a licensing regime to enable the commercial cultivation of medicinal cannabis and the manufacture and supply of medicinal cannabis products in New Zealand; and
Setting quality standards for medicinal cannabis products to give prescribers, consumers and export markets confidence that the medicinal cannabis products available meet minimum standards of quality.
The Medicinal Cannabis Agency has now been established within the Ministry of Health to administer the Scheme. The Misuse of Drugs (Medicinal Cannabis) Regulations 2019 sets out the minimum quality standard that applies to medicinal cannabis products. It also sets out the licensing framework for activities relating to the cultivation of medicinal cannabis and the manufacture and supply of medicinal cannabis products.
A draft guidance document was released today, provided to assist local businesses in applying for a medicinal cannabis licence in New Zealand.
The Scheme introduces a single medicinal cannabis license approach. This means that a company's licence will specify activities that can be undertaken. Additional activities can be added as needed, by applying to the agency (MOH) and paying additional licence fees.
There are five activity types allowed under the single medicinal cannabis licence:
possession for manufacture activity
Businesses (or individuals) must apply for a medicinal cannabis licence and at least one of the above mentioned activities. Applicants can choose whichever activity or combination of activities for which they wish to be licensed. The licensing framework enables businesses to submit a single application to conduct multiple activities, with the intention of reducing the overall administrative burden of the process.
Duration of license
The medicinal cannabis licence is valid for one year from the date of issue and may be renewed on application. The activities authorised under the medicinal cannabis licence will be valid for the period of the licence. This means that an activity that is added to the licence at the time the licence is issued is also valid for one year.
Businesses can apply for activities to be added to their medicinal cannabis licence at any time during the 12-month licence period, but the activities will only be authorised for the duration of the licence period, unless renewed.
Making an application for a medicinal cannabis license
Eligibility for individuals to hold a licence
Firstly, to apply for a medicinal cannabis licence, the form requires you to supply the following information:
Applicant details (individual or an entity (body corporate or partnership))
Types of activities you wish to be covered by the application for a licence
So, you can apply for a medicinal cannabis licence as an individual or an entity, such as a body corporate or partnership.
To hold a licence, you must be 18 years or older and live in New Zealand.
Ministerial approval is required to issue a licence if you have had:
a conviction under the Misuse of Drugs Act 1975; or
a licence issued under the Misuse of Drugs Act 1975 or any regulations made under that Act that has been revoked.
In deciding whether to approve an application, the Director-General may also have regard to whether you have been convicted of a crime involving dishonesty in New Zealand or overseas, or an offence overseas that, if committed in New Zealand, would be an offence under the Misuse of Drugs Act 1975.
To clarify this further, a crime involving dishonesty is described in the Crimes Act 1961. It generally includes theft, fraud, receiving, conversion, corruption, bribery, trading in influence and corrupt use of information. Offences against the Misuse of Drugs Act 1976 include the manufacture, supply or possession of illicit substances, including the possession of utensils. Convictions covered under the Criminal Records (Clean Slate) Act 2004 may not need to be disclosed. Click here for more information about this.
You must be entitled to use the location/s specified in the application for the licence, for the types of licensed activity sought. If you don’t own the property, you must obtain written permission from the owner to use the property for the licensed activity sought and submit this with your application.
You must also be familiar with, and have the expertise and resources to comply with, the obligations imposed on the licence holder under these regulations, for the types of licensed activity sought.
Eligibility for businesses (entities) to hold a licence
A body corporate must be incorporated in New Zealand or the partners of the entity must reside in New Zealand.
Directors or partners of an entity are subject to the same requirements as individuals, mentioned above. They must be 18 years or older, must have permission to use the location/s where activities will be undertaken, and ministerial approval will be required to issue a licence if the entity or any director or partner of the entity has a conviction under MoDA or has had a previous license revoked.
One or more directors or partners of the entity must have the expertise, and the entity the resources to comply with the obligations imposed on the licence holder by the regulations for the types of licensed activity sought.
