NARCOTIC DRUGS AMENDMENT BILL 2016 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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NARCOTIC DRUGS AMENDMENT BILL 2016

2013-2014-2015-2016 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA HOUSE OF REPRESENTATIVES NARCOTIC DRUGS AMENDMENT BILL 2016 EXPLANATORY MEMORANDUM (Circulated by authority of the Minister for Health, the Hon Sussan Ley MP)

NARCOTIC DRUGS AMENDMENT BILL 2016 OUTLINE The Narcotic Drugs Amendment Bill 2016 will provide a legislative framework that will enable cannabis cultivation in Australia and provide Australian patients in need with access to medicinal cannabis for therapeutic purposes. These amendments will also ensure that when cultivation and production of cannabis and manufacture of cannabis products for medicinal purposes begin, Australia will remain compliant with its international treaty obligations as defined in the United Nations Single Convention on Narcotic Drugs, 1961 (the Single Convention). The Commonwealth currently has laws to regulate the import, export and manufacture of cannabinoids and cannabis raw material, but these do not allow the cultivation in Australia of cannabis plants for medicinal purposes. The manufacturing provisions in the Narcotic Drugs Act 1967 are considered inadequate to properly manage the risks associated with the potential for diversion of medicinal cannabis products and other narcotic drugs. The Commonwealth is unable to grant licences for the production of locally cultivated cannabis for medical use and remain compliant with the obligations contained in the Single Convention. As a signatory to the Single Convention, Australia agrees that the licit use of narcotic drugs must be tightly regulated to ensure that public health is protected from the risks of diversion into illicit markets. Cannabis sativa (cannabis) is a narcotic drug that is tightly controlled in Australia. The cultivation, production, manufacture, import, export, distribution, trade, possession, use and supply of cannabis and cannabis derived products are regulated by a number of Commonwealth laws, including the Narcotic Drugs Act 1967, which addresses the manufacture of narcotic substances (including cannabis). The amendments to the Narcotic Drugs Act 1967 will ensure that any therapeutic product, including medicinal cannabis, also meets Australia's strict international obligations safe-guarding its production, manufacture and distribution for medical and scientific purposes only. The amendments will establish a licensing scheme for the cultivation of cannabis for medicinal and related scientific purposes. The key features of the cannabis cultivation licence scheme include:  Two cannabis licences, one that authorises the cultivation of cannabis for manufacture into medicinal cannabis products; the second that authorises research into the cannabis plant that is to be used for medicinal purposes. This could include research into growing conditions, cannabinoid yields from different strains, ensuring consistency in yields and other matters related to ensuring a safe, predictable raw material.  A strict 'fit and proper person' test that will be applied to the applicant and relevant business associates and involve consideration of a range of matters including criminal history, connections, associates and family, financial status, 1

business history and capacity to comply with licensing requirements. Licence holders will also be expected to remain 'fit and proper'. This test is explicitly designed to ensure the exclusion of criminal elements, including organised crime, which may be tempted to use the licence scheme as cover for illegal activities.  A need to demonstrate a supply arrangement exists with a licensed manufacturer, in order to get a licence.  A permit system for controlling how much cannabis can be produced. This will assist in meeting a key obligation of the Single Convention to prevent over- production. Other than in the case of research, a permit will not be granted for production unless a contract exists between the licence holder and a licensed manufacturer.  Conditions applying to the licence that ensures security of the crop so that it is not diverted to illicit uses.  Substantial penalties for offences for breaches of conditions and for undertaking unauthorised activities.  A comprehensive suite of regulatory controls including: powers to give directions to licence holders; of inspection, monitoring and investigation; to issue infringement notices and seek civil penalties; to accept enforceable undertakings and to seek injunctions - all to assist in ensuring the integrity of the system. The existing manufacturing provisions are also to be updated to mirror the cannabis licence provisions. Where a cannabis licence holder must demonstrate a business relationship with a licensed manufacturer, the licensed manufacturer must be able to demonstrate a legitimate supply chain to patients consistent with provisions of the Therapeutic Goods Act 1989. In effect, this will limit production and supply to legitimate demand. Demand will be determined by suitable medical practitioners, in accordance with provisions in the Therapeutic Goods Act, such as clinical trials, authorised prescribers and the Special Access Scheme. Importantly, the Secretary of the Department of Health will have the power to order the destruction of cannabis produced by a licence holder. This allows the Secretary to control the level of production and prevent accumulation (or rectify accumulation, if it has occurred). The Bill confers decision-making powers on the Secretary (previously the Minister) so that an internal review provision, undertaken by the Minister, can be facilitated. This gives applicants and licence holders subject to adverse decisions a more timely and less expensive option than seeking review by the Administrative Appeals Tribunal directly. 2

FINANCIAL IMPACT STATEMENT The regulation of the cultivation licensing scheme will create some administration costs for the Government. It is proposed that these be funded from a cost-recovery scheme consistent with the Commonwealth's cost-recovery guidelines. Costs to be recovered include administration of licence and licence variation applications, site inspections (to support application decisions), post-licence inspections, sampling and testing and the acquisition of law enforcement data to allow determinations related to 'fit and proper' person test, as well as other compliance and law enforcement activities. 3

REGULATION IMPACT STATEMENT The following Regulation Impact Statement has been prepared and received an assessment of 'compliant' from the Office of Best Practice Regulation on 29 January 2016. Access to cannabis for medical and scientific purposes Regulation Impact Statement 4

Introduction There has been increasing public discussion about the medical and scientific use of cannabis, with several states and territories exploring options to provide access to cannabis for specified conditions through clinical trials or other authorised mechanisms. The Australian Government has made a commitment to work collaboratively with the States and Territories to share knowledge and information on issues relating to the appropriate use of therapeutic products derived from cannabis, and also to consider health and law enforcement concerns in the context of the Commonwealth's authority and obligations for the control of the cannabis plant when used for medical or scientific purposes in Australia. On 17 October 2015, the Commonwealth announced its intention to make amendments to the Narcotic Drugs Act 1967 to enable the cultivation of cannabis for medicinal and scientific purposes in a way that is compliant with Australia's international obligations while facilitating the production of medicinal cannabis products for clinical trials and for specified patients under clinical care in accordance with the Therapeutic Goods Act 1989. This announcement was in response to a cross party bill, the Regulator of Medicinal Cannabis Bill 2014, which was introduced into Parliament in November 2014. The Bill was referred to the Senate Legal and Constitutional Affairs Legislation Committee in February 2015 and tabled its report in August 2015. The amendments that the Narcotic Drugs Amendment Bill will introduce, will address the structural issues that the Senate Committee identified in the report. While the Department had commenced developing a Regulation Impact Statement for the proposed Bill, it was not possible to assess the full implications of the regulatory changes until the detail of the regulatory framework was developed. This Regulation Impact Statement (RIS) outlines the Australian Government's options for facilitating access to medicinal cannabis products for medical and scientific purposes. The term 'medicinal cannabis' has been used interchangeably to mean either: the smoking or eating of raw, herbal cannabis for the notional relief of symptoms; or the use of pharmaceutical products derived from the active compounds of cannabis. The distinction between regulated pharmaceutical products and the use of raw cannabis herb for recreational or therapeutic purposes in this context is that regulated products have been tested for quality, safety and efficacy prior to being registered for consumer use. 5

Background Cannabis sativa (cannabis) is a narcotic drug that is tightly controlled in Australia. The cultivation, production, manufacture, import, export, distribution, trade, possession, use and supply of cannabis and cannabis derived products are regulated by a number of Commonwealth laws. These laws include the: 1. Criminal Code 1995, which makes it illegal to traffic, import, export, manufacture, cultivate or possess cannabis in any form; 2. Narcotic Drugs Act 1967, which addresses the manufacture of narcotic substances (including cannabis); 3. Customs Act 1901, which addresses the import and export of narcotic substances, including a regime under the Customs (Prohibited Imports) Regulations 1956 that allows for the importation of cannabis for medical and scientific purposes; 4. Therapeutic Goods Act 1989, which addresses the regulation of authorised medicines and medical products; and 5. Quarantine Act 1908, which provides the legislative basis for human, plant and animal quarantine activities in Australia. In addition, various Commonwealth, State and Territory laws provide penalties for possessing, using, making, selling, or driving under the influence of cannabis. There are also laws that prevent the sale and possession of bongs and other smoking equipment in some States and Territories (Attachment A). Australia is a party to international agreements that aim to restrict production, manufacture, export, import, distribution, trade, and possession of narcotic drugs (including cannabis) exclusively to medical and scientific purposes. The Commonwealth has responsibility for ensuring that any Commonwealth, State or Territory scheme for the cultivation of cannabis for medicinal purposes is consistent with Australia's international obligations under the following three international drug control conventions: 1. the Single Convention on Narcotic Drugs (1961), which specifies the obligations of signatory states in relation to narcotic drugs listed in schedules annexed to the Convention; 2. the Convention on Psychotropic Substances (1971), which aims to limit the use of psychotropic substances to medical and scientific purposes and also to ensure their availability for those purposes; and 3. the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988), which aims to promote cooperation between parties to address various aspects of illicit traffic in narcotic drugs and psychotropic substances. Under the United Nations Single Convention on Narcotic Drugs, 1961 (Single Convention) as amended by its 1972 amending Protocol, Australia, through the Commonwealth Government, has an obligation to carefully control, supervise and report on various stages of cannabis cultivation, production and manufacture. The purpose of the Single Convention is to establish a framework to both prevent abuse and diversion of controlled narcotics and to facilitate the availability of such drugs for medical purposes. The enabling legislation for these obligations is the Narcotic Drugs Act, which is administered by the Health Portfolio, in concert with the Attorney- General's Department. 6

