5. Options for reform

Introduction

  1. 5.1 This chapter sets out a number of options that would allow medicinal cannabis to be supplied and used in Victoria. In reviewing them, the Commission has drawn on its consultations with the public, professional stakeholders and the advisory committees. It has considered the written submissions it received in response to the issues paper and taken into account the experience of other jurisdictions.
  2. 5.2 All the options build on the assumption that the following regulatory mechanisms would be in place:
  • an administrative unit within the Department of Health and Human Services, referred to in this report as the Office of Medicinal Cannabis, to administer the scheme either alone or in conjunction with other government agencies, as described in Chapter 1.1
  • a system by which medical practitioners authorise eligible patients to be treated with medicinal cannabis, as recommended in Chapter 3.2
  1. 5.3 The Victorian Government’s decisions as to what is desirable will be determined by many factors beyond the terms of reference for this review. For the purposes of assessing the options, the Commission has been mindful of the recommended regulatory objectives and inherent risks set out in Chapter 1, which it has inferred from the terms of reference.3
  2. 5.4 The options for law reform discussed in this chapter are:
  • Importation—Victoria could import cannabis for the purposes of a medicinal cannabis scheme by special arrangement under Commonwealth law.
  • Exemption from prosecution—Eligible patients and their carers could be authorised to possess small quantities of cannabis for the patient’s use.
  • ‘Grow your own’—Eligible patients and their carers could be authorised to cultivate cannabis plants for the patient’s use.
  • Regulated not-for-profit production and distribution—Not-for-profit cooperatives could be licensed to cultivate, manufacture and distribute medicinal cannabis products among their members.
  • Regulated distribution through dispensaries—Medicinal cannabis products could be distributed through licensed, single purpose dispensaries.
  • A government-enforced monopoly—Victoria could authorise a publicly funded entity to cultivate and manufacture cannabis for distribution to patients through pharmacies.
  • Licensed producers—Victoria could issue multiple licences to cultivators and manufacturers to produce medicinal cannabis products for distribution to patients through pharmacies.
  1. 5.5 All of the options under which medicinal cannabis could be produced and distributed in Victoria, other than under a grow your own scheme, would be contingent on the co-operation of the Commonwealth Government in either or both of the following forms:
  • removing the regulation of medicinal cannabis products that are produced and distributed under the Victorian medicinal cannabis scheme from the Therapeutic Goods Act 1989 (Cth)
  • issuing a licence to manufacture cannabis, under the Narcotics Drugs Act 1967 (Cth).
  1. 5.6 Most of these options would also have an impact upon the frameworks for the control of narcotic drugs and the quality of medicines described in Chapter 4. The Commission considers that Victoria should engage with these frameworks to the greatest possible extent by avoiding measures that depart substantially from Australia’s international obligations and preferring measures that:
  • allow the quantity of medicinal cannabis produced in Victoria to be reported accurately to the Commonwealth, so that it may in turn provide accurate annual estimates to the International Narcotics Control Board4
  • minimise the risk that cannabis will be diverted into the illicit market,5 consistently with the regulatory objective to preserve the prohibition on illicit use of cannabis
  • develop medicinal cannabis products that medical practitioners can authorise ‘rationally’,6 consistently with the regulatory objectives to integrate medicinal cannabis into the patient’s medical treatment, to inform patients of any clinical uncertainty and to ensure the quality and composition of medicinal cannabis products.

Importation under amended Commonwealth rules

The option

  1. 5.7 Cannabis can be imported under current Commonwealth law and policy only if approved on a case-by-case basis by the Secretary of the Commonwealth Department of Health, exercising powers under the Therapeutic Goods Act 1989 (Cth) and the Customs Act 1901 (Cth). The Law Institute of Victoria proposed that the Commonwealth provide special access for state governments to import products for the purpose of their medicinal cannabis schemes:

As there are currently several states agitating for public access to medicinal cannabis, the states could negotiate with the Commonwealth Government over several options to assist, including facilitating importation. The states could make an application to the Secretary of the Commonwealth Department of Health to exercise its discretion to provide for a special access scheme and provide excluded goods declaration.7

  1. 5.8 This option would not require legislative reform though, if ongoing, it could be desirable to have the security of a statutory avenue of access.
  2. 5.9 Bringing in or importing cannabis is specifically prohibited by criminal law and customs regulations and is also unlawful because almost all forms of cannabis are unapproved therapeutic goods for the purposes of the Commonwealth Therapeutic Goods Act. As discussed in Chapter 4, the Secretary of the Commonwealth Department of Health has a discretion to make exceptions, which in practice is exercised through schemes administered by the Therapeutic Goods Administration (TGA).
  3. 5.10 If the Commonwealth agreed to facilitate the approval of requests by the Victorian Government to import medicinal cannabis that has been produced under regulated conditions into Victoria, the Victorian Government would then need to enter into contracts with cultivators and manufacturers who would be willing and able to export it to Australia.

Comments

Advantages

  1. 5.11 The view that Victoria should import medicinal cannabis products from overseas, and that a way to facilitate this should be found, was put to the Commission on a number of occasions.8 The primary reasons identified in support were:
  • The regulatory burden of importing medicinal cannabis products would be much lower than that of regulating their cultivation and manufacture.
  • It would also enable suitable products of a high quality to be made available in less time than it would take to establish a lawful and therapeutically appropriate local supply.9
Reduced regulatory burden
  1. 5.12 As noted by the advisory committees, importing medicinal cannabis could reduce the cost of administering a medicinal cannabis scheme while providing access to products that have been produced under regulated conditions.10 If it were possible to import sufficient quantities for all eligible patients, then the medicinal cannabis scheme could focus primarily on authorising and monitoring access. While it could be necessary to subsidise the cost of the imported product to allow it to be affordable to patients, the expenditure would be far less than that of establishing and regulating the cultivation and manufacture of medicinal cannabis products.
  2. 5.13 The cost advantages diminish if only a small amount of the demand for products could be met in this way, as local production would still need to be established and regulated as well.
  3. 5.14 Importation of the state’s supply of medicinal cannabis would also accord with Australia’s international obligations. Because it does not involve local cultivation or manufacture, importation would not engage Articles 23 and 28 of the Single Convention on Narcotic Drugs 1961. In addition, the Commonwealth would be able to meet its obligation to monitor how much cannabis had been imported each year and accurately estimate for the International Narcotics Control Board how much cannabis would be required for a Victorian scheme.
Quicker access to licit products
  1. 5.15 Even if the medicinal cannabis scheme were designed to provide for local cultivation and manufacture, importing high-quality products that have been produced under regulated conditions could be an interim measure while the industry is being established in Victoria.
  2. 5.16 Belinda Doonar said in her submission that it is unnecessary to import cannabis products because ‘we have people on the ground with extensive knowledge ready to move ahead’.11 However, under each of the options where medicinal cannabis products would be produced (other than grow your own), the government would have a role in selecting or licensing suppliers, creating quality controls and meeting international obligations to control and report on the amount of cannabis being cultivated. A time delay between the law being changed and licit products being made available is inevitable.