Eligibility to be a responsible person
Licenses require someone to be the nominated responsible person. This individual must be authorised by the entity concerned to control the activities for which the licence is sought, and to communicate with the Director General on behalf of the entity. Again, a responsible person must meet the background criteria.
Criminal conviction history will be requested
The regulations require the Medicinal Cannabis Agency to check with the Ministry of Justice as to whether an applicant, director, partner or nominated responsible person has a conviction for a relevant crime or offence.
To enable the Agency to do this, each applicant individual, director, partner or nominated responsible person must fill in the Ministry of Justice Request criminal convictions history form, which can be found here. Suitable identification must be submitted with the form.
Activities covered by the medicinal cannabis licence
At least one activity must be included in an application for a medicinal cannabis licence. Further activities can be added once the licence has been issued but will only be covered by the licence for the remainder of the duration of the licence.
The medicinal cannabis licence can cover:
one activity at one site only; or
one or more activities at the same site; or
one or more activities at different sites.
Consideration of your application involves an assessment of the activity and an assessment of the site, including verification security arrangements. A separate application is required for each activity and/or for each site.
Fees will be payable for a medicinal cannabis license. The following table sets out the costs which are exclusive of GST.
The initial check is to confirm that an application appears to be in order. Incomplete applications will be returned and you will be advised that a new application will be required. The fee for the initial check must be paid when the application is submitted. If the initial check verifies that the application appears to be in order then you will be invoiced and must pay the full application fee before your application can be considered.
During the assessment of your application, the Medicinal Cannabis Agency may need additional information and clarification. If further information is requested, a licence cannot be granted until that information has been provided and the Agency is satisfied that all concerns have been addressed.
The application fee is calculated on the cost of the medicinal cannabis licence plus the cost for each activity. For example, if someone applies for a new licence for a cultivation and supply activity, they must first pay $300 for the initial check of the application. If the initial check confirms that the application appears to be in order, the applicant must then pay $12,550, comprising:
$2,250 for consideration of the new licence; and
$10,300 for consideration of the 2 new types of licensed activity ($4,750 for the cultivation activity + $5,550 for the supply activity).
If the application is for supply of a new dosage product, the applicant must also pay a further $13,400 under the regulations. All amounts are plus GST.
Once you have submitted an application form and paid the required fee, the application cannot be altered. The application fee is non-refundable.
Cannabis activities that can be undertaken
Certain activities can be added to a medicinal cannabis licence. These are as follows:
1. Cultivation activity
This activity covers:
Cultivation of cannabis for therapeutic use, including growing, harvesting and drying cannabis plant material.
Procurement of cannabis: - from a holder of a medicinal cannabis licence that authorises its supply. - no more than 50 seeds and 20 plants from each holder of a licence issued under the Misuse of Drugs (Industrial Hemp) Regulations 2006 that authorises its supply. - no more than 50 seeds and 20 plants (from any source) of a variety of cannabis that is established in New Zealand and that the applicant has declared (under reg 35). - import under a MoDA licence to import controlled drugs.
Production of starting material, including by harvesting or drying cannabis.
Supply within New Zealand to a person who is authorised to receive it.
Possession of cannabis.
2. Nursery activity
This activity covers:
Supply of cannabis seeds or plants for cultivation of cannabis for therapeutic use.
Procurement of cannabis from a holder of a medicinal cannabis licence that authorises its supply.
Import under a MoDA licence to import controlled drugs.
Supply within New Zealand to a person who is authorised to receive it.
Possession of cannabis.
3. Research activity
This activity covers:
Research about cannabis for therapeutic use.
Procurement of cannabis for research purposes from a holder of a medicinal cannabis licence that authorises its supply.
Import under a MoDA licence to import controlled drugs for research purposes.
Produce or manufacture a cannabis-based ingredient or medicinal cannabis product for research purposes.
Supply or administer a medicinal cannabis product for research purposes.
Possession of any starting material, cannabis-based ingredient, or medicinal cannabis product for research purposes.