Article 5 of the Single Convention confers certain functions on the International Narcotics Control Board (INCB) (Attachment B), which includes publication of an annual report that provides a comprehensive account of the global drug situation, analyses trends in drug abuse and drug trafficking and suggests necessary remedial action. In addition, the INCB also publishes technical reports on narcotic drugs and psychotropic substances that provide details on estimates of the annual legitimate requirements of each country, as well as data on the licit production, manufacture, trade and consumption of drugs worldwide. As a signatory to the Single Convention, Australia is obliged to regularly provide information to the INCB to allow it to carry out these functions. Failure to meet those international obligations contains certain risks, including potential damage to Australia's international reputation for its progressive, balanced and comprehensive approach to dealing with the problems posed by the use and misuse of drugs in the community. The INCB also requires annual estimates of the areas harvested, amounts produced, amount of raw material and refined products in stock, amounts required for importation in the current and next calendar year, estimates for cultivating in the next calendar year, relevant trends in use for medical purposes, estimates of the areas to be used for cultivation in the next year and quantities obtained by the manufacturers. All of these requirements are exemplified in the 2015 reporting requirements for the INCB at Attachment C. Australia, as a Member State of the Commission on Narcotic Drugs (CND), would be required to report these estimates, in relation to cannabis, to the INCB annually or more frequently. In order to meet these requirements, the Australian Government Department of Health would require manufacturers to regularly report these estimates to the Department. The Commonwealth currently has laws to regulate the import, export and manufacture of cannabinoids and cannabis raw material, but these do not allow the lawful cultivation in Australia of cannabis plants for medicinal purposes. Cultivation of cannabis Presently, the Commonwealth is unable to grant licences for the production of locally cultivated and produced cannabis for medical use and remain compliant with the obligations in the Single Convention or the Narcotic Drugs Act. Currently, States and Territories can authorise cultivation of cannabis for horticulture and industrial purposes as allowed under the Single Convention. However, if a State or Territory were to authorise cultivation for medicinal purposes, this would enliven the Commonwealth's obligations under Article 23 of the Single Convention. This would require the Commonwealth to establish an authority to regulate the cultivation of cannabis for medicinal and scientific purposes. There are already mechanisms in place to enable access to medicinal cannabis products through the Therapeutic Goods Act 1989, which allows for access under clinical trials and access under the Special Access and Authorised Prescriber Schemes for individual patients. The difficulty and cost of obtaining medicinal cannabis products from international suppliers, however, creates an access issue for the conduct of clinical trials and for people who may potentially benefit from using cannabis for medicinal purposes. Enabling the potential to cultivate cannabis for medicinal purposes locally will mean that there is potentially a level of supply that meets the 7

demands for clinical trials or other access options. The inability to readily access supplies also creates an environment where black markets for medicinal purposes are forming, thus posing potential dangers to the consumer as products are not tested or monitored for quality or safety. There are already provisions in the Narcotic Drugs Act through which manufacturing of a narcotic drug can be licensed (as have been used for the processing of poppy straw for many years). The cultivation of cannabis is not currently controlled under the Act. Refining, extraction or other processes (e.g. making extracts, tinctures, cannabis oil) from cannabis (including industrial hemp) is subject to the manufacturing controls set out in the Narcotic Drugs Act. Consumer access to cannabis In relation to consumer access, there are a number of pathways for lawful access to cannabis for medical use through the Therapeutic Goods Act. These are not under review as part of this proposal. This information is provided by way of background. Assuming there is a suitable source of cannabinoids available; pathways for lawful access to cannabinoids for medicinal use are: 1. medicines registered on the Australian Register of Therapeutic Goods (ARTG); 2. clinical trials (such as the trials being conducted in New South Wales and Victoria); and 3. the Special Access Scheme (SAS) and Authorised Prescriber Scheme (AP). Access to cannabis for medicinal purposes through the first pathway, such as occurred for Sativex, requires a robust dossier of clinical trial and other data and is commonly submitted after some years of significant commercial investment. Access through the second pathway is a matter of either seeking the approval of a human research ethics committee and notifying the Therapeutic Goods Administration (TGA) or seeking approval of both an ethics committee and the TGA, depending on the levels of risk associated with the clinical trial proposal. The third pathway has always been a potential mechanism and it has been used to prescribe imported product. Access to products under SAS, however, is undertaken by application to the TGA on an individual basis and requires the patients to source their own products from international suppliers, which can be cumbersome and costly exercise. Under the Authorised Prescriber Scheme, the TGA approves a medical practitioner to prescribe defined but unregistered medications to patients with defined conditions. This has not been used for a medicinal cannabis product, to date. Some cannabis product has been supplied through SAS Category B over the last 10 years. However, global sources of appropriate medicinal product are limited. As a result, there are widespread reports of patients (and parents of patients that are children) turning to illicit sources of product touted as 'medicinal', produced without any controls on its manufacture ensuring safety and quality. Such patients/parents see that it is necessary to engage in this criminal activity and are taking risks with the quality of the medicines they are acquiring and in their association with criminal activity. 8

Cannabis and cannabis products for medicinal purposes have been available in some countries for over a decade. This includes overseas jurisdictions such as Canada, 21 states of the United States, Israel and the Netherlands. Access to internationally sourced cannabis for medical and scientific purposes is difficult and expensive. No current international model features market authorisation of raw or minimally processed herbal cannabis from any national medicines regulator. In some jurisdictions people are able to access raw herbal cannabis for smoking, either grown by them or grown commercially, on compassionate grounds, usually through a permission scheme on recommendation by a medical clinician. This approach has some risk as raw herbal cannabis can be of varying strength and composition making dosing inaccurate, along with the respiratory risks associated with inhaling smoke from raw dried plant matter. Section 1: The problem to be addressed There are community expectations that there should be a licit source of cannabis for medicinal use. The fact that there is illicit cannabis being used for medicinal purposes is concerning as there are no controls on quality or strength nor is there a prescribing service that is professionally based, nor any system for tracking clinical outcomes, including adverse events. This could expose the community to potentially dangerous substances and outcomes. There is a risk that Commonwealth legislation could be inconsistent with that of the States and/or Territories. In such a case, the Commonwealth is potentially in breach of its international obligations under the Single Convention with at least one State unilaterally moving to permit cultivation of cannabis for medicinal purposes, either to supply clinical trials or to supply some form of access scheme. There is also increased attention to reports that suggest cannabis is beneficial in the treatment and symptomatic relief for some health conditions. Subject to appropriate safeguards, failure to enable supply of cannabis for medicinal purposes, as well as further scientific study into this treatment option, could deny patients access to new, safe and effective medicines and treatments. Section 2: Objectives The use of any medication should be, as much as possible, based on the scientific evidence of its quality, safety and efficacy. However, there are some circumstances where use is not based on comprehensive data supporting efficacy, but rather the professional judgement of a medical practitioner that it is appropriate to try an unregistered (and, as such, unassessed) therapeutic good. The Australian Government is committed to ensuring any therapeutic product, including cannabis for medicinal purpose, is not only a safe treatment for public use, but also meets our strict international obligations safe-guarding its production, manufacture and distribution for medical purposes only. Section 3: Options to address the problem Only two options have been considered as part of this proposal. This is because the options are, to a large extent, directed by the requirements of the Single Convention, which means the Commonwealth options are limited. Accordingly, the only feasible options relate to whether the Commonwealth will enable cultivation in a way that is consistent with Australia's international obligations and which ensures secure supply with minimal risk of diversion. 9

Option 1 - Maintaining the status quo and taking no regulatory action to enable cultivation. Option 2 - Establishment of a Commonwealth licensing scheme to facilitate the right to cultivate cannabis for medicinal purposes Option 2 would require amendments to the Narcotic Drugs Act to enable Australia to cultivate, produce and manufacture cannabis and cannabis products to facilitate access to regulated medicinal products and related scientific research in a way that fulfils Australia's international obligations. Section 4: Impact of the options Option 1- Status quo At the Federal level, the status quo means that there would be no legislation to enable lawful cultivation of cannabis for medicinal purposes. Access would still be possible through pathways under the Therapeutic Goods Act, but for imported products, supply of which appears to be insufficient to meet demand. The status quo will continue to severely limit options for patient access to cannabis for medicinal purposes through the pathways available under the Therapeutic Goods Act and for advancing the scientific understanding of this herbal product through rigorous clinical trials. Without Commonwealth regulation consistent with Australia's international obligations, States and Territories moving ahead with cultivation will affect Australia's ability to present itself as compliant with the Single Convention. This could have adverse reputational implications for Australia's licit poppy industry with medium term risks to Australia's approved status as a major supplier of poppy straw in a timely controlled manner. Option 1 will also potentially result in inconsistency in the legislation surrounding the cultivation and production of cannabis for medicinal purposes between the States and the Commonwealth. Various pieces of legislation exist to ensure the Australian public is protected from false therapeutic claims while continuing to access safe and effective medicines. Maintaining the status quo would reduce the Commonwealth's ability to continue to ensure the public is protected from these claims. If not closely monitored, this may lead to increased use of or public misperceptions about the safety and efficacy of herbal cannabis. Under this option, the existing risks associated with accessing medicinal cannabis from the illicit drug market remain. Option 2- Establishment of a Commonwealth licensing scheme to facilitate the right to cultivate cannabis for medicinal purposes in a way that is compliant with Australia's international obligations. Under Option 2, Australia would have a regulatory system that supports the end to end process of supplying medicinal cannabis products consistent with its international obligations and that works congruently with State and Territory legislation. It is not possible to quantify the benefits of this option but the qualitative benefits involve facilitating state based regulatory decisions to allow Australia to develop safe, legal and sustainable local supply of cannabis for medicinal or scientific purposes. In 10

turn, this would support greater local opportunities to research, develop, manufacture and supply medicinal cannabis-based products. Australians would have increased access to high quality medicinal cannabis products. Researchers would be better able to undertake scientific research into the benefits (or otherwise) of medicinal cannabis products. This option would avoid the prospect that individual jurisdictions will take different approaches to authorising cannabis and cannabis-derived products for medical and scientific use. While some jurisdictions have already commenced action to do this, others are yet to do so. This option will not necessarily bring a medicinal cannabis product to registration on the Australian Register of Therapeutic Goods (ARTG), in the short or medium term, but will facilitate further clinical trials that may support such a registration in the future. Cannabis material cultivated and manufactured in Australia would be able to be used to conduct clinical trials and develop therapeutic products to be used in accordance with the Therapeutic Goods Act. The granting of licences would be dependent on market forces, as well as compliance with licensing conditions as described in the proposed amendments and associated regulations. In addition, facilitating cultivation in Australia of legal cannabis crops for medicinal use under strict local controls strikes the right balance between patient access, community protection and our international obligations. From a law enforcement perspective, there are a number of issues requiring consideration by the States and Territories when exploring options for access to cannabis for medicinal purposes, including:  ensuring secure possession and use among identified patients and carers;  preventing crime groups or individuals influencing the production, supply, transportation and administration of cannabis, for its approved use;  child safety and welfare requirements;  road safety enforcement relating to driving under the influence of cannabis; and  crime associated with increased diversion of controlled drugs to unauthorised use or misuse. These issues are critical for the robust and credible operation of a licensing scheme but are not relevant for the proposals considered by the RIS. The proposed regulatory requirements, including an identified and described line-of- sight to prescribers and patient groups, as allowed for under the Therapeutic Goods Act, as well as significant security requirements mean that it is not expected there will be a large industry in the short to medium term. Compliance costs While the cost impact is difficult to estimate in the absence of a current scheme, costs associated with the Commonwealth scheme may include application fees, enforcement and monitoring charges, costs linked to the scheme's obligations (such as record keeping and reporting) and costs associated with complying with the conditions of the licences, including fit and proper person documentation requirements. 11