Disadvantages

Scarcity of suppliers
  1. 5.17 The fundamental difficulty with relying on importation is the need to identify an exporter who is willing and able to supply Victoria with medicinal cannabis products. In order for the scheme to be viable, an exporter would have to be able to supply enough to meet patient demand, at a price that was sufficiently affordable to justify not having a domestic industry.
  2. 5.18 Securing an affordable and reliable supply of medicinal cannabis is ultimately a question for government, and the Commission does not exclude the possibility of securing an agreement to import. However, at the time of writing, only one country exports medicinal cannabis.12
  3. 5.19 The Netherlands, through its Office of Medicinal Cannabis, permits the export of the medicinal cannabis that is cultivated under government regulation by the sole supplier, Bedrocan BV.13 Cannabis is currently exported from the Netherlands to Italy, Germany, Finland, Canada, and the Czech Republic.14 However, the Commission understands that Bedrocan is unable to supply large quantities of cannabis. The Netherlands gives priority to meeting its domestic needs rather than facilitating a cannabis export industry, and it does not allow substantial quantities to be exported.15
  4. 5.20 Uruguay has indicated that it would like to export cannabis, and Israel, Canada and Chile have also reportedly expressed interest, but it appears that no arrangements are yet in place.16 In Canada, there is a process under the Marihuana for Medical Purposes Regulations for the export of medicinal cannabis. Only licensed producers may obtain an export permit.17 However, it appears that, while technically possible, exports are not generally allowed by Health Canada.18 Some Canadian companies have expressed a wish to become licensed exporters, but it appears this is unlikely in the near future.19 Health Canada states that it:

does not support facilitating a regime premised on servicing global demand given the associated public health, safety and security risks. For the above reasons, importation and exportation would be permitted under very limited circumstances, such as, … exporting a unique marijuana strain for scientific investigation in a foreign laboratory.20

  1. 5.21 Although the medicinal cannabis industry in the United States thrives under the various state schemes, the products it produces may not be exported without the approval of the federal government’s Attorney-General.21 As cannabis is considered illegal at the federal level, such approval seems unlikely to be granted.
 
Limited choice of products
  1. 5.22 Another drawback of relying on imports is that the cannabis exported from the Netherlands is only in dried plant form because this is the only form available domestically. The Dutch government is currently preparing to amend the law so that cannabis oil can also be supplied, with scientists and pharmacists working on a method for its safe and consistent production.22 Similarly, if Canadian companies were to be permitted to export cannabis, it would be only in dried form or as an oil.23
  2. 5.23 Israel may allow exports in the future. But while significant quantities of cannabis are grown and refined in Israel, in a range of strains and formulations,24 quality control is said to be poor.25
  3. 5.24 The United States produces a wide range of products and strains—in most jurisdictions producers are free to cultivate whatever strains and manufacture whatever products they wish, including a large number of refined products. However, as mentioned above, the United States does not permit export without a permit from the Attorney-General, which is unlikely to be granted.
  4. 5.25 If Victoria were to import cannabis in dried form, it could then be processed into other forms. As this would be manufacturing, it would need to be conducted under regulatory architecture that is compliant with Article 29 of the Single Convention on Narcotic Drugs. In any event, the cost advantage of importing rather than cultivating and processing locally would be significantly diminished, if not lost.

Conclusion

  1. 5.26 There may be benefit in Victoria reviewing with the Commonwealth the potential for streamlining the approval processes for the purpose of facilitating imports under the Victorian scheme. For example, it may be possible to facilitate the importation of Sativex for individual patients who are eligible to participate in the Victorian scheme or whose application is supported by the Office of Medicinal Cannabis. Perhaps this could be accompanied by a Victorian Government program to subsidise the cost of the product to patients and their families. It could also be useful if the importation processes were streamlined to facilitate the importation of cannabis seeds so that a suitable variety and quality of strains could be developed in Victoria. These measures could operate in tandem with any of the other options.
  2. 5.27 As a means of meeting all or most of the demand for medicinal cannabis under the scheme, however, importation is not feasible in the current international environment. The available products would need to be processed in Victoria under regulations that accord with Articles 23 and 29 of the Single Convention on Narcotic Drugs, and the quantity that could be sourced would not obviate the need to produce a local supply under such regulations. 

Exemption from prosecution for possession and use

The option

  1. 5.28 The issues paper sought comments on whether the law should be amended to protect patients and their carers from prosecution for possessing or using cannabis for medicinal purposes. An eligible patient who has been authorised to be treated with medicinal cannabis could be made exempt from criminal prosecution for use or possession of the amount they need. This option could be achieved by amending the Drugs, Poisons and Controlled Substances Act 1981 (Vic) to create an exception to the offences of possessing or using a drug of dependence26 for small amounts of dried cannabis or cannabis extract where a person is an authorised medicinal cannabis user.
  2. 5.29 The exception would extend to the patient’s carers, to allow them to possess the cannabis that the patient may lawfully use, and would require an additional exception to the offence of introducing a drug of dependence into the body of another person.27
  3. 5.30 This option was canvassed in the issues paper because a similar reform was recommended by General Purpose Standing Committee No 4 of the New South Wales Legislative Council in 2013.28 The committee recommended a complete defence to the offences of possession and use for terminally ill patients and those who had moved from HIV to AIDS, for possession of up to 15 grams of dried cannabis or equivalent amounts of cannabis products. The defence was to have applied to a patient or carer where the patient had been certified by their treating specialist medical practitioner as having been diagnosed with a specified condition and had been listed on a register of ‘authorised cannabis patients and carers’.29

Comments

Advantages

  1. 5.31 The advantage of this option is that it would protect patients and their carers from the risk of being prosecuted, and the associated uncertainty and pressure of sourcing cannabis for medicinal purposes illegally. The Commission was told on a number of occasions about the stress of being exposed to prosecution for using cannabis for medicinal purposes. The idea drew some support in submissions, but mostly only as an initial step in introducing broader reforms.30 Others saw no need for it, because they want to see broader reforms introduced immediately.31

Disadvantages

  1. 5.32 Some submissions opposed this option because they did not agree that medicinal cannabis products that are not available on prescription should be used for medical treatment.32 One submission expressed concern about the wider implications for legislative reform:

There should be under NO circumstances any forms of raw product or cannabis derivatives in the possession of any ‘patient’ that have not been prescribed and supervised under strict medical and TGA guidelines. These exact caveats are exactly what the pro-pot lobby want [to] ensure lower accountability/scrutiny and a furtherance of ‘self-medication’ practices and ultimately recreational use.33

  1. 5.33 The Royal Australasian College of Physicians noted that an option such as this would allow carers to administer cannabis without fear of prosecution but would not ensure the safety or reliability of the composition of the product consumed.34 The Australian Lawful Use of Cannabis Alliance similarly observed that it ‘would not provide a safe and consistent system of access to medicinal cannabis treatments’.35 The Law Institute of Victoria pointed out that it would not address the broader issues of cultivation, manufacture and supply.36

Conclusion

  1. 5.34 The Commission is of the view that, when assessed against the regulatory objectives, the disadvantages of this option outweigh the advantages. It fails to provide access to a safe and reliable supply of medicinal cannabis products. Thus, it would not integrate medicinal cannabis effectively into a health regime: doctors would authorise patient access to cannabis, but would not have any mechanism for controlling or supervising use. The products available to the patient would not necessarily be therapeutically appropriate, as they could have unknown or inappropriate THC/CBD levels and may contain unsafe contaminants.
  2. 5.35 Because the cultivation and supply of cannabis would remain unlawful, any person selling cannabis to an authorised patient or their carer would still be committing a serious criminal offence. The legislative change would only assist users willing to purchase cannabis that has been grown and supplied illegally. This in turn would strengthen the illicit market.