4. Possession for manufacture activity
A licence to manufacture medicines, issued under the Medicines Act 1981, is also required to manufacture products for patient use
This activity covers:
Procurement of any starting material, cannabis-based ingredient, or medicinal cannabis product from a holder of a medicinal cannabis licence that authorises its supply by import under a MoDA licence to import controlled drugs.
The following manufacturing activities but only to develop or test the related processes or products or to validate that testing extracting a cannabis-based ingredient manufacturing or packing a medicinal cannabis product testing any cannabis or medicinal cannabis product.
Possession of any starting material, cannabis-based ingredient, or medicinal cannabis product.
5. Supply activity
This activity covers:
Procurement of any starting material, cannabis-based ingredient, or medicinal cannabis product from a holder of a medicinal cannabis licence that authorises its supply; or by import under a MoDA licence to import controlled drugs.
Supply of starting material not intended for export, cannabis based ingredient, or medicinal cannabis product within New Zealand to a person authorised to receive it Supply by export of starting material intended for export, cannabis-based ingredient, or medicinal cannabis product that is specified on a licence to export controlled drugs issued under the Misuse of Drugs Regulations 1977.
Possession of any starting material, cannabis-based ingredient, or medicinal cannabis product
The following information is required for each type of licensed activity to be added to the medicinal cannabis licence.
Locations to be used for each activity
Cannabis activities are usually site specific. If someone intends to conduct licensed activities at more than one site, a separate application must be submitted for each site.
The following information is required for the site at which the activity will be carried out:
Legal description and area of land and premises
Geographical coordinates for the site
A plan or map, if required to identify the location.
Applicants will need to attach a geographical plan of the site showing those areas where the cannabis is proposed to be grown or stored. You would need to provide a full description of the geography of the cultivation area, including natural features, structures (for example, fence lines, buildings or sheds), roads or paths present.
It would also be helpful to include clearly marked maps and Land Information New Zealand (LINZ) photographs of the site showing:
The property with GPS coordinates marked
Roads, buildings, residences and any publicly accessible areas
Storage and processing areas
The paddocks, blocks or glasshouses intended for cannabis cultivation.
For buildings, you'll need to include details of the nature of the construction of the facilities, access points such as windows and doors, and restricted areas of access. Floor plans and photographs of the buildings and facilities (if relevant) should also be included.
Security arrangements at the location
You must ensure that your application includes details of the security arrangements in place to minimise the risk of diversion of cannabis to illicit use. The Medicinal Cannabis Agency will take into account a range of factors in determining whether your security arrangements are adequate for the activities you wish to undertake. This includes the nature and size of the crop, physical site security, operational procedures and personnel security arrangements.
Your application must include detailed arrangements for physical and procedural security, and the security of staff members at the location. The Agency’s assessment of the security arrangements involves a desktop assessment of your application and a site inspection to verify that the security arrangements are in place and operational.
At the time of your application, you should have completed construction of the facility and have installed the physical security features outlined in your application. The assessment of your application is not considered complete until an inspection of the site has verified that adequate security arrangements are in place before a license can be issued.
Once verified, your security arrangements will form part of your licence conditions which may be reviewed through the ongoing inspection and compliance framework.
The Agency will assess the adequacy of the security measures based on the risk of diversion of cannabis material to illicit use.
The Australian Office of Drug Control has published guidance for assisting licence applicants to design and meet required security standards, which can be used as guidance for information that should be covered in the security plan. You can view it here.
It may be useful to engage a security specialist to do a security assessment of the site and operations, as we did with Helius.
Low THC cultivars (less than 1% THC) have minimal intoxicating potential and would be of little use to the illicit market compared to high THC cultivars. If you intend to cultivate only approved hemp (low THC) cultivars then the expectations around intruder resistance and access controls would be significantly reduced compared to high THC cultivars. If you intend to cultivate high THC cultivars or cultivars with unknown or mixed THC levels, then the default is that a higher level of security would be required.