The option could potentially incur start-up and ongoing costs to industry. Industry would also need to be educated on the new regulatory requirements and would potentially need to make changes to existing practices to accommodate them. Industry would also have to commit to monitoring, compliance and administrative costs incurred to demonstrate ongoing compliance with the regulation, including record keeping and reporting costs. Costs may include application fees, the time taken to pay licence fees, purchase and maintenance of plant and equipment to meet regulatory requirements, fees paid to training providers, provision of information to third parties (such as background checks on staff) and operational costs. There are several options for facilitating access to cannabis/cannabis products for medicinal and scientific purposes in Australia; however, any option that entailed cultivation of cannabis for non-industrial/horticultural purposes in Australia would trigger specific obligations under the Single Convention. This would involve a Commonwealth authority furnishing estimates on production levels to the International Narcotics Control Board (INCB)1, designating cropping areas, licensing cultivators, as well as maintaining exclusive right to import and export, wholesale trading, and maintaining stocks other than those held by manufacturers through a Single Agency (Single Convention Articles 23 and 28 - refer Attachment D). The following costs have been excluded from the calculation: Opportunity costs (unless they relate to a delay) - the quantification of opportunity costs is difficult due to the complexity in accurately predicting what a business would do as an alternative to this option; 1. Business-as-usual costs - the costings have only measured regulatory burden over and above what a normally efficient business would undertake in the absence of regulation; 2. The costs of non-compliance - this includes costs such as fines for failing to comply with a licence condition and legal fees; and 3. Indirect costs - these are costs that arise indirectly from the impacts of regulatory changes, including changes to market structure and competition impacts. 4. It is estimated that the Agency will incur costs of around $43,000 per year, estimated over a 10 year period. 1 The INCB is the United Nations body charged with overseeing the global licit narcotics industry. It is established under the Single Convention and, among other things, approves estimates on consumption and production that controls the import and export of licit narcotics. It does this to prevent accumulation of narcotics that could subsequently be a risk of diversion to non-licit uses with commensurate public health risks. 12

Estimate Table Average Annual Compliance Costs (from Business as usual) Costs ($m) Business Community Individuals Total Cost Organisations Total by Sector $406,966 $0 $0 $407,000 Cost offset ($m) Business Community Individuals Total by Organisations Source Agency $0 $0 $43,000 Within portfolio $0 $0 $0 $0 Outside $0 $0 $0 $0 portfolio Total by Sector $ $ $ $ Proposal is cost neutral? yes no Proposal is deregulatory yes no Balance of cost offsets 13

Section 5: Consultation Targeted consultation with States and Territories, researchers, manufacturers and Commonwealth departments has been ongoing throughout the development of the proposed options Consultation with Commonwealth Government departments and agencies has also occurred through the Standing Interdepartmental Committee on International Narcotic Issues (SIDCINI). This committee consists of representatives from the Department of Health, Prime Minister and Cabinet, Australian Customs and Border Protection Service, Agriculture and Water Resources, Australian Federal Police, Infrastructure and Regional Development, Attorney General's, Australian Competition and Consumer Commission, Foreign Affairs and Trade, Crime Commission, and the National Health and Medical Research Council. The ongoing consultations through SIDCINI ensure that Australia's national and international policy positions are mutually reinforcing, consistent and workable. As part of the Intergovernmental Committee on Drugs (IGCD), involving the Commonwealth, States and Territories, discussions have focussed on developing a nationally agreed approach to this issue. Without an agreed and activated national approach, there is a significant chance that individual jurisdictions will take different approaches to authorising cannabis and cannabis-derived products for medical use. Controls on the forms and uses of cannabis that differ between jurisdictions creates a significant risk of regulatory gaps that organised criminal groups would be highly likely to exploit and which may leave some patients and doctors without the access available in other jurisdictions. The IGCD have expressed the need for further research which has also been a recommendation of previous State and Territory inquiries into the use of cannabis for medicinal purposes, and is echoed nationally by key stakeholders. Extensive consultations have been undertaken with jurisdictions over recent months. Exposure drafts have been provided to jurisdictions and consultations have been ongoing. A consultation strategy has been provided to the Minister for Health to guide discussions with parliamentary colleagues and jurisdictions prior to and at the time of the introduction of the Bill. The Department is maintaining contact with States and Territories throughout the process. The required amendments to the Narcotic Drugs Act significantly affect both existing Commonwealth legislation and State and Territory legislation. Exposure drafts have been shared with jurisdictions for comment on 4 December 2015 and 6 January 2016. Jurisdictions have met face to face on two occasions and participated in several national teleconferences. Jurisdictions have also been contacted individually on occasions to discuss specific issues. Overall, there is support for the Commonwealth's approach to this issue. Stakeholder feedback has focussed on the following points:  Aligning the legislative changes to State and Territory timeframes;  Funding of the scheme;  Role of States and Territories on monitoring and inspection;  Protocols for information gathering and sharing;  Jurisdictions ability to influence licensing decisions; 14

 Patient access and cross border issues;  Exporting; and  Capacity of cultivators to grow both industrial and medicinal cannabis. These items have been addressed with jurisdictions. Several other key stakeholders, including the Australian Medical Association (AMA), Royal Australasian College of Physicians (RACP), Multiple Sclerosis (MS) Australia, MS Research Australia and Palliative Care Australia, have publicly expressed support for the facilitation of safe and effective access to cannabis for medicinal purposes in Australia. The AMA supports the Therapeutic Goods Administration regulatory process where medical products are approved as a therapeutic good, with a high level of scientific evidence. The AMA also supports the approved authorised prescriber pathway under the Therapeutic Goods Act as it still requires some evidence to support the use of a particular therapeutic product. While the AMA acknowledges that cannabis has constituents that have potential therapeutic uses, it argues that: 1. appropriate clinical trials of potentially therapeutic cannabinoid formulations should be conducted to determine their safety and efficacy compared to existing medicines, and whether their long-term use for medical purposes has adverse effects; 2. therapeutic cannabinoids that are deemed safe and effective should be made available to patients for whom existing medications are not as effective; 3. smoking or ingesting a crude plant product is a risky way to deliver cannabinoids for medical purposes and other appropriate ways of delivering cannabinoids for medical purposes should be developed; and that 4. any promotion of the medical use of cannabinoids will require extensive education of the public and the profession on the risks of the non-medical use of cannabis2. The RACP considered that 'while medicinal cannabis shows some potential for certain patients, further research is required to determine its efficacy and it should be subject to the same scrutiny as any other medicine'3. Both MS Australia and MS Research Australia are 'committed to supporting the provision of proven therapies for improving the lives of people with MS, and will continue to monitor the debate regarding cannabis use for medical purposes and their potential impact on people affected by MS'4. Palliative Care Australia believes 'there is a place for medicinal cannabis in medical treatments and palliative care for specific symptoms. There are patients and doctors 2 AMA Position Statement - Cannabis Use and Health - 2014, 1 May 2014 (https://ama.com.au/position-statement/cannabis-use-and-health-2014 3 Submission to Senate Inquiry in the Regulatory of Medicinal Cannabis Bill 2014 (www.aph.gov.au/sitecore/content/Home/Parliamentary _Business/Committees/Senate/Legal_and_Constitutional_Affairs/Medicinal_Cannabis_Bill/S ubmissions?main_0_content_1_RadGrid1ChangePages=3 4 Submission to Senate Inquiry in the Regulatory of Medicinal Cannabis Bill 2014 (www.aph.gov.au/sitecore/content/Home/Parliamentary _Business/Committees/Senate/Legal_and_Constitutional_Affairs/Medicinal_Cannabis_Bill/S ubmissions?main_0_content_1_RadGrid1ChangePages=3 15

who strongly stand by its use; however, what is needed, as is the case for any medications, is a strong evidence base and not only anecdotal stories'5. Two industry groups (Medicann and AusCann) have also made public their views in regards to the need to facilitate safe and effective access to cannabis for medicinal purposes in Australia. Medicann believe that 'medicinal cannabis should not be regulated by the current system (TGA)'. They argue that cannabis is a natural product and should be treated as such when it comes to the regulation of its use as a medicine or therapeutic good6. AusCann state that 'it is critical that dried medical cannabis is treated as much as possible like a medication by creating a licensing scheme for the commercial production and distribution of dried cannabis for medical purposes'7. Existing manufacturers licensed under the Narcotic Drugs Act have been made aware of the proposed changes, as there are consequential amendments proposed to the manufacturing provisions, including the application of a 'fit and proper persons' test for the first time. They are broadly understanding of the need for these changes and do not anticipate significant difficulty in complying. However, there has not been sufficient time to formally consult. Existing licences will continue under the previous conditions until they lapse, some as late as December 2018, so there is time for the Department of Health to continue dialogue with them to minimise any impact. Section 6: Recommended Option If Option 1, maintain the status quo, were chosen and some States/Territories proceeded to enable cultivation unilaterally, the Commonwealth would be considered non-compliant with the INCB and in breach of its international obligations under the Single Convention. Victoria introduced legislation to this effect to its Parliament in December 2015 and indicated that it would enact its legislation, if the Commonwealth were not to take action that had an equivalent effect. As such, the risk to Australia's compliance with its international obligations is extremely likely to be realised should Option 1 be progressed. This option may also have a negative impact on Australia's licit poppy market and consequently the global supply of licit opiates Importantly, some Australian patients may be at risk through the use of illicit sources of product with unknown and variable properties. Amending the Narcotic Drugs Act (Option 2) would facilitate the safe access to cannabis for medicinal purposes for patients in certain circumstances with defined conditions and the ongoing and enhanced pursuit of evidence through clinical trials in a way that is compliant with Australia's international obligations while adding minimal regulation to the Australian community. 5 Submission to Senate Inquiry in the Regulatory of Medicinal Cannabis Bill 2014 (www.aph.gov.au/sitecore/content/Home/Parliamentary _Business/Committees/Senate/Legal_and_Constitutional_Affairs/Medicinal_Cannabis_Bill/S ubmissions?main_0_content_1_RadGrid1ChangePages=3 6 Submission to Senate Inquiry in the Regulatory of Medicinal Cannabis Bill 2014 (www.aph.gov.au/sitecore/content/Home/Parliamentary _Business/Committees/Senate/Legal_and_Constitutional_Affairs/Medicinal_Cannabis_Bill/S ubmissions?main_0_content_1_RadGrid1ChangePages=3 7 Submission to Senate Inquiry in the Regulatory of Medicinal Cannabis Bill 2014 (www.aph.gov.au/sitecore/content/Home/Parliamentary _Business/Committees/Senate/Legal_and_Constitutional_Affairs/Medicinal_Cannabis_Bill/S ubmissions?main_0_content_1_RadGrid1ChangePages=3 16