‘Grow your own’

The option

  1. 5.36 A large number of people who made submissions and attended consultations argued for a ‘grow your own’ scheme.37 Eligible patients could be licensed by the government to cultivate a designated number of cannabis plants at home for medicinal purposes. They could be able to nominate carers to assist them. The patients and carers would be responsible for manufacturing the raw cannabis into a form appropriate for the patient to use.
  2. 5.37 This option was often put forward as a scheme that would co-exist with cultivation by community-based, government or commercial enterprises.38 Marie Gladman of the HEMP Party summed up this view in her submission:

People can grow, people can make medicine, people can do whatever they like with their own cannabis, but the minute they sell the cannabis or cannabis products, then they register a business and pay tax like everyone else.39

  1. 5.38 Schemes of this type are most prevalent in the United States, notably in the jurisdictions that pioneered the legalisation of cannabis for medicinal purposes. Where patients are permitted to cultivate their own supply in the United States, the law will generally specify the maximum number of mature plants they are permitted to possess (ranging between two and six plants, with extra allowances for seedlings).40 A number of states, but not all, require that the patient be registered with the state or hold an ID card in order to be permitted to grow cannabis.41 In Arizona, patients are only permitted to grow their own supply if they are sufficiently geographically distant (at least 25 miles) from a licensed dispensary.42
  2. 5.39 In Australia, a grow your own scheme was recommended in 2000 by a New South Wales Working Party on the Use of Cannabis for Medical Purposes. More recently, it was proposed by a Bill that was introduced into the New South Wales Parliament in 2014 and lapsed during 2015, and a draft Bill that is currently under consideration by a committee of the Legislative Assembly of the Australian Capital Territory.
  3. 5.40 The Victorian Drugs, Poisons and Controlled Substances Act prohibits cultivation unless it is authorised by or licensed under the Act or regulations. The Act could be amended to provide that a licensed patient who operates within the conditions of the licence would not be engaging in the unauthorised trafficking, cultivation, possession or use of a drug of dependence within the meaning of the Act. The legislation would also need to permit the patient to possess the necessary substances, materials, and equipment at their residential address for this purpose. Cultivators would have to be exempted from the operation of the Therapeutic Goods Act 1989 (Cth).43
  4. 5.41 A licensed patient would be permitted to cultivate the designated number of cannabis plants at home without attracting the prohibitions in the Act. The legislation could also be amended so that a licensed patient who manufactures products at home from the cannabis they have grown, for personal use, would not be committing ‘trafficking’ within the meaning of the Act. The patient would be permitted to possess the necessary substances, materials or equipment at their residential address only for this purpose.
  5. 5.42 Further regulatory controls could include:
  • requiring the patient to grow the cannabis indoors
  • requiring the patient to give the Office of Medicinal Cannabis a ‘cultivation plan’ containing information about the cultivation site
  • allowing authorised officers to conduct periodic inspections of any cultivation site and report any significant failure to comply with the cultivation plan to the Office of Medicinal Cannabis
  • treating the cultivation of more than the permitted amount of cannabis as the unauthorised cultivation of a narcotic plant within the meaning of sections 72–72B of the Drugs, Poisons and Controlled Substances Act. Outdoor cultivation would also be unauthorised cultivation and captured under sections 72–72B.

Comments

Advantages

  1. 5.43 This option could provide eligible patients with a readily available and inexpensive supply of cannabis. They would have control over their dosage, frequency of use, and form of administration. They would no longer need to rely on the illicit market for the purchase of prepared cannabis, provided they were able and inclined to grow their own, and they would be aware of the conditions in which the cannabis is grown and processed.
 
Patient autonomy
  1. 5.44 Ultimately, a grow your own scheme places responsibility on the patient for their own treatment. The core feature of such a scheme is that it gives patients the freedom to experiment with cannabis and determine the dosage and form that works for them. Many people who made submissions and attended consultations argued for a grow your own scheme on the basis that it would give them substantial personal freedom in and responsibility for their medical treatment.44 Medical practitioners were said to have insufficient knowledge about the endocannabinoid system and for this reason should not be responsible for controlling access to cannabis or determining whether it was appropriate for a patient.45
Ease of access
  1. 5.45 A grow your own scheme was favoured also because it was seen as accessible, in that medicinal cannabis was expected to be affordable and easy to obtain.46 For some it was a matter of personal choice:

I just want to be able to access it myself, growing my own Cannabis medicine in my garden in a similar way that I grow my vegetables to sustain my lifestyle.47

  1. 5.46 For others, it was a matter of principle:

I am not opposed to legal growing of a small supply of the plant if a manufactured supply becomes too expensive to those who need it but a medicine is more useful to us and we could pay.48

  1. 5.47 Another sentiment that was expressed a number of times, and which is related to the issue of costs, was that a Victorian medicinal cannabis scheme should not be directed by the interests of ‘big pharma’. Cheryl Wright said that cultivation ‘should not be left to pharmaceutical companies who are interested only in profits, not people’.49 Another submission put the view that cultivation should not be regulated at all, so ‘big pharmaceutical business has some competition, FINALLY!’50

Disadvantages

Product quality
  1. 5.48 Under a grow your own scheme, the patient may not obtain cannabis that is of a sufficient quality or consistent composition. Significant variability is caused by different cannabis strains and growing conditions, which only sophisticated growing operations are able fully to control. In addition, patients and their authorised growers may have limited expertise in producing refined products, which can be difficult and dangerous to produce.51
  2. 5.49 Canada and Israel initially established grow your own schemes but then moved away from them for various reasons, including quality control concerns. In Canada, there were concerns about the quality of the product that the patients were using and the inability of doctors to adequately monitor its use.52 It was abandoned in Israel partly because there was ‘no quality control on breeds, yield quantity and cannabis quality’.53
  3. 5.50 One of the regulatory objectives recommended by the Commission is to ensure that patients have access to medicinal cannabis products of reliable quality and composition. This is a priority for many of the people who spoke to the Commission,54 some of whom have encountered significant variability in the products they have obtained from well-meaning individuals.55 There is no guarantee that personally cultivated cannabis will achieve standards appropriate for medical treatment.
  4. 5.51 This issue is not whether patients who want to grow cannabis have the skills to do so; it is whether the cannabis produced is of suitable and consistent composition and quality. This was noted in the submission from the Drug Policy Modelling Program:

While it is possible for non-regulated growers to produce stable cannabis free from adulterants, the reliance on unregulated suppliers for the manufacturer of medicinal products poses substantial risks for patients who cannot be guaranteed product stability and purity.56

  1. 5.52 The medical profession is generally opposed to a grow your own scheme primarily because of concerns about quality and dosage control.57
Engagement with professional medical care
  1. 5.53 If cannabis is to be treated as a medicine on a rational basis, it is necessary to ensure that ‘the smallest dose is prescribed for the shortest period required to gain the desired therapeutic effect, under medical supervision’.58 Under a grow your own scheme, little can be done by a medical practitioner to supervise how much cannabis the patient uses and in what form. It has been observed in the United States that ‘allowing [personal] cultivation for any qualifying patient sacrifices too much control over a substance currently classified as having a high risk of abuse’.59
  2. 5.54 Supporters of a grow your own scheme have pointed out that cannabis has a relatively low risk profile and has the potential to help many people.60 The Commission was informed that:

To suggest that somehow strains becoming more potent is a problem for home growers is not based on any independent scientific or historical data.61