The following questions should be asked of an applicant's security arrangements:
What do the premises look like?
Where will cannabis material be handled, stored on the premises?
How is visitor access to the premises managed?
What prevents the public from accessing the premises?
What will stop intruders from accessing the premises?
What measures are in place to control and monitor staff access to cannabis material?
What measures are in place to detect unauthorised access to the site and theft of cannabis material?
What procedures are in-place to deal with theft or loss?
What procedures are in place to manage waste cannabis materials including waste plant materials and waste cannabis extracts?
How will cannabis material be tracked through its lifecycle from seed sowing through to finished product. Include a description of how waste material is tracked.
For outdoor cultivation only: What measures are in place to address the risk of dispersal of the plants from the cultivation area?
For outdoor cultivation of cultivars that are not approved industrial hemp cultivars: What measures are in place to address the risk of cross-pollination from your medicinal cannabis to any industrial hemp crops in the vicinity?
For outdoor cultivation of cultivars What measures are in place to protect the plants from access by any animals?
Tracking and record keeping
Licence holders with a cultivation activity must keep records of the amounts of cannabis that they:
Maintain for the purposes of propagation; or
Produce and store; or
Supply within NZ to another licence holder; or
Dispose of or destroy.
Records must also be kept of:
Failure by the licence holder to sow cannabis seeds intended for sowing
Failure of any cannabis seeds to germinate, or of any crop to reach maturity
The amount of material you possess at the time of stocktake.
You should provide details of the record keeping arrangements in place to track and trace the life cycle of each of the prohibited plants grown from seed or cutting, through to harvest, drying and processing, and if applicable, through extraction/manufacture, including accounting for destruction or disposal of any prohibited plant material.
This can be recorded electronically or held on paper or some other means. The method of recording should be secure, and you must ensure that they cannot be tampered with, or destroyed. you should consider means of backing up records. Records should be able to be produced for viewing on demand by the Ministry of Health.
Destroying cannabis waste material
You must outline procedures to ensure that all unwanted or excess material (particularly seed head, seed and flower) is disposed of in a way that renders the material unusable, unrecognisable and irretrievable. This includes documenting procedures for destruction and any arrangements in place with a third party to dispose of or destroy waste material. Third party arrangements should also include:
Secure transport to and from another site.
Security arrangements at the third-party site.
Transport of cannabis material
If transportation of cannabis material is involved, you should adhere to the requirements of regulation 23 of the Misuse of Drugs Regulations 1977 (MoDR) regarding written authority, endorsement of receipt, and delivery personally (or by an employee) or a carrier, or by registered or insured post. If these requirements are met, the carrier is not required to hold a Licence to Deal in Controlled Drugs.
Additional information specified for cultivation activity
You should provide sufficient information to cover the scale of your operations, beginning from obtaining the seed, through sowing/planting, and treatment after harvest. There should be enough information in the operating procedures to describe the nature of the operations involved in sufficient detail so that the steps in any particular procedure can be understood and followed.
Describe how the harvested crop material will be stored, used, disposed of, or retained in undertaking this activity. The extent of the processing of cannabis plant material allowed under a medicinal cannabis licence with cultivation activity is limited to physical processes such as harvesting, collection/discarding, and drying.
These operating procedures can be provided in the form of standard operating procedures attached to the application. We would expect companies undertaking cultivation to have formal operating procedures.
List the name and THC content of the cultivars you wish to grow.
Outline the purpose of cultivation activity, such as cultivation of cannabis for a nursery, research, possession for manufacture, or supply activity. Do you intend to undertake these activities yourself, or do you have an agreement to supply cannabis to the holder of a licence for a cultivation, nursery, possession for manufacture, or supply activity? Provide the agreement if possible.
This guide was prepared with information from the Ministry of Health and the Medicinal Cannabis Scheme. Helius Therapeutics holds a License to Cultivate a Prohibited Plant, a License to Deal in Controlled Substances, Licenses to Import and a License to Sell Medicines by Wholesale (pending).