Section 7: Implementation It is proposed that the Department of Health, through the newly established Office of Drug Control, will license those who cultivate, produce and manufacture cannabis and cannabis products for medical and scientific use, while the TGA would regulate the manufacture, registration and supply of medicinal cannabis products, in the same way that it does for all other therapeutic goods. The continued involvement of the TGA in this process is essential to ensuring that these products are safe and closely monitored. As this approach is currently undertaken for the regulation of other therapeutic goods and narcotic drugs, relevant and affected stakeholders, including the drug industry, are aware of the regulatory requirements. It is envisaged that all other powers (including the licensing of production and manufacture of cannabis products) would be covered by amendments to, or the current provisions of, the Narcotic Drugs Act along with the current provisions of the Therapeutic Goods Act, the Customs (Prohibited Imports) Regulations, the Quarantine Act and Customs (Prohibited Exports) Regulations. Implementation will need to allow for State and Territories to be consulted and to develop and secure their schemes in a complementary fashion to a Commonwealth scheme. Section 8: Conclusion Under Option 1, the Commonwealth is likely to become non-compliant with the Single Convention where States and Territories proceeded to allow cultivation unilaterally. Further, patients will continue to access illicit and potentially dangerous unregulated supplies, exposing themselves to health risks. Based on qualitative assessment of the options, the highest net benefit to the Australian community would be to facilitate the safe and effective access to cannabis for medicinal purposes by amending the Narcotic Drugs Act. This option will allow Australia to develop a safe, legal and sustainable local supply of cannabis for medicinal or scientific purposes. In turn, this will support greater local opportunities to research, develop, manufacture and supply cannabis for therapeutic products. Other benefits of a local cultivation include a potential new agricultural industry within Australia, similar to that already established for the use of Australian-grown poppies for medicinal and scientific purposes. In addition, allowing Australia to cultivate legal cannabis crops for medicinal use under strict local controls strikes the right balance between patient access, community protection and our international obligations. 17

Attachment A Australian State and Territory legislation providing penalties for possessing, using, making or selling or driving under the influence of cannabis. Jurisdiction Legislation New South Wales Drug Misuse and Trafficking Act (1985) New South Wales Government laws - General Australian Capital Territory Drugs of Dependence Act (1989) Criminal Code Regulation (2005) Australian Capital Territory Government laws - General Tasmania Misuse of Drugs Act (2001) Interpretation: Poisons Act (1971) Tasmanian Government laws - General Western Australia Cannabis Law Reform Act (2010) Victoria Drugs, Poisons and Controlled Substances Act (1981) The Therapeutic Goods (Victoria) Act (2010) Victorian Government laws - General Queensland Drugs Misuse Act (1986) Police Powers and Responsibility Act (2000) Queensland Government laws - General South Australia Controlled Substances Act (1984) Section 33L of the Controlled Substances Act (1984) Summary Offences Act (1953) South Australian Government laws - General Northern Territory Misuse of Drugs Act Northern Territory Government laws - General 18

Attachment B Single Convention on Narcotic Drugs 1961 ARTICLE 5 The international control organs The Parties, recognizing the competence of the United Nations with respect to the international control of drugs, agree to entrust to the Commission on Narcotic Drugs of the Economic and Social Council, and to the International Narcotics Control Board, the functions respectively assigned to them under this Convention. 19

Attachment C Reporting to the International Narcotics Control Board ANNUAL ESTIMATES OF REQUIREMENTS FOR NARCOTIC DRUGS, MANUFACTURE OF SYNTHETIC DRUGS, AND CULTIVATION OF THE OPIUM POPPY, THE CANNABIS PLANT AND THE COCA BUSH Single Convention on Narcotic Drugs of 1961: articles 1, 12 and 19. 1972 Protocol amending the Single Convention on Narcotic Drugs of 1961: articles 5 and 9. Part VI: This part concerns Governments of countries and territories that authorize the cultivation of the cannabis plant for the production of cannabis for medical and/or scientific purposes. 22. The information furnished should include the geographical location of land used for the cultivation of cannabis and the area estimated to be in use for the cultivation of cannabis during the calendar year to which the estimates relate, regardless of whether the sowing takes place in that year or in the preceding year. Geographical locations should be reported as precisely as possible, indicating state/province and county/municipality. Areas should be expressed in hectares (1 hectare is equal to 10,000 square metres). 20

Annual estimates of requirements for narcotic drugs (for all countries and territories) 1 2 3 4 Quantity to be utilized for the manufacture Quantity to be of: Quantity to Quantity to be consumed for be added to held in stocks at (a) (b) (c) domestic special 31 December of Other drugs Preparations Substances not medical and stocks the year to Narcotic included in covered by the scientific which the drug Schedule III 1961 purposes estimates relate of the Convention 1961 Conven tion Regardless of whether these other drugs, preparations or substances are intended for domestic consumption or for export kg g kg g kg g kg g kg g kg g Cannabis 21

Annual estimates of cannabis production (for Governments of countries and territories where the cultivation of the cannabis plant is authorized for the production of cannabis for medical and/or scientific purposes) I II III Area Total estimated used for the quantity of cannabis Cultivation of the Geographical location of land cultivation of the to be obtained in the cannabis plant used cannabis plant country Hectares Kilograms 1. For the production of cannabis for medical purposes 2. For the production of cannabis for scientific purposes 22

Attachment D Single Convention on Narcotic Drugs 1961 ARTICLE 23 National opium agencies 1. A Party that permits the cultivation of the opium poppy for the production of opium shall establish, if it has not already done so, and maintain, one or more government agencies (hereafter in this article referred to as the Agency) to carry out the functions required under this article. 2. Each such Party shall apply the following provisions to the cultivation of the opium poppy for the production of opium and to opium: (a) The Agency shall designate the areas in which, and the plots of land on which, cultivation of the opium poppy for the purpose of producing opium shall be permitted. (b) Only cultivators licensed by the Agency shall be authorized to engage in such cultivation. (c) Each licence shall specify the extent of the land on which the cultivation is permitted. (d) All cultivators of the opium poppy shall be required to deliver their total crops of opium to the Agency. The Agency shall purchase and take physical possession of such crops as soon as possible, but not later than four months after the end of the harvest. (e) The Agency shall, in respect of opium, have the exclusive right of importing, exporting, wholesale trading and maintaining stocks other than those held by manufacturers of opium alkaloids, medicinal opium or opium preparations. Parties need not extend this exclusive right to medicinal opium and opium preparations. 3. The governmental functions referred to in paragraph 2 shall be discharged by a single government agency if the constitution of the Party concerned permits it. 23

ARTICLE 28 Control of cannabis 1. If a Party permits the cultivation of the cannabis plant for the production of cannabis or cannabis resin, it shall apply thereto the system of controls as provided in article 23 respecting the control of the opium poppy. 2. This Convention shall not apply to the cultivation of the cannabis plant exclusively for industrial purposes (fibre and seed) or horticultural purposes. 3. The Parties shall adopt such measures as may be necessary to prevent the misuse of, and illicit traffic in, the leaves of the cannabis plant. 24

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 Narcotic Drugs Amendment Bill 2016 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Overview of the Bill The Bill amends the Narcotic Drugs Act 1967 (ND Act) to establish a licensing scheme for the cultivation and production of cannabis and cannabis resin for medicinal and related scientific purposes, and to replace the licensing provisions of the ND Act for manufacture of narcotic drugs. Cannabis sativa is a narcotic drug that is tightly controlled in Australia. The cultivation, production, manufacture, import, export, distribution, trade, possession, use and supply of cannabis and cannabis derived products are regulated by a number of Commonwealth laws. These laws include the Criminal Code which makes it illegal to traffic, import, export, manufacture, cultivate or possess cannabis in any form. In addition, various Commonwealth and State and Territory laws provide penalties for possessing, using, making, selling, or driving under the influence of, cannabis. Australia is a party to international agreements that aim to restrict production, manufacture, export, import, distribution, trade, and possession of narcotic drugs (including cannabis) exclusively to medical and scientific purposes. The Commonwealth has responsibility for ensuring that any scheme for the cultivation of cannabis for medicinal purposes is consistent with Australia's international obligations under the following three international drug control conventions: 1. the Single Convention on Narcotic Drugs (1961) (Single Convention), which specifies the obligations of signatory states in relation to narcotic drugs listed in schedules annexed to the Single Convention; 2. the Convention on Psychotropic Substances (1971), which aims to limit the use of psychotropic substances to medical and scientific purposes and also to ensure their availability for those purposes; and 3. the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988), which aims to promote cooperation between parties to address various aspects of illicit traffic in narcotic drugs and psychotropic substances. Under the Single Convention as amended by its 1972 amending Protocol, Australia has an obligation to carefully control, supervise and report on various stages of cannabis cultivation, production and manufacture. The purpose of the Single 25