  1. 5.55 Valid points are made about the relative health risks of cannabis compared to some legal medications. Nevertheless, if participating in a grow your own scheme causes or encourages patients to disengage from or not engage with the care of a medical practitioner, the patient’s health could be put at risk. The patient’s health could deteriorate not because of the cannabis treatment but because of the absence of other treatment as well.
  2. 5.56 One of the regulatory objectives recommended by the Commission is to integrate the use of medicinal cannabis products into the patient’s medical treatment. As stated in Chapters 2 and 3, the Commission considers that an option for law reform must enable doctors to respond to the development of side effects in their patients and manage the titration of dosages and the forms of administration used. Where there is a grow your own scheme, doctors have little knowledge of or control over a patient’s dose of cannabis and lack the capacity to assess its efficacy.62 Their role in a grow your own scheme would be limited to certifying that a patient’s condition and associated symptoms make them eligible to use medicinal cannabis, and discussing with the patient the risks associated with excessive use.
  3. 5.57 Some advocates of a grow your own scheme supported the idea that doctors should only be peripherally involved,63 the suggestion in one submission being that a medical practitioner should only have the ‘ability to sign a form saying this person can use medicinal cannabis. That’s it.’64 Indeed, there is evidence that patients who grow their own cannabis begin to disengage from the conventional medical system.65
  4. 5.58 A scheme that separates treatment with cannabis from the conventional principles of medical treatment means that a patient with a serious condition is not receiving care based upon a holistic understanding of the patient’s treatment. Furthermore, a grow your own scheme provides little scope for a medical practitioner to determine whether a person’s use of cannabis is therapeutically effective or is being abused.
  5. 5.59 Creating a system that prevents medical practitioners from monitoring their patient’s use would be inconsistent with the national designation of cannabis as a Schedule 9 drug that is liable to abuse. Some argue that treating cannabis as a Schedule 9 drug is fundamentally wrong, and that cannabis should be rescheduled or de-scheduled from the SUSMP to facilitate wider access.66 However, the reason why cannabis is presently a Schedule 9 poison is not because of its toxicity and capacity for physical damage but substantially because of the concern that it can be abused.67 The dependence-forming tendencies of cannabis were discussed in the issues paper and the effects of its unmodulated recreational use are the subject of recent studies.68
  6. 5.60 A Victorian grow your own scheme would compromise the ability of medical practitioners to prevent their patients from abusing cannabis, because a medical practitioner would have no option but to rely on the patient to report accurately the amount that was actually being used. Such reports would not be able to address the actual amount of active constituents that were being taken. There is very little that can be done to address these issues in a grow your own scheme. It is a consequence of a scheme that makes the patient responsible for deciding how much cannabis they will use and in what form, thereby removing the capacity from the medical practitioner, which exists in relation to orthodox medications, to titrate usage on the bases of dose-response and dose-side-effect.
Potential for diversion
  1. 5.61 Patients and their carers participating in other schemes of this type have been selling on the illicit market, or giving away, cannabis they have been licensed to cultivate for personal use.69 Diversion in these and other ways could occur in a Victorian grow your own scheme as well.
  2. 5.62 A study of Canada’s scheme in 2012 estimated that that 36 per cent of grow your own licences were subject to ‘misuse’, defined as the sale of cannabis grown under such a licence into the illicit market.70 Another example is found in the United States, where the Chair of Oregon’s Liquor Control Commission estimated that up to 75 per cent of Oregon’s medicinal cannabis was diverted into the illicit market.71
  3. 5.63 The submissions that raised this issue noted that it is difficult to ascertain how much personally cultivated cannabis is moving into the illicit market,72 and this is reinforced by the research.73
  4. 5.64 Even a small crop of cannabis is worth a substantial amount of money on the illicit market, and this has led other governments to disallow grow your own because of the risk to patients. For example, in deciding to prohibit grow your own on the basis that it was a ‘public nuisance’, the Californian City of Galt estimated that six mature plants lawfully cultivated in an individual’s cannabis garden would have a market value of US$12,000.74
  5. 5.65 Therefore, even with restrictions limiting cultivation to a small number of plants there remains the risk that patients will be targeted by criminals for their cannabis.75 It was observed in one submission that ‘we don’t want people put at risk because they have a high value crop or having their medicine stolen and putting their health at risk’.76 Another observed that ‘[t]he risk to growers may be significant, and thus invasion of private property and risk to personal safety, being the main concern’.77
  6. 5.66 Victoria Police expressed the view in its submission that the police would not be able to protect personal cultivators from being targeted by criminals:

Personal crops would be a likely target for theft. Theft has the potential to escalate into crimes against the person, for example through owners protecting their crops, or through retaliatory actions. It would be extremely difficult for police to protect potentially large numbers of personal crops and their owners from targeted criminal activity.78

  1. 5.67 To reduce the risk that personally cultivated cannabis will be targeted by criminals, other jurisdictions have required cultivation to be undertaken indoors79 or simply prohibited grow your own schemes entirely.80 Indoor personal cultivation is thought to reduce the public visibility and smell of cannabis, making it less of a target.81 The Californian cities that permitted indoor cannabis cultivation prescribed the maximum dimensions of the cultivation space (both in area and height), restricted the maximum number of plants that could be grown (notwithstanding the number of qualified patients or caregivers engaging in cultivation) and prohibited exposing cannabis plants to public view.82
  2. 5.68 Some supporters of a grow your own scheme argued for this approach:

Cannabis cultivation can be controlled to a very high extent, meaning that it can be done indoors, under completely artificial conditions. It can also be strictly limited by such conditions, such as by a restriction on growing area or available lighting. It follows that a framework restricting a patients growing space indoors would limit the production of the medicine and prevent commercial cultivation. One should need to prohibit the outdoor cultivation absolutely, but there are legitimate security and public safety issues that justify such a policy in any case. As with potentially dangerous weapons, cannabis ought to be kept under lock and key, and restricted to a scale and ‘firepower’ commensurate with the need.83

 
Safety
  1. 5.69 Indoor cultivation may reduce the risk that a patient will be targeted by criminals but only to a modest degree; risks remain of the commission of break and enter and robbery (including armed) offences to steal what is otherwise an illegal and valuable product.
  2. 5.70 In addition, there are significant risks to the health and safety of those who grow their own and to the health and safety of the community.
  3. 5.71 If cannabis is not cultivated responsibly and diligently, it can become contaminated in a way that threatens the health of the person who consumes it. For example, cannabis may become contaminated with mould or harmful bacteria;84 pesticides;85 or metals like lead, mercury, and zinc.86 These risks are exacerbated by indoor cultivation.87 Additionally, certain techniques for cultivating cannabis indoors use a great deal of power. If the electrical system of a residence is not designed to cope with the increased load or is poorly wired, it can cause fire or electrocution. In Canada, for example, the Royal Canadian Mounted Police found that the risk of fire was 24 times higher than in residences in which cannabis was not cultivated.88
  4. 5.72 Contaminated cannabis poses an elevated risk to patients with serious illnesses. For example, patients with AIDS or otherwise compromised immune systems have reportedly developed lung infections when smoking cannabis contaminated with Aspergillus.89
  5. 5.73 Consistently with their emphasis on personal freedom in medical treatment, advocates for a grow your own scheme tended to argue that avoiding these risks was a matter of ‘due diligence’ for the cultivator roughly equivalent to that required to cultivate vegetables safely.90 The Commission was told on a number of occasions that cultivating cannabis does not require a great deal of expertise,91 although the opposite has also been suggested.92 Furthermore it was suggested that there is a significant amount of material available that could help patients and carers develop the necessary skills and that ‘we need to learn how to deal with this’.93
A partial solution
  1. 5.74 No matter how many patients were able to grow their own cannabis and make their own products safely, a grow your own scheme would be only a partial solution. The Commission also heard that many people did not want to prepare their own medicinal cannabis.94 Some of them were unfamiliar with cannabis, cautious about personally cultivating cannabis and did not want to learn about it.95 Michelle Whitelaw, for instance, was unequivocal: ‘I do not wish to cultivate or be my son’s pharmacist.’96
  2. 5.75 The opponents of grow your own were generally eager to try medicinal cannabis products, but only if regulated and supplied in a way that is similar to prescription medicines.97 Some were dealing with serious, debilitating conditions, or were parents caring for children suffering from such conditions. For them, requiring or encouraging seriously ill patients to cultivate cannabis was ‘unfair’:

This is not the dark ages and it seems quite disrespectful and unfair to those who are in need, to have to grow their own or suffer without. Those people who are so debilitated they can barely manage to get out of bed may qualify to grow their own, but it poses the question, how?... How will they maintain and grow a crop for personal use if they are physically infirm or in pain … Would this not be a foolish exercise when the probability of gain may be ruined entirely by not having the appropriate skills necessary? A ruined crop may mean that person has to go without. This is certainly not a compassionate nor safe option.98