Convention is to establish a framework to both prevent abuse and diversion of controlled narcotics and to ensure the availability of such drugs for medical purposes. Australia's obligations under the Single Convention include:  the prevention of diversion to illicit trafficking and uses;  a single agency to designate areas of land where cultivation can occur;  the licensing of cultivators by the agency;  control of cultivation and production to ensure there is no oversupply;  reporting annually to the International Narcotics Control Board (INCB). There is considerable public expectation that cannabis should be made available for medicinal purposes but limited pathways by which the further research is required to determine the efficacy of cannabis and its products as medicines can be undertaken (See further below in relation to the right to health.). The amendments will effectively allow the removal of the very serious penalties under Commonwealth, State and Territory law (up to 25 years for a commercial quantity) for the cultivation and production of cannabis. There are existing pathways for lawful access to cannabis for medicinal use - provisions in the Therapeutic Goods Act 1989 already allow the supply of medicinal cannabis products that have not been approved by the Therapeutic Goods Administration for general marketing in Australia, for use in individual patients where a medical practitioner deems it appropriate. Importation can be approved under regulations made under the Customs Act 1901. These supply provisions are, however, subject to State and Territory requirements, which in some cases may be a barrier to access. Further, there is considerable difficulty in importing supplies because of the lack of availability of legally produced medicinal cannabis products around the world. As a result, some patients, and the parents of patients, are accessing cannabis products for medicinal use on the 'black market'. The safety of these products cannot be guaranteed as they are produced illegally outside normal regulatory controls that would otherwise apply to medicines. Decisions to use medicinal cannabis in those circumstances are made without appropriate medical input and supervision. Finally, those involved are potentially subject to criminal prosecution. The proposed amendments to the ND Act are designed to help address this problem by creating a cultivation scheme that will allow for the supply of raw material for manufacture into safe and appropriate quality medicinal cannabis products which can be prescribed by medical practitioners in clinical trials, through authorised prescribers (subsection 19(5) of the Therapeutic Goods Act) or through the Special Access Scheme (subsection 19(1) of the Therapeutic Goods Act). The Bill envisages manufacturers obtaining licences if they are able to demonstrate a legitimate supply route; while cultivators would obtain a licence by demonstrating the ability to supply to a licensed manufacturer. In this way, the legislation will ensure an appropriate supply chain, without the possibility of oversupply or excess production, which creates a risk of diversion. The amendments include provisions that, if contravened, enable criminal sanctions to be imposed as well as providing for civil penalties to be sought in accordance with the Regulatory Powers (Standard Provisions) Act 2014. The sanctions are, in many cases, 26

very substantial and this reflects the serious nature of consequences that may flow from contravention of the provisions and the fact that the availability of narcotic drugs is required to be strictly controlled in order for Australia's regulatory arrangements to protect public health and to comply with obligations under the Single Convention. Human rights implications The Bill will engage the following rights:  Right to health - Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR);Error! Reference source not found.  Right to work - Article 6 of the ICESCR;  Right to privacy and reputation - Article 7 of the International Covenant on Civil and Political Rights (ICCPR);  Right to freedom of movement - Article 12 of the ICCPR;  Right to a fair trial/fair hearing - Article 14 of the ICCPR;  Right to the presumption of innocence - Article 14 (2) of the ICCPR;  Right to be free from self-incrimination - Article 14(3) of the ICCPR;  Right not to be tried or punished again for an offence for which a person has already been finally convicted or acquitted - Article 14 (7) of the ICCPR;  Right to freedom of association - Article 22 of the ICCPR. Right to health - Article 12 of the ICESCR Article 12 of the ICESCR promotes the right of all individuals to enjoy the highest attainable standard of physical and mental health. This includes the application of measures for the prevention, treatment and control of epidemic, endemic, occupational and other diseases (Article 12(2)). Internationally there has been increased attention on cannabis as a treatment option for a number of medical conditions. The use of medicinal cannabis has been advocated for a range of illnesses and disorders including as a treatment for paediatric epilepsy, chronic pain and terminal illness pain, the symptoms of multiple sclerosis, and for reducing nausea during chemotherapy. There is some evidence to suggest that it could be effective to reduce the impact of symptoms but the current evidence is limited. More extensive research is required to determine the efficacy of cannabis and its products as medicines. In Australia, some States have indicated that they will undertake clinical trials among children with severe drug resistant, epilepsy while also exploring a range of other clinical trials in adults such as pain relief for people who are terminally ill. These clinical trials will provide a platform for rigorous medical research and will build an ongoing evidence base on the use of medicinal cannabis in the treatment of various symptoms and conditions. There is very limited availability of appropriately grown and manufactured medicinal cannabis products for clinical trials in Australia as currently they need to be imported and their supply is very restricted. However some patients believe that cannabis products are a valuable treatment option for them and this has led to a 'black market' supply of products whose constituents, both in ingredient type and strength, are not controlled or produced in a medicinal 27

quality process. Because of this the safety of these products is not fully known, nor is the efficacy of the various products able to be consistent. The Bill promotes the right to health by:  providing a mechanism by which access to medicinal cannabis products that have been produced and manufactured in a highly regulated environment (from cannabis that has been cultivated in a highly regulated environment) can be facilitated for use in clinical trials and on the advice of medical practitioners for medically acceptable applications;  providing for a supply chain for cannabis cultivated in Australia to manufacture quality medicinal cannabis products;  integrating with existing provisions under the Therapeutic Goods Act that allow for supply of medicines that have not been approved for general marketing by the Therapeutic Goods Administration, where there is a genuine medical need and engaging appropriate medical supervision, which is currently missing from 'black market' supply. The amendments include a new regulation-making power to establish quality standards for cultivation. This allows for health enhancing standards to be mandated and gives flexibility to respond to emerging health issues that might arise, for example, new pesticides or contamination risks that are not currently foreseen. This will help ensure that products manufactured from material cultivated under licences are safer than the black market products currently being used. Manufacturers of medicinal cannabis products will also be subject to relevant quality standards enforced under the Therapeutic Goods Act. Right to work - Article 6 of the ICESCR Articles 6(1) of the ICESCR protect the right of everyone to the opportunity to gain his or her living by work which he or she freely chooses or accepts, and rights at work while Article 7 recognises the right of everyone to the enjoyment of just and favourable conditions of work. These rights may be subject only to such limitations 'as are determined by law only in so far as this may be compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society'. New Chapters 1, 2 and 3 of the ND Act, which are to be inserted by Schedule 1 to the Bill, include provisions that limit these rights in order to ensure that cannabis is not cultivated or manufactured for illegal purposes. Persons may be prevented from holding a licence under the ND Act on the basis that they are determined not to be fit and proper to do so or that they may have business associates that are not fit and proper. In this way the ND Act may be seen to be limiting their right to work. New section 8A in Chapter 1 contains provisions that set out the matters to be taken into account by the Secretary of the Department of Health (the decision-maker under the ND Act) in determining whether or not an applicant for a licence, a licence holder or a business associate of an applicant or holder is fit and proper person. New sections 8G and 9F in Chapter 2 require the Secretary to be satisfied that an applicant and any relevant business associates are fit and proper to hold a cultivation licence for medicinal cannabis or related research. New section 11J contains similar provisions for applicants and relevant business associates in relation to the grant of a manufacture licence. Under new sections 10P in Chapter 2 and 13B in Chapter 3, a 28

licence must be revoked if the Secretary is of the view that the holder is no longer a fit and proper person, or a business associate is not a fit and proper person. These provisions are necessary to address the high diversion risk associated with cannabis, which is very valuable on the illicit market. It is very likely that without effective regulatory controls in place, this industry will attract organised crime elements looking to profit from the 'black market' under the legitimacy of an authorised cultivation or manufacturing set up. The fit and proper person test, which takes into account convictions, imposition of civil penalties, revocations of drug regulation licences and financial situation, among other things, is designed to exclude persons who have a relevant criminal history, could be either involved in organised crime or might be susceptible to approaches from organised crime. These limitations are appropriate given the nature of the businesses that are being regulated. Allowing these persons into the industry represents a greater risk to public health and regulatory effectiveness. Accordingly, these provisions are reasonable and proportionate to achieving the legitimate outcome. It will be a statutory condition on every licence, under new section 10K in Chapter 2 and new section 12N in Chapter 3, for the holder to advise the Secretary of matters that might affect their ongoing fit and proper status and that of any business associate. The Secretary must revoke a licence under new section 10P in Chapter 2 and new section 13B in Chapter 3 when satisfied the licence holder or business associate is not fit and proper, as well as where there are breaches of condition and other matters. In operation, these provisions could have the effect of closing a business, thus affecting the employment status of those working in the business (regardless of whether or not they have been implicated in the non-compliant behaviour). Again, it is appropriate that the Secretary have the ability to curtail a business that represents a risk to public health and public order. The fact that a licence can be cancelled works as a deterrent to a licence holder from engaging in activities that would breach the conditions of their licence and could affect their livelihood, and encourages licence holders to ensure that their staff are aware of their relevant regulatory obligations. Finally, it is also a statutory condition on every licence under new section 10F in Chapter 2 and new section 12H in Chapter 2 that a licence holder only employ only 'suitable persons'. This would exclude those that have been convicted of a serious offence during the previous 5 years. ('Serious offence' is defined in new subsection 4(1) to be inserted by Schedule 1 to the Bill as an offence against a law of the Commonwealth, a State or a Territory, or of another country, that involves dishonesty, fraud or cultivation of, or trafficking in, drugs punishable by imprisonment for not less than 3 months, or an offence against a law of the Commonwealth, a State a Territory or another country that is punishable by imprisonment for not less than 5 years.) This provision is designed to address the risk of infiltration by organised crime below management level. Employees will have access to highly divertible material with a high 'street value' and so ensuring persons that are not going to engage in illicit activities is essential to the protection of public health and to help meet Australia's international obligation to control diversion. Decisions on the granting or revoking of a person's licence (including on the basis of a breach of the condition relating to employment of staff) are subject to review by the 29

Minister, the Administrative Appeals Tribunal and the Federal Court. The ability to seek review of these decisions helps ensure that only those persons who do not fulfil the fit and proper persons test, or comply with licence conditions around 'suitable persons', will be prevented from holding a licence. The limits imposed by the Bill are both reasonable and proportionate to achieve a legitimate outcome. The right to work in Articles 6(1), of the ICESCR is limited by these provisions only so far as is necessary to reduce the risk that cannabis grown under licence will enter the black market, and are reasonable and proportionate to achieving that objective. Freedom of movement - Article 12 of the ICCPR Provisions in Chapter 5 proposed to be inserted by Chapter 1 of the Bill may be seen to limit this right. Chapter 5 New section 14P in Chapter 5 gives the Secretary to give to a holder of a cannabis licence directions relating to the security of premises. Among these is the power to give directions 'to take specified measures for preventing the entry of persons or vehicles into, or the departure of persons or vehicles from, land and premises other than at specified places'. In operation, this power may be seen to operate to temporarily infringe on a person by requiring licence holders to prevent employees or others from leaving the premises. However, this does not limit freedom of movement as it merely places restrictions on where a person may enter and leave land and premises, it does not prevent them from leaving. In this industry, it will be important to be able to monitor the ingress and egress of persons such that the removal of divertible material from the premises is prevented. These controls are essential to the security of the premises. Decisions by the Secretary to issue a direction under these provisions are subject to review by the Minister and by the Administrative Appeals Tribunal. The Bill does not infringe on a person freedom of movement as the directions powers are about ensuring proper ingress and egress of persons to control the flow of divertible material. As such, the measure is reasonable and proportionate. There are review provisions through both the Minister and the Administrative Appeals Tribunal (and to the Federal Court) to protect against the risk of abuse or arbitrary exercise of discretion. The limits imposed by the Bill are both reasonable and proportionate to achieve a legitimate outcome. Right to a fair trial / hearing - Article 14 of the ICCPR Article 14 of the ICCPR guarantees equality before courts and tribunals, and, in the determination of criminal charges, or any suit at law, the right to a fair and public hearing before a competent, independent and impartial court or tribunal established by law. This guarantee includes respect for the principle of `equality of arms', which requires that all parties to a proceeding must have a reasonable opportunity of presenting their case under conditions that do not disadvantage them as against other parties to the proceedings. Those charged with a criminal offence have the rights set out in Article 14(2) to (7), including the presumption of innocence and the guarantees set out in Article 14(2). Under certain circumstances, a civil penalty can be characterised as 'criminal' for the purposes of the application of Article 14. 30

New civil penalty provisions proposed to be inserted by Schedule 1 of the Bill (see subsections 11B(4), 11C(4), 11D(4), 11E(4), 13E(4) and 13F(4)) provide for civil penalty amounts to be awarded as a maximum, 1,000 penalty units for individuals ($180,000). These provisions involve the undertaking of unauthorised activities under a licence and breaches of licence conditions by the licence holder. The civil penalty provisions in the Bill are provided as disciplinary alternatives to the punitive or deterrent criminal offences a maximum of 10 years imprisonment and a fine of 600 penalty units. Civil penalties will also enable an effective disciplinary approach to dealing with non-compliance by corporations. They only apply to licence holders and those authorised under a licence to carry on activities that would otherwise be criminal. While a criminal penalty is deterrent or punitive, the objectives of these civil penalties are regulatory or disciplinary in nature and apply to a class of persons, licence holders, who can reasonably be expected to be aware of their obligations under the legislation and who have voluntarily sought the approval of the Commonwealth to engage in an activity that is regulated under very clear conditions. Accordingly, the civil penalty provisions in the Bill should not be considered 'criminal' for the purposes of human rights law. In addition, there are other levels of regulatory actions that can be taken before escalating to civil penalties, including imposition of additional conditions or varying the activities that can be undertaken under the licence, the issuing of directions, giving of infringement notices, the accepting of enforceable undertakings and, if necessary, the revocation of a permit or the licence. The maximum penalty amount of 1,000 for an individual ($180,000) is considered justified given the nature of the conduct and will provide the appropriate incentive for those regulated under the Act to comply with regulatory requirements. Other civil penalty provisions proposed to be inserted by Schedule 1 (including include new subsections 14M(4), C15C(4) and subsection 15D(4)) involve failure by a licence holder to comply with a notice to provide information or documents or to comply with a direction relating to their licence for which the penalty is 500 and 600 penalty units for individuals, respectively. Based on the above factors, the cumulative effect of the nature and severity of the civil penalties in the Bill is unlikely to be considered 'criminal' for the purposes of human rights law. Right to the presumption of innocence - Article 14(2) Article 14(2) of the ICCPR provides that everyone charged with a criminal offence shall have the right to be presumed innocent until proven guilty according to law. The right to presumption of innocence is also a fundamental common law principle. When 'strict liability' applies to an offence, the prosecution is only required to prove the physical elements of an offence, not the fault elements, beyond reasonable doubt in order for the defendant to be found guilty. The defence of honest and reasonable mistake of fact is available to the defendant (see section 9.2 of the Criminal Code). Strict liability is used in circumstances where there is public interest in ensuring that regulatory schemes are observed and it can reasonably be expected that the person was aware of their duties and obligations. Strict liability offences can be considered a 31

limitation of the presumption of innocence because the defendant can be found guilty without the prosecution being required to prove fault. Strict liability offences will not necessarily be inconsistent with the presumption of innocence provided that removal of the presumption of innocence pursues a legitimate objective and is reasonable, necessary and proportionate to achieving that objective. Whether a strict liability provision impermissibly limits the right to the presumption of innocence will depend on the circumstances of the case and the particular justification for an offence being a strict liability offence. The following are strict liability offences (as well as fault-based offences):  breaching conditions of licences (for instance growing high THC cannabis when only authorised by a permit to cultivate low THC cannabis or failing to comply with the conditions about security of cannabis cultivated under the licence) (see new subsections 11C(3), 11E(3) and 11F(3));  engaging in activities that are not authorised by a licence (for instance, cultivating in premises that have not been approved in relation to security) (see new subsections 11B(3) , 11D(3) and 13E(3));  failing to provide assistance to, or obstructing or hindering, an inspector who is authorised to enter licensed premises and monitor compliance (new subsection 14G(2));  failing to provide information or documents required by the Secretary within the specified period (new subsection 14M(3));  failing to comply with a direction issued by the Secretary (new subsection 15C(3));  supplying by the licence holder of a drug or narcotic preparation not labelled in accordance with a direction (subsection 15D(3)). These strict liability offences have been created to reflect the strong public interest in ensuring that the provisions of the licence are properly followed and that monitoring powers are effective to ensure that the overall objective of preventing diversion is met. In the main, the strict liability offences only apply to the licence holder, who can reasonably be expected to understand the conditions and obligations that apply to a licence holder under the ND Act. The breach of condition strict liability offences (new subsections 11C(2), 11E(2) and 13F(2)) also apply to other persons authorised under a licence to undertake the relevant activities. As it is a statutory condition imposed on all licence holders (see new sections 10E and 12G) that they inform any person authorised by the licence about any relevant conditions and directions, these persons will be aware of their obligations. The strict liability provisions are not punishable by imprisonment. They are punishable by a fine of up to 60 penalty units (300 penalty units for a body corporate) which reflects the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. The strict liability offences in the Bill are regulatory in nature and act as a deterrent to behaviour that would compromise the operation of the cultivation and manufacturing scheme. They are compatible with Article 14(2) of the ICCPR, as they pursue a legitimate objective in acting as a deterrent to unauthorised activities that may otherwise represent a risk to public health, and they are reasonable and proportionate in achieving that outcome. 32

Right to be free from self-incrimination - Article 14(3)(g) Article 14(3)(g) of the ICCPR protects the right of an individual to be free from self- incrimination in the determination of a criminal charge by providing that a person cannot be compelled to testify against him or herself or confess guilt. The common law also recognises the privilege against self-incrimination, which applies unless expressly or impliedly overridden by statute. The privilege against self-incrimination may be subject to permissible limits but any such limitations must be for a legitimate objective and be reasonable, necessary and proportionate to that objective. This Bill limits the right for an individual to be free from self-incrimination where the exercise of this right could seriously undermine the effectiveness of the regulatory scheme and prevent the collection of evidence. New section 24B inserted by Schedule 1 to the Bill abrogates the privilege by providing that a person is not excused from providing information in certain limited circumstances even though that information might tend to incriminate the person or expose them to a penalty. The provisions to which section 24B will apply are:  new sections 10K and 12N - these are statutory conditions imposed on the holder of a licence to inform the Secretary of matters that could require or allow the Secretary to revoke the licence including, matters affecting whether the licence holder remains a fit and proper person, and any breach of the licence;  new section 14J- this is a power for the Secretary to request information or documents from applicants for a licence and from licence holders. The Secretary must refuse a licence application if any information requested under new subsection C14J(1) is not provided (paragraphs 8G(1)(h), 9F(1)(h)) and 11J(1)(h)) and conditions can be imposed requiring the provision of information to the Secretary (see paragraphs 10D(1)(l) and 12F(l)). A breach of any such condition or the failure of a licence holder to respond to a request for information (also an offence under new section 14M if the person is a licence holder) would both be grounds for revocation of the licence (see new paragraphs 10P(2)(a) and (i), and 13B(2)(a) and(i)). However, these provisions do not themselves override the right to be free from self-incrimination as, in common law, it must be expressly over-ridden by statute. Without limiting this right, applicants and licence holders could withhold pertinent information that would seriously undermine the effective operation of the licensing system and the Secretary would not have grounds to refuse to grant a licence or to revoke a licence, as would be justified if the full facts were known. For example, a person may have no criminal convictions yet have extensive ties to organised crime or associate with people who have such ties. This person could potentially engage in illegal activities using the licence as a cover for those activities. Alternatively, that person may be influenced by other persons to allow them to engage in illegal activities. While in some cases it may be feasible to obtain information by other means or from other persons or agencies, there will be occasions when the relevant information is only known by that person or it is not feasible to do so, which could significantly increase the risk of illegal activities being undertaken undetected. 33

Without the abrogation of the right to be free from self-incrimination, the regulatory scheme would be seriously compromised. The public benefit of its removal outweighs the loss of personal liberty. The abrogation of the privilege has been limited so that self-incriminatory disclosures cannot be used against the person making the disclosure in any criminal proceedings or in any proceedings for contravention of a civil penalty proceeding (so-called 'use immunity'). It can however be taken into account for the purposes of a decision about whether to revoke the licence or any review of such a decision, or to take any other regulatory action in relation to a licence or permit. Exceptions are also made in relation to proceedings arising out of sections 137.1 and 137.2 (which deal with the giving of false or misleading information and documents to the Commonwealth) and of subsection 149(1) (which deals with obstruction of Commonwealth officials). The other exception made is in relation to new subsection 14M(1) under which a licence holder is liable for a failure to comply with a notice from the Secretary under new subsection 14J(2) to provide information or documents about matters relating to a licence or any permit granted in relation to the licence. The information provided by the licence holder in purported compliance with the notice may be the only evidence the Secretary has of non-compliance with the licence. The capacity of the Secretary to obtain accurate and full information from licence holders will be absolutely essential to the overall effectiveness of the licensing scheme and any capacity on the part of the licence holder to withhold relevant information could seriously undermine Australia's ability to comply with its international obligations under the Single Convention. New subsection 26B(1) does not include a 'derivative use immunity' (which would otherwise protect information provided by the individual from being used to investigate unlawful conduct by that person but could be used to investigate third parties). This reflects the nature of the activities that are being regulated. The Commonwealth needs to be in a position to ensure that efforts to control the illegal activities associated with the cultivation of cannabis are not undermined by any lack of capacity to use information it has available to it for that purpose. The inclusion of a derivative use immunity has the potential to do so. This approach is consistent with the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. These limitations of the right to be free from self-incrimination under Article 14(3)(g) of the ICCPR are permissible as protections apply to ensure the exercise of these powers is reasonable and proportionate to achieving the legitimate objective, and adequate safeguards apply to prevent the risk of abuse or arbitrary exercise of discretion. Right not to be tried or punished again for an offence for which a person has already been finally convicted or acquitted - Article 14 (7) Article 14(7) of the ICCPR prohibits an individual from being tried or punished again for an offence for which he or she has already been finally convicted or acquitted in accordance with the law and penal procedure of each country--commonly known as the prohibition on double jeopardy. This prohibition is limited to proceedings relating 34