  1. 5.76 These concerns were underscored by the submission from Cancer Action Victoria, which noted that it ‘was not in favour of a “grow your own” scheme. This is not feasible for patients who are debilitated by their illness’.99 The problem is exacerbated by the issue that the most obvious method of ingesting cannabis under a grow your own scheme is through smoking,100 which many people are unwilling to do for health reasons.101
  2. 5.77 As noted above, a number of the advocates for a grow your own scheme envisaged that it would operate alongside a scheme that provided for medicinal cannabis products to be produced by regulated community, government or commercial entities. This means that the Victorian Government would still need to establish a scheme for the production of medicinal cannabis products, in collaboration with the Commonwealth and in compliance with the Single Convention on Narcotic Drugs, but for a smaller patient group.
  3. 5.78 The co-existence of a grow your own scheme and production by regulated entities is not advisable. Some advocates have drawn analogies with home-grown and commercially grown vegetables. However, cannabis would remain illegal for most Victorians, and there would continue to be an illicit market for recreational and other unauthorised use.
  4. 5.79 One submission noted that, where both personal and government-regulated cultivation are permitted, it is more difficult to track what goes onto the black market.102 Mullaways Medicinal Cannabis Pty Ltd expressed the view that a grow your own scheme is ‘nearly the worst of all options’ for the patient, for medical practice and from a policing perspective.103 The Law Institute of Victoria maintains that:

any schemes that would self-regulate the end user as a grower should be avoided, as it would undermine the regulatory system around cultivation and supply of drugs and weaken public confidence in the regulatory system.104

 
Compliance with international law
  1. 5.80 Furthermore, any scheme that includes grow your own is at odds with the system of control prescribed by international law.105 The International Narcotics Control Board has recently made clear its view that grow your own schemes do not comply with the Single Convention on Narcotic Drugs:

The Board has reviewed the issue of cultivation of cannabis for personal medical use and has determined that, in the light of the heightened risk of diversion it represents, such cultivation does not meet the minimum control requirements set out in the Single Convention. Accordingly, the Board has consistently maintained the position that a State which allows individuals to cultivate cannabis for personal use would not be in compliance with its legal obligations under the Single Convention.106

  1. 5.81 Given this position, Australia’s international obligations pose a major impediment to the adoption of a scheme that includes grow your own. This would affect the legal stability of a grow your own scheme in Victoria, because of the incompatibility of Australia’s international obligations under the Convention and an essentially unregulated grow your own scheme.

Conclusion

  1. 5.82 Medical and regulatory experts overwhelmingly rejected this option when discussed at consultations, as did a significant number of patients and their families who want medicinal cannabis to be made available in the same way as prescription medication. The Commission shares their concerns. A grow your own scheme would not provide all eligible patients with access to medicinal cannabis because it would exclude those who do not have the wish, resources, skills and ability to grow their own plants or have them grown on their behalf. It would not ensure that the patient’s cannabis use is integrated with their other medical treatment because their medical practitioner would not know of, or be able to monitor, what they were using or its effects. A patient using home-grown cannabis may not be using a product of sufficient quality or consistent composition because of the significant variability caused by different cannabis strains and growing conditions, which only sophisticated growing operations are able fully to control.
  2. 5.83 The Commission considers that the products that are made available under any medicinal cannabis scheme should not be able to be smoked, which is more likely in a grow your own scheme. It also considers that a grow your own scheme would be a substantial diversion risk, as there would be no distinction between licit and illicit dried plant products and the limits on production and distribution would be very difficult to enforce. This would undermine efforts to preserve the continuing prohibition of unlawful trafficking, cultivation, supply and use.
  3. 5.84 This option would not ease the regulatory burden and the related costs to the Victorian Government compared to other options, because an alternative scheme would still need to be introduced for patients who are unable—or do not wish—to be responsible for producing their own medicine. 

Regulated not-for-profit production and distribution

The option

  1. 5.85 Some submissions advocated the creation of regulated not-for-profit cooperatives, collectives or clubs which would arrange for the collective cultivation and manufacture of medicinal cannabis products for distribution to their members.107 A submission made on behalf of the cannabis community of Victoria described these cooperatives as follows:

[M]embers of the Compassion Club or Co-operative join the club for an annual membership fee and come together sharing skills and resources to cultivate, distribute and or manufacture cannabis and cannabis products in accordance with a clubs constitution, rules and or regulations.108

  1. 5.86 Victoria could exempt associations such as these from the Therapeutic Goods Act 1989 (Cth) without the co-operation of the Commonwealth, as long as they are unincorporated. Victoria could make regulations under section 6(3) of the Therapeutic Goods (Victoria) Act 2010 (Vic) to exclude the operation of the Commonwealth Act for the purposes of the production and distribution of medicinal cannabis by authorised unincorporated cooperatives.
  2. 5.87 As the submission on behalf of the cannabis community of Victoria noted, cooperatives can in principle be incorporated or unincorporated.109 The Commonwealth would have to exempt medicinal cannabis from the Therapeutic Goods Act 1989 (Cth) in order to allow incorporated cooperatives to produce medicinal cannabis products.
  3. 5.88 Any cooperative that wished to refine cultivated cannabis into other forms such as oils or tinctures would still need to obtain a manufacturing licence from the Commonwealth under the Narcotic Drugs Act. This option therefore relies on the Commonwealth agreeing to license cooperatives so they may provide patients with cannabis in a form that is appropriate for their medical needs, rather than forcing patients to resort to smoking.
  4. 5.89 To create the scheme, Victoria could amend the Drugs, Poisons and Controlled Substances Act to provide for licences to be issued either to a cooperative (to produce medicinal cannabis products for its members), or to a person nominated by the cooperative (to cultivate a certain amount of cannabis, or produce products, as determined by the cooperative and approved by the government).
  5. 5.90 The licensees would need to comply with detailed rules, which could be a combination of licence conditions, statutory provisions and regulations, to ensure that the products are of good quality and provided to authorised patients. The cannabis community of Victoria put forward a detailed proposal, based on the British Columbia Compassion Club Society, in which the cooperative would operate a closed system encompassing all steps of the production and supply of the product as well as patient care.

 

Comments

Advantages

Simple and cheap to regulate
  1. 5.91 Regulating cooperatives is thought to be simple because its members are responsible for arranging for cultivation and guaranteeing the quality of the cannabis they purchase from cultivators and manufacturers. All of the activities associated with cannabis production and supply are concentrated in a single association of patients and carers, and this is said to reduce the regulatory burden and cost of medicinal cannabis.110 The submission made on behalf of the cannabis community of Victoria noted that the British Columbia Compassion Club Society screens its cultivators. The Society goes so far as to inspect cultivation sites for cleanliness, safety, plant quality, and security.111
Viable alternative to illicit market
  1. 5.92 Because cooperatives are thought to provide a simple and cheap source of cannabis, they are asserted to undermine the illicit market for cannabis. For example, it was noted that cooperatives provide a viable alternative to the black market that can be taxed and that reduce diversion.112 Trich from the Cannabis Social Club Australia said that criteria of access to medicinal cannabis should not be too restrictive because ‘one of the main aims of legalisation—to reduce the size of the criminal market—will not be met’.113 This reasoning is commonly associated with advocacy for legal cannabis for recreational purposes.114 Indeed, the advocates for this option generally assumed in their submissions that they would be permitted to supply cannabis to a large market. Trich said that ‘millions of reasonable users’ could be supplied under a compassion club scheme.115
  2. 5.93 The Commission notes that any scheme established by the government would provide an alternative to the illicit market, as well as creating a risk that products produced under the scheme would be diverted to it.
  3. 5.94 The purpose of the proposed reform, conveyed by the terms of reference, is on providing cannabis for medicinal purposes to a confined group of patients. This would limit the potential membership base for cooperatives of this type to people with complex medical needs.