to a criminal charge, however it is noted that whether a proceeding is civil or relates to a criminal charge under Article 14(7) is determined by the substance and the effect of the proceedings themselves, rather than their label under domestic law. The right not to be twice tried or punished for the same offence may be engaged as the Bill permits both criminal and 'civil' proceedings (considered criminal for the purposes of international human rights law) to be brought against a person for the same conduct. However, the commencement and conduct of such proceedings is subject to the Regulatory Powers (Standard Provisions) Act 2014 (see new section 13N). Under Part 4, Division 3 of that Act, criminal proceedings may be commenced against a person after they have been ordered to pay a civil penalty for the same conduct. However, civil proceedings for the same conduct for which criminal proceedings have commenced are stayed and can only be re-instated if the person is not convicted. Right to privacy and reputation- Article 17 Article 17 of the ICCPR provides for the right not to be subjected to arbitrary or unlawful interference with privacy. The prohibition on interference with privacy prohibits unlawful or arbitrary interferences with a person's privacy, family, home and correspondence. It also prohibits unlawful attacks on a person's reputation. Personal information - fit and proper person test The Bill engages the right to privacy because it provides:  for collecting, using, storing and disclosing personal information (including information about a person's reputation and criminal record), and  for interference with a person's home and family life by requiring the provision, and allowing collection of personal information about the family of the person (an applicant's/licence holder's relatives are relevant to a determination by the Secretary of whether the person is 'fit and proper'). The fit and proper persons test (see new section 8A in relation to applicants and licence holders who are individuals and 8B in relation to applicants and licence holders that are body corporates) is applied not only to an applicant for a licence and to a licence holder during the period a licence is in force, but also any business associates that the Secretary deems to be relevant. The test involves consideration of the following (all of which would require the collection of personal information):  where the applicant/licence holder is an individual - convictions for offences, liability for civil penalties, any revocations of licences under drug regulation laws, the connections and associations of the person (including family), the person's previous business experience, financial circumstances and whether the person is of 'good repute'  where the applicant/licence holder is a body corporate - information about the involvement of current directors and officers with any criminal convictions of the company or civil penalties for which it has been liable, the connections and associations of any director or officer (including their families), the previous business experience of the directors and officers, and also of any shareholders presently in a position to influence the management of the body corporate and whether the directors and officers are of good repute. 35

An applicant will be required to provide information relating to these matters (see sections 8F, 9E and 11H) and the Secretary will be able (under new sections 14K and 14L) to seek such information from third parties, including Commonwealth, State and Territory agencies (which would necessarily involve disclosing, as well as collecting, personal information). Moreover, a licence holder will be required to inform the Secretary of any matters that might affect the assessment of whether the licence holder is fit and proper or whether their business associates are fit and proper (see new sections 10K and 12N). This information may give rise to the taking of regulatory action by the Secretary, for instance to revoke the licence, if the Secretary came to the view that a business associate of the holder was not a fit and proper person. These provisions are necessary because of the need to prevent diversion of material that has an extremely high, illicit value and to ensure licences are only granted (and retained) by those who represent a low risk of diversion. An applicant seeks a benefit from the Commonwealth when applying for a licence and does so in full knowledge of the implications of that application. A licence holder is also required under a mandatory condition (see sections 10F and 12H) not to employ staff who have been convicted of a serious offence (as defined in subsection 4(1)) or who is under the regulations 'taken not to be suitable'. These regulations will set out other circumstances in which a person is not to be employed by a licence holder relating to the person's criminal record and employment history. Not only will this require the employer to seek sensitive personal information about all persons considered for employment, the Secretary would be able to access that information for the purposes of determining whether that condition had been breached (see the powers in Parts 3 and 4 of Chapter 4). These provisions of the Bill are neither arbitrary nor unlawful. The mechanisms used in the Bill authorise the collection, use and disclosure of the information in a manner consistent with the Privacy Act or authorises a departure from certain provisions of the Privacy Act (see for instance new sections 14K and 14L). They are not arbitrary because they serve the legitimate purpose of providing the Secretary with critical information about persons relevant to the ND Act licensing scheme. If such information is not provided (whether from applicants themselves or from third parties) the Secretary's capacity to form a judgement about the risk of diversion or other non-compliance would be severely compromised. Obtaining a licence for this new industry is voluntary, and licensing allows a person to undertake an activity that would otherwise be criminal in nature - which would tend to justify a greater intrusion. The absence of such information would create a real prospect of compromising the integrity and robustness of the scheme, thus creating a risk to public health. Reputation - fit and proper person test Article 17(2) also prohibits unlawful attacks on a person's reputation. The fit and proper person test allows for the consideration and evaluation of a person's reputation and thus may be viewed as engaging this protection (for instance, new paragraph 8A(h) refers to whether the person is of good repute, having regard to matters going to their character, honestly and professional and personal integrity). However, it is clear that the test is provided for by law. Further any consideration by the Secretary of a person's reputation (by reason of the making of a decision in relation to a grant of 36

revocation of a licence) would not normally be expected to enter the public domain (subject to the applicant or licence holder choosing to ventilate the issue through the Administrative Appeals Tribunal or the Federal Court through the review process). Powers of monitoring and inspection The Bill also allows authorised inspectors to monitor and inspect premises which may be considered to form part of a person's home or workplace within the scope of Article 17. Chapter 4 provides for compliance and enforcement powers, including for powers from the Regulatory Powers Act. New sections 13K and 13M and sections 18 and 48 of the Regulatory Powers Act, provide for powers to enter premises, which enables a number of monitoring and investigation powers to be exercised on those premises of the kind referred to in sections 19 and 49 of the Regulatory Powers Act. These powers include the ability to search the premises, inspect documents or things on the premises, take extracts or copies of documents and sample anything on the premises, seize evidence and ask questions and seek production of documents (through the application of sections 24 and 54 of the Regulatory Powers Act). The monitoring powers are proposed to be modified (see new section 13L) to include the power to take samples and remove the test such samples (which reflects the nature of the things and activities regulated under the Act). Consistently with other legislation which involves licensing (such as the Therapeutic Goods Act 1989 and Gene Technology Act 2000), Part 4 of Chapter 4 includes additional powers excisable by authorised inspectors in relation to licensed premises, without requiring consent or a warrant (see new section 14C). These powers are concomitant with the statutory condition imposed on all licences under new section 10H (in relation to cultivation and production) and new section 12K (in relation to manufacture). The powers are only to be used for the purpose of determining whether the Act has been, or is being, complied with, determining whether information provided for the purposes of this Act is correct, deciding whether to exercise a power under the Act (new section 14C), and to take samples for testing (new section 13L). The powers are limited to the monitoring powers in section 19 of the Regulatory Powers Act (including the additional taking of samples for testing powers referred to above). Noting that the Human Rights Committee has taken the view that a person's home can include their place of work, the powers of authorised inspectors to enter licensed premises are, in the context of the regulatory scheme, justifiable and reasonable. They can only be exercised during business hours (see new subsection 14C(2), only after an appropriate announcement of the entry and explanation of the reasons (see new section 14D) and only for a legitimate purpose - to ascertain whether the licence is being complied with. These powers are necessary for the legitimate objective of ensuring that relevant information required under the Act and information required to assess compliance with the Act, is accessible and available to authorised inspectors (and thus the Secretary) when required. The interferences with privacy allowed for by this Bill are lawful and reasonable, necessary and proportionate to ensuring that cannabis licensed for cultivation and manufacture for medicinal or scientific purposes is not diverted to the black market. 37

Right to freedom of association - Article 22 of the ICCPR Article 22 of the ICCPR protects the right of individuals to free association with others. It also states that the only permissible limitations to this right are those 'which are prescribed by law and which are necessary in a democratic society in the interests of national security or public safety, public order, the protection of public health or morals or the protection of the rights and freedoms of others'. In all cases, restrictions must be provided for by legislation (or imposed in conformity with legislation), must be necessary to achieve the desired purpose and must be proportionate to the need on which the limitation is based. Chapters 1, 2 and 3 to be inserted in the ND Act by the Bill contain provisions that, together, might be interpreted as limiting this right. Fit and proper persons test The fit and proper persons test is applied not only to an applicant for a licence and to a licence holder during the period a licence is in force, but also any business associates that the Secretary deems to be relevant. Moreover the test of whether a person is fit and proper (see new sections 8A and 8B) includes consideration of the person's associations and connections with other persons (including relatives), and where the applicant or licence holder is a body corporate, the connections and associations of the directors and officers with other persons (including their families). A licence holder would be required to inform the Secretary of any matters that might affect the assessment of whether the licence holder is fit and proper or whether their business associates are fit and proper (see new sections 10K and 12N). This would include persons with whom they associate or have connections. This information may give rise to the taking of regulatory action by the Secretary, for instance to revoke the licence, if the Secretary came to the view that a business associate of the holder was not a fit and proper person. While this could be seen to limit the persons with whom a licence holder can associate with, and with the licence holder's ability to make new business associations, in reality, the licence holder is not prevented from having these associations, though it may put the licence in jeopardy. These provisions are necessary because of the need to prevent diversion of material that has an extremely high, illicit value. Business associates and others may have influence over the applicant or licence holder such that they may be able to compel the applicant or licence holder to undertake illegal activities on their behalf, through inducement or other means. Further, business associates or family members may be able to use their relationship with the applicant or licence holder to gain direct access to material to be trafficked illegally. A person seeking the benefit from the Commonwealth in the form of a licence does so in the knowledge that the existence of certain associations, or the entering into in the future of certain relationships, may result in the rejection of an application, or revocation of a licence. The limitation on association for licence holders is both reasonable and proportionate and consistent with the allowed limitations on the freedom of association. 38

Conclusion The Bill is compatible with human rights because it promotes the right to health, and to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate The Hon Sussan Ley MP, the Minister for Health 39