Disadvantages

  1. 5.95 The Commission is concerned that adapting cooperatives to suit Victoria’s requirements would require significant regulatory intervention which is unlikely to be feasible. As has been identified in Chapter 4, for a scheme to support Australia’s international obligations it must take specific regulatory measures to limit diversion and ensure that accurate estimates can be reported to the Commonwealth. Furthermore, patients are entitled to expect that any medicine they receive is of sufficient quality and is not unduly harmful to their health.
 
An alternative to conventional medical treatment
  1. 5.96 A cooperative scheme is designed to concentrate expertise in growing and using cannabis within the cooperative. Some supporters of cooperatives argued that a system of distributing medicinal cannabis should not be merged with the general medical system.116 However, as is explained below in relation to dispensaries, the risk of concentrating treatment with cannabis in cooperatives is that patients may begin to disengage from the conventional medical system.117 This would be incompatible with the regulatory objectives. A scheme should ideally be integrated with a patient’s conventional medical treatment, not act as a replacement.
Diversionary risks
  1. 5.97 Substantial diversionary risks are associated with cooperatives. The submission made on behalf of the cannabis community rejected this, asserting that ‘[d]espite suggestions that these organizations may operate as a front for organised crime and diversion to the illicit market, there is little evidence to support these claims’.118 The submission claimed that in Canada ‘police organizations recognize this fact and tolerate the operation of both Compassion Clubs /Medicinal Cannabis Dispensaries’.119 The Commission notes that in light of concerns about diversion120 Canada moved to replace illegal cooperatives with what is effectively a regulated dispensary scheme.
  2. 5.98 Furthermore, there is some evidence in other jurisdictions that cooperatives are targeted by criminals who wish to take advantage of the legitimate front for cultivation and manufacture they provide. For example, in Belgium it has been reported that cooperatives are frequently approached by potential cultivators who are uninterested in complying with the cooperative’s rules, have cultivated cannabis of poor quality deliberately to offset costs, and have cultivated more cannabis than is required in order to sell it to others illegally. Belgian cooperatives have reported that they are in greater fear of ‘systematic violence from criminal entrepreneurs than of police intervention’.121 Spain, which permits the operation of not-for-profit cooperatives, also suffers from this problem.122
  3. 5.99 The Commission notes that these risks could be managed through robust regulatory oversight. However, such regulation would reduce the capacity of the cooperative to self-regulate and weaken its autonomy. It would also increase the costs of the scheme, weakening the reasons for preferring it over alternatives. This calls into doubt a core rationale of a cooperative scheme: that it is cheap to regulate.
Quality control
  1. 5.100 As noted above, members of a cooperative could take steps to ensure that they are obtaining cannabis of sufficient quality from cultivators. However, there is some evidence that, like people who grow their own, cooperatives encounter difficulties ensuring the quality and safety of cannabis. For example, cooperatives in Belgium claim that they test their cannabis for contaminants but the practicality of their methods has been questioned.123 The actual THC content of the cannabis produced by Belgian cooperatives is often unknown, making it impossible to estimate dosages with any accuracy.124 The procedures Belgian cooperatives have adopted to guarantee quality control have been described as ‘superficial and rather subjective’.125
Compliance with international obligations
  1. 5.101 It would not be feasible for a cooperative to be compliant with Australia’s obligations under international law. Advocates for a not-for-profit cooperative scheme argued that it complied with the Single Convention on Narcotic Drugs.126 The argument is that that the international conventions allow states to decriminalise cannabis for personal consumption, and that this latitude extends to the cultivation of cannabis for personal consumption.127 Interpretations like these take cooperatives into ‘uncertain territory’ from an international law perspective.128
  2. 5.102 If a decision were made to regulate cooperatives as a system of cultivation and distribution for the purposes of medical treatment, regulating them consistently with international law would become difficult. If the state took positive legislative steps to regulate the cultivation of cannabis for medicinal purposes, as opposed to merely decriminalising its personal cultivation and use in small amounts, the Single Convention on Narcotic Drugs requires a government agency to license cultivators129 and take physical possession of the crops of cannabis.130 If Victoria wished to impose these requirements, it would further increase the regulatory costs of a cooperative scheme.

Conclusion

  1. 5.103 The Commission does not consider that this option is suited to Victoria. The Commission was told on several occasions that patients and their families would like medicinal cannabis to be treated as much as possible like conventional medications. However, having medicinal cannabis cultivated by and for closed communities of users could reinforce negative perceptions about using it, perpetuate doubts about its efficacy, and undermine efforts to encourage communication between patients and their medical practitioners about whether it could provide them relief. It would also significantly exclude the involvement of medical practitioners in monitoring the effectiveness of the medicinal cannabis and taking suitable measures to address any risks or side effects.
  2. 5.104 The Commission also notes that this option would provide little, if any, opportunity for the government to take possession of the medicinal cannabis before it is distributed to patients, as required by the Single Convention on Narcotic Drugs. The lack of such an opportunity may deter the Commonwealth from agreeing to issue the manufacturing licences on which the scheme would depend.

Regulated distribution through dispensaries

The option

  1. 5.105 Many submissions suggested that medicinal cannabis products could be distributed through dispensaries.131 Dispensaries have been established in a number of jurisdictions overseas as outlets for producers of medicinal cannabis products or in connection with a clinic that specialises in the use of those products.
  2. 5.106 Dispensaries arrange for the production by cultivators and manufacturers of medicinal cannabis products, which they then supply. This would make dispensaries ‘sponsors’ within the Commonwealth’s therapeutic goods framework. Accordingly, the Commonwealth would need to provide an exemption under the Therapeutic Goods Act enabling Victoria to regulate the distribution of medicinal cannabis products by dispensaries.
  3. 5.107 The Drugs, Poisons and Controlled Substances Act could be amended to provide for a licence to be issued to the entity to distribute medicinal cannabis products.132 The amount and content of the associated rules would depend on the entity, but probably would be directed to the risk of diversion to the illicit market.
  4. 5.108 The form and function of medicinal cannabis dispensaries that operate overseas vary. The common elements are that they supply only cannabis products and usually offer the customer a variety of products, information about the characteristics and effects of each, and advice about which could be most suitable in treating their conditions.

Comments

Advantages

  1. 5.109 By specialising only in the distribution of cannabis products, dispensaries are able to provide patients with a broad choice in obtaining the cannabis they are permitted to use, together with advice about which products could be most suitable for them.133

Disadvantages

Replacing medical decision making
  1. 5.110 The operation of dispensaries, like not-for-profit cooperatives, could discourage or replace the need for medical professionals to make decisions about whether the patient’s use of cannabis is therapeutically appropriate.
  2. 5.111 Like cooperatives, dispensaries purport to perform many functions conventionally performed by a prescribing doctor.134 The submission on behalf of the cannabis community of Victoria observed that medicinal cannabis dispensaries ‘provide health care services to the patient and assist patients in achieving therapeutic outcomes’, and ‘educate and assist patients in selecting appropriate cannabis strains and or products…for specific therapeutic needs and or desired outcomes’. The submission stated that dispensaries provide detailed advice on the risks, benefits, contra-indications, undesired effects, dosage, application, and safe use of cannabis.135
  3. 5.112 Some argued that this was an advantage of dispensaries, and that the current lack of medical or pharmacist expertise or interest in cannabis made dispensaries necessary.136 For example, Fred Andronikos argued that dispensaries would be necessary in Victoria because ‘[m]ainstream doctors and pharmacy preparations are a decade or more away and until then its going to take a specialist dispensary doctors, to work with the patients specialist physicians to make this work’.137
  4. 5.113 The role that the Commission recommends that medical practitioners would have under a Victorian scheme is intended to encourage them to increase their knowledge about medicinal cannabis and engage with their patients about using it in tandem with any other medications. Without such integration, specialists may refuse to treat patients who use cannabis because it does not form part of the patient’s conventional treatment. Patients in this situation may be forced to choose between dispensaries and specialist doctors, which may negatively affect the patient’s health.138
Compliance with international obligations
  1. 5.114 It would be very difficult to create an opportunity for the state to take possession of medicinal cannabis under a dispensary system without imposing a substantial and contrived regulatory burden. Dispensaries typically purchase cannabis wholesale from producers. If the state were to take possession of cannabis and arrange for its distribution to dispensaries it would increase the regulatory costs of the scheme. These costs would either be passed on to patients by dispensaries (as usually occurs in private markets) or be absorbed by the state of Victoria.
  2. 5.115 Nor does the introduction of dispensaries resolve the problem of how to regulate cultivation and manufacture. As the submission on behalf of the cannabis community of Victoria indicated, dispensaries operate as stand-alone operations that contract with independent cultivators, or act as a retail front for commercial cultivators or a cooperative.139 It would be necessary to create an additional layer of regulation to allow dispensaries to be lawfully supplied with, and then distribute, cannabis.
  3. 5.116 The Commission is not persuaded that there is such a need for dispensaries as to justify additional regulation. It considers it appropriate that pharmacies dispense cannabis, in light of the views expressed in submissions and at consultations that pharmacies are convenient, form part of conventional medicine, employ trained staff and are already established throughout urban and rural Victoria.140
  4. 5.117 Accordingly, setting up a dispensary system is not likely to reduce the regulatory costs of a Victorian scheme or reduce the cost of cannabis supplied under that scheme. On the contrary, it would add an additional, unnecessary layer of regulation.

Conclusion

  1. 5.118 The Commission does not consider this option appropriate for a Victorian medicinal cannabis scheme. Unlike the United States, where not-for-profit dispensaries have been established under state medicinal cannabis schemes because the federal government prohibits the sale of cannabis for profit, there is no regulatory incentive in Victoria to find an alternative to distribution by pharmacies.

Government-enforced monopoly

The option

  1. 5.119 Under this option, a single entity with the necessary ability and capacity would cultivate and distribute cannabis and deliver it to the government, for distribution through pharmacies. The entity could be any of the following:
  • a government agency or government-owned corporation
  • a university or research institute
  • a privately owned corporation.
  1. 5.120 For this option to be legally stable, Commonwealth support would be needed for each of these alternatives. The entity would need to be licensed under the Narcotic Drugs Act and granted an exemption from regulation under the Therapeutic Goods Act. It is possible, however, that neither of these requirements applies to a Victorian agency or a statutory authority that does not generate revenue from its activities.141
  2. 5.121 The option could be established in either of two ways. The Drugs, Poisons and Controlled Substances Act could be amended to permit a specified government-funded or owned entity to cultivate and manufacture cannabis for medicinal purposes and exempt it from Part V of the Act (concerning offences relating to drugs of dependence). Alternatively, the Drugs, Poisons and Controlled Substances Act could be amended to provide for a licence to be issued to cultivate and manufacture cannabis products and deliver them to the government.

Comments

Advantages

  1. 5.122 A government-enforced monopoly would allow the Victorian Government to take advantage of an entity with existing expertise in producing plant products of high quality in a safe and controlled environment. Because only one producer can ever be involved, the scheme would not involve a substantial regulatory burden. The Secretary of the Department of Health and Human Services through the Office of Medicinal Cannabis would only have responsibility for administering a single producer. The amount and quantity, form and composition of the cannabis to be produced by the single producer would be set out in a contract negotiated with the Victorian Government.
Preventing diversion
  1. 5.123 Allowing for a single producer that is solely responsible for cultivating and manufacturing cannabis for delivery to the Victorian Government, and which acts under a monopoly granted by the government, would be unlikely to give rise to diversionary concerns and would enable the accurate and prompt reporting of estimates and quotas to the Commonwealth. Accordingly, the scheme would comply with the objectives of the Single Convention on Narcotic Drugs.
Concentrating expertise
  1. 5.124 The viability of such a scheme depends on whether Victoria could identify a single entity with a capacity to produce cannabis products ‘in-house’. Potentially, a government-controlled scheme can be quite large. The University of Mississippi, for example, has had its contract to cultivate cannabis renewed at US$68.8 million to grow 30,000 plants.142 However, the University has been cultivating cannabis for research purposes since 1968, operates a ‘Marijuana Research Project’, and is solely responsible for supplying cannabis
    to researchers for their clinical trials. This demonstrates the importance of the expertise and capacity of the entity, across every aspect of the production chain, to the success of
    a monopolistic, government-controlled scheme.143

Disadvantages

  1. 5.125 Some submissions suggested that the experience overseas does not support, on balance, the use of a government-enforced monopoly to control the production of medicinal cannabis. For example, Alkman Management Services Pty Ltd argued against the Victorian Government exercising monopolistic control over the cultivation and manufacture of medicinal cannabis, asserting that a monopoly over cultivation and manufacture has contributed to problems with cost and quality in Canada and the Netherlands.144
    Similarly, UTT BioPharmaceuticals argued that ‘a single entity is not advised, since it could create a monopolistic environment, which could slow down research and development of new drugs’.145
Reliance on a single producer
  1. 5.126 Furthermore, if a single agency, university, or government-owned corporation is solely responsible for producing and supplying cannabis, a great amount of risk is concentrated in that single producer. If any step in the production chain failed—for example, if a crop of cannabis were lost—it would significantly reduce the amount of medicinal cannabis available to patients.
Inflexibility
  1. 5.127 Although a government monopoly scheme is relatively straightforward, it is also inflexible. The scheme is not designed to evaluate the eligibility of multiple producers. Jurisdictions that allow medicinal cannabis have increasingly adopted regulatory structures that can accommodate multiple producers (regardless of whether multiple producers actually participate in the scheme).

Conclusion

  1. 5.128 Because only one producer would ever be involved, the scheme would not involve a substantial regulatory burden. It would create a simple mechanism that is substantially compliant with international law and allow for an experienced entity to start producing cannabis medicines relatively quickly.
  2. 5.129 The government would have to identify a producer that it trusts to operate across all aspects of the production chain and which can consistently produce enough cannabis of sufficient quality to satisfy the requirements of a Victorian medicinal cannabis scheme. The scheme turns on the capacity of that single producer to manage risks and supply enough product without subcontracting its functions to other cultivators and manufacturers. If a suitable entity could be identified, this option could be an intermediate step in establishing a scheme that is sustainable in the long term.
  3. 5.130 Unlike the licensed producer scheme set out below, a government-enforced monopoly would not provide the regulatory framework to accommodate multiple cultivators and manufacturers. It would be preferable, given the risks associated with a single producer, to establish a flexible regulatory framework that is capable of accommodating multiple producers.

Multiple licensed producers

The option

  1. 5.131 Many submissions proposed that Victoria should license multiple private-sector cultivators and manufacturers similarly to the framework used to regulate poppies.146 This option would provide ‘a comprehensive scheme regulated through every step of the supply chain which includes cultivation, manufacturing, processing, distribution and use’.147
  2. 5.132 This option resembles the Israeli and Dutch arrangements for the production and distribution of cannabis, using the Victorian poppy straw regulatory framework and drawing on the Commonwealth scheme for licensing manufacturers of therapeutic goods. Broadly, it would involve the cultivation and manufacturing of cannabis by licensed cultivators and manufacturers respectively. Standards would need to be established to ensure that licensed cultivators and manufacturers produce products of sufficient quality to be used as a medicine.
  3. 5.133 To implement controls akin to those in Article 23 of the Single Convention on Narcotic Drugs, the State of Victoria would have to take possession of the products from commercial producers and arrange for their labelling and distribution to pharmacies.
  4. 5.134 This option would allow multiple cultivators and manufacturers to be assessed against statutory criteria and other checks and balances derived from Victoria’s poppy scheme. The government would be able to exercise the degree of regulatory control required by the Single Convention on Narcotic Drugs. In addition, the scheme would be adaptable to any changes to law or policy, either in Victoria or at the Commonwealth level, which could affect the reach or focus of the scheme.
  5. 5.135 To enable the scheme, a new Part could be inserted into the Drugs, Poisons and Controlled Substances Act authorising various dealings that are currently illegal. Commonwealth support would be needed, by exempting the manufacture and production of medicinal cannabis from regulation under the Therapeutic Goods Act and by granting licences under the Narcotic Drugs Act.

Comments

Advantages

  1. 5.136 The submissions that supported this option argued that it was a tested and successful model for managing the risks associated with cultivating prohibited substances that have a value on the illicit market.
Building on an existing framework that is preferred by industry
  1. 5.137 Mullaways Medicinal Cannabis Pty Ltd observed that ‘it is not necessary to reinvent the wheel’ and that ‘any medical cannabis system set in place should follow similar guidelines to that of Opium Poppies in Australia’:

The cultivation of high grade Opium Poppies are allowed in Tasmania (and Victoria) under regulation, to produce medication of varying dosages, as long as the end product meets the designated medication criteria for safety and effectiveness there is no current concern.148

  1. 5.138 Similarly, TPI Industries observed that: ‘[u]sing the opium poppy framework, the legislation and regulations would enable cultivation to occur in a highly controlled and regulated environment with complete government oversight’.149 TPI observed that: ‘the cultivation, manufacture and supply of medicinal cannabis and its extracts is the same process and involves compounds of similar Schedules in the SUSMP as the cultivation, manufacture and supply of NRM and Active Pharmaceutic Ingredients’.150 UTT BioPharmaceuticals made a similar point, suggesting that: ‘[c]annabis and opium have a lot in common, as they contain many compounds of therapeutic use and at the same time can be abused for their psychoactive properties’.151
  2. 5.139 However, the Commission notes Mullaways’ observation that the poppy scheme was not a ‘blueprint’ because it would still be necessary to develop manufacturing, reporting and labelling standards such as are required by the TGA.152 In other words, the system of licences established by the poppy scheme could underpin the cultivation and manufacture of cannabis but its transformation into a medicine would require other regulation.
 
Building on an established framework for reporting to the Commonwealth
  1. 5.140 The poppy scheme is designed to enable commercial producers to report to the Commonwealth on the amount of poppy straw produced per year.153 As John Ramsay & Associates noted in its review of the Tasmanian scheme:

The [poppy] processor role in the identification and reporting of the area of crop sown and harvested, and the volumes processed and product recovered is absolutely critical to Australia’s ability to report on activity to the INCB and to meet its Convention obligations.154

  1. 5.141 The Commission notes that cannabis is treated differently to poppy straw under the Single Convention on Narcotic Drugs. The Single Convention requires the state to take physical possession of cultivated cannabis, providing an opportunity to take stock of the amount of cannabis for report to the Commonwealth. Regardless, the accountability frameworks established under the poppy scheme provide an established, alternative basis upon which to build in order to ensure that reporting is as accurate as is possible. In particular, it would be important for manufacturers in a Victorian scheme to accurately account for the wholesale stocks of medicinal cannabis they hold.155
Limiting diversion and promoting quality
  1. 5.142 The terms of reference indicate that the prohibition on unlawful uses of cannabis would need to be preserved under any Victorian medicinal cannabis scheme, and the poppy scheme provides a successful template by which to achieve this regulatory objective. As UTT BioPharmaceuticals observed:

The whole idea behind Poppy cultivation for the production of opioids for clinical [use], is to have stringent controls in place to make sure there is not illicit businesses… generated from the cultivation/production activity. Production of cannabis raw material must be for clinical purpose only, unless legislation modifications are enacted in the future.156

  1. 5.143 The security arrangements put in place by the Tasmanian poppy scheme, which has existed since 1971, have successfully prevented diversion of opium poppies into the illicit market.157 Victoria Police supported an adaptation of the poppy scheme as a way of addressing the potential for diversion of cannabis. It suggested that the value of cannabis on the illicit market would require any industrial scale production of medicinal cannabis to be strictly regulated, and that ‘the regulations surrounding the poppy industry provide an instructive example’ for the Commission in dealing with issues of diversion.158
  2. 5.144 Others expressed the view that adapting the poppy scheme to the regulation of cannabis would resolve problems around the quality as well as the security of the product.159 Shirley Humphris suggested that the regulation of cultivation and manufacture should be ‘[p]resumably similar to the poppy industry. It must be possible to grow and manufacture a secure supply’ and ‘a supply that is clean and grown under controlled conditions’.160
 
Research, innovation and product choice
  1. 5.145 A scheme in which multiple cultivators and manufacturers participate could foster research and innovation, consistently with the recommended regulatory objectives. The success of the poppy scheme model in fostering research was reinforced by John Ramsay & Associates, which in its review of the Tasmanian scheme made a similar observation regarding the importance of using industry investment and expertise:

The success of the Tasmanian industry is in no small way due to the expertise and efficiency of these two processors who both occupy a significant position in the international market. They have maintained continued research and development programs. Innovation has resulted in the developments of different varieties of poppies and improvements to alkaloid extraction methods, both to significant product recovery advantage.161

  1. 5.146 Allowing for the creation of a range of products that cater to the spectrum of patient demand is integral to encouraging patients to choose those products over the products available on the illicit market. The lack of choice has created problems in the Netherlands and initially in Canada, where patients have been supplied cannabis by a single producer.162
Adaptability
  1. 5.147 The Commission’s view is that a scheme that permits multiple cultivators and manufacturers to participate would be adaptable to further changes in the regulation of medicinal cannabis. If the market expanded because other states or territories established medicinal cannabis schemes, more licences could be issued or the conditions of the existing ones could be varied. If the Commonwealth entered the field, some aspects of the Victorian scheme could be discontinued. If demand for new products emerged, mechanisms would be in place to assess and approve them for manufacture and sale in Victoria.

Disadvantages

  1. 5.148 This option is the most comprehensive of the options reviewed and is therefore administratively more complex to establish. Once the regulatory framework is in place, however, the ongoing administration would be more straightforward.
  2. 5.149 Some submissions expressed concern that the market for poppies is significantly different from that for cannabis. For example, the Law Institute of Victoria observed that the poppy scheme is different because it relates to ‘an established and regulated pharmaceutical product approved under the Therapeutic Goods Act 1989 (Cth)… that had a large international demand’.163 Given that a Victorian scheme is expected to supply cannabis only to patients in exceptional circumstances, the consumer base could—initially—be small, and the costs of production would have to be offset by the Victorian Government. The Commission notes that this would be true of any scheme that involves the industrial production of cannabis for the purposes of purchase and distribution by the state.
  3. 5.150 What is attractive for these purposes about the poppy scheme is that it serves as a template for the secure cultivation and manufacture of a product with high illicit value that has received the support of the Commonwealth. The Commission also notes that the Dutch medicinal cannabis scheme, although not as comprehensive as this option, is self-funding.

Conclusion

  1. 5.151 A system of multiple licensed producers is the Commission’s preferred option and it recommends that it be adopted as the model for a Victorian medicinal cannabis scheme.

Recommendation

  1. 18 The Victorian Government should create a scheme to regulate the production of medicinal cannabis by:
  2. (a) licensing private entities to cultivate and manufacture medicinal cannabis products under regulatory arrangements that are based on those that apply to the cultivation of alkaloid poppies, the processing of poppy straw and the manufacture of therapeutic goods
  3. (b) establishing a process for approving medicinal cannabis products and ensuring that they are of appropriate quality
  4. (c) providing the Secretary of the Department of Health and Human Services with the power to administer the scheme and the authority to take possession of medicinal cannabis products, account to the Commonwealth for those products, and arrange their transfer to pharmacies.

 

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