NARCOTIC DRUGS AMENDMENT BILL 2016 NOTES ON CLAUSES Clause 1 - Short title This clause provides that the Bill, once enacted, may be cited as the Narcotic Drugs Amendment Act 2016. Clause 2 - Commencement This clause provides that sections 1 and 3 and anything in the Bill not elsewhere covered in the table will commence on Royal Assent. Schedules 1 and 2 amend the Narcotic Drugs Act 1967, Schedule 3 contains transitional provisions, Schedule 4 contains amendments to the Schedules to the Narcotic Drugs Act and Schedule 5 contains a consequential amendment to the Therapeutic Goods Act 1989. Schedule 1 will commence on a date to be fixed by proclamation and Schedules 3, 4 and 5 will commence on the same day. Schedule 2, which allows the Secretary to authorise a State or Territory Government agency to undertake cultivation and production of cannabis and manufacture of medicinal cannabis products, will also commence on a day to be fixed by proclamation and is expected to commence soon after Royal Assent. This will allow government controlled cultivation and manufacture to take place before the regulations that facilitate private industry are completed (and Schedule 1 commences) and will speed access for patients. The Victorian Government has introduced legislation into the Victorian Parliament in December 2015 for this purpose. It is proposed that the period within which all the provisions of the Act come into force will be 8 months, rather than the usual 6 months. It will be important for the effectiveness of the cannabis cultivation licensing scheme that the full suite of regulations and subsidiary legislation necessary to support it is ready by the time that remaining schedules commence. With the expected inter-action between the licensing regime and land management, drug regulation and public health, the States and Territories have indicated their interest in continuing their contribution, in particular in the development of how the detailed framework under which the proposed licensing regime will operate. Ongoing, close and extensive consultation with the States and Territories will be important if a consistent national approach is to be achieved. It is intended that the remaining provisions of the Bill will come into effect as soon as possible after those consultations are complete. Clause 3 - Schedules This clause provides that each Act that is specified in a Schedule to this Bill is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms. 40

Schedule 1 -- AMENDMENTS RELATING TO MEDICINAL CANNABIS Narcotic Drugs Act 1967 Item 1 - Title This item amends the title of the Narcotic Drugs Act 1967 (the Act) to reflect that fact that the Act will now deal with more than the manufacture of drugs. Item 2: - Part 1 (heading) This item will replace the current heading to Part 1 with two new headings - Chapter 1 (Preliminary) and Part 1 (General provisions). Item 3 - After section 2 This item will insert a new section 2A (Object of this Act) to make it clear that the object is to give effect to Australia's obligations under the Single Convention on Narcotic Drugs, 1961, as in force from time to time (the Single Convention). Item 4 - Section 3 This item will repeal section 3 (which is redundant) and include a new section 3 (Simplified outline of this Act). The new section 3 includes references to:  the Act giving effect to the Single Convention,  the licensing and permit scheme to regulate the cultivation of cannabis plants and the production of cannabis and cannabis resin, and related activities,  a separate licensing and permit scheme to regulate the manufacture of drugs covered by the Single Convention,  authorised inspectors having monitoring, inspection and enforcement powers under the Regulatory Powers (Standard Provisions) Act 2014 (the Regulatory Powers Act) and for the Secretary to give directions to licence holders and former licence holders, and  the authorisation of State and Territory agencies to undertake cultivation of cannabis plants and production of cannabis and the manufacture of certain drugs, activities that would otherwise require a licence. Item 5 - Subsection 4(1) This item repeals subsection 4(1) and replaces it with new subsection 4(1), which includes additional definitions of terms that will be as a result of the amendments. The definitions refer in some instances to definitions that are included in the Single Convention. By referring directly to the Single Convention, definitions will remain consistent. A copy of the Single Convention as amended is included as a new schedule to the Act to be inserted by Schedule 5 so it can be easily referenced. 41

The definitions kept from the repealed subsection include cannabis, cannabis resin, coco leaves, Collector, drug, narcotic preparation, opium, Secretary (slightly amended) and the Convention (slightly amended). The definition of Secretary now refers to the Secretary of the Department administered by the Minister administering the National Health Act 1953 (which is a drafting rather than substantive change), and the definition of the Convention is now a definition of Convention, which includes a reference to the amendments made by the Protocol (now also defined as the Protocol Amending the Single Convention on Narcotic Drugs, 1961 done at Geneva on 25 March 1972), and as amended from time to time. Again, it is a drafting rather than substantive change. New definitions include the following: Business associate (and related definitions of relative, relevant financial interest, relevant position and relevant power), cannabis plant, cultivate a cannabis plant, medicinal cannabis product, production and serious offence. The definition of business associates sets out the circumstance in which 2 or more persons are taken to be business associates. In order to grant a licence, the Secretary has to be satisfied, not only that the applicant is a fit and proper person, but that any relevant business associate is a fit and proper person to be associated with the holder of a licence and must revoke a licence if a relevant business associate is not a fit and proper person to be associated with the licence holder. Under the definition, a person will be a business associate of the applicant for a licence or a licence holder in relation to a particular business if each of them:  holds a relevant financial interest in the business (this means a share in the capital of the business or an entitlement to receive any income from the business), or is entitled to exercise a relevant power in the business (this means any power to participate in any directorial, managerial or executive decision in the business or elect or appoint any person to a relevant position in the business), and is thus able to exercise a significant interest over the management or operation of the business, or  holds any relevant position in the business (this means a director, partner, trustee, manager or other executive position, or secretary). Even though the Secretary must refuse to grant, and must revoke a licence, if satisfied a business associate is not fit and proper, and the business associate can be a business associate in relation to any business (not just the business associated with the licence), there is some discretion in deciding which business associates are relevant to a particular application decision. Cannabis plant The definition expands the definition of 'cannabis plant' in the Single Convention (any plant in the genus Cannabis) to make it clear that any part of the cannabis plant, including stems, leaves and seeds are included. Thus any reference to cannabis plant in the Act will cover these parts, particularly references to the obtaining of cannabis plants (which will allow the acquisition of seeds), destruction of cannabis plants (which will ensure destruction of seeds) and security of cannabis plants (which will 42

ensure security of seeds). This expanded definition is consistent with international understanding of the Single Convention. Cultivate a cannabis plant This definition has been included to make clear what activities are covered by a new Chapter 2 licence (to cultivate cannabis plants) and that these activities do not extend to the separation of cannabis or cannabis resin from the plant (see definition of production below). Medicinal cannabis product A medicinal cannabis product is a product that includes a substance, composition, preparation or mixture that includes, or is from, any part of the cannabis plant and is used for the purposes of curing, or alleviating the symptoms of, a disease, ailment or injury. This definition reflects the relevant parts of the definition of 'therapeutic use' in the Therapeutic Goods Act 1989. Any manufacturing of a drug that includes or is from a cannabis plant under a new Chapter 3 licence will be limited to medicinal cannabis products supplied for certain purposes or for research in relation to medicinal cannabis products. Production This definition reflects the relevant parts of the Single Convention definition and means the separation of cannabis and cannabis resin from the plant from which they are obtained. This is the activity covered by a new Chapter 2 licence for the production of cannabis and cannabis resin. Serious offence The Secretary must refuse an application for a new Chapter 2 or 3 licence if satisfied that the applicant has engaged in conduct that constitutes a serious offence in the previous ten years (whether or not convicted) and must revoke a licence if the licence holder has engaged in such conduct since the licence was granted. It is also a condition of a licence that the licence holder not employ a person who has been convicted of a serious offence during the previous five years. A serious offence includes offences that involve dishonesty, fraud or cultivation or trafficking in drugs if punishable by imprisonment of at least three months, or any other offence punishable by an imprisonment for not less than five years. It also includes any such offences against the law of another country. Item 6 - Sections 5 and 6 Item 6 inserts two new sections - section 5 (Crown to be bound) and section 6 (Extension to external Territories). New section 5 provides for Act to bind the Crown in each of its capacities which means that the Commonwealth, State and Territory Governments are bound by the Act. In line with normal practice, the Crown is not liable to be prosecuted for an offence. New subsection 13N(4) makes it clear that the Crown is also not liable for a pecuniary penalty. New section 6 extends the Act to every external Territory. 43

Item 7 - Section 7 This item will make a minor amendment to section 7 consequential on the repeal of sections 12 and 13 by item 10 below. Item 8 - After section 7 This item will insert a new section 7A (Interaction with State and Territory laws). The new section makes clear Parliament's intention that the new section 25A (under which State and Territory agencies can be authorised to undertake the cultivation and production of cannabis and manufacture of drugs from cannabis) and new Chapter 2 (which deals with the licensing of the cultivation and production of cannabis) operate to the exclusion of certain State and Territory laws. Any State or Territory law that purports to allow the cultivation of cannabis plants for the purposes of producing cannabis or cannabis resin for medicinal purposes or for research relating to medicinal cannabis, or the production of cannabis or cannabis resin for medicinal purposes or for research realign to medicinal cannabis (whether by means of the grant of a licence or otherwise) will be ineffective to the extent that it purports to do so. Moreover, any State or Territory law that purports to prevent any activity that is authorised under new section 25A or a licence granted under Chapter 2 will also be ineffective. This outcome reflects Australia's obligations under the Single Convention. State and Territory laws that authorise the manufacture of drugs (including from cannabis) would not be affected by this provision. Regulations can be made to allow the continuation of particular State and Territory laws that would otherwise be affected by the provision to continue to operate. This can be limited to the specific circumstances set out in the regulations. This provision does not override any State or Territory legislation dealing with criminal activities associated with the cultivation and trafficking of cannabis that occurs outside the regulatory scheme established by the amendments to the Act in Schedule 1. It is important to maintain this legislation so that cultivation and related activities that are not authorised by the provisions of this legislation remain criminal activities. Item 9 - Section 8A This item will repeal section 8A (which is now redundant) and insert a new Part 2 into new Chapter 1 (inserted by item 2 above). The new Part 2 (Fit and proper person requirements) consists of three new sections 8A, 8B and 8C. In making decisions to grant a licence, the Secretary must be satisfied that the person or body corporate is sufficiently responsible to undertake the activities that will be 44

authorised by the licence as there is a potential for illegal activity to be undertaken should the entities cultivating, producing or manufacturing cannabis be inclined or manipulated to do so. Under new sections 8G, 9F and 11J, the Secretary can only grant a licence if the applicant or licence holder and their relevant business associates are fit and proper persons and under new sections 10P and 13B, must revoke a licence if they are not. A licence holder is obliged under the conditions in new sections 10K and 12N to inform the Secretary about any matter that may affect that status. New sections 8A and 8B set out the matters that the Secretary may have regard to when determining if an applicant or licence holder or any business associate of the applicant or licence holder is fit and proper. Section 8A concerns individuals and section 8B, bodies corporate. The new sections list a wide range of elements that may be taken into account in making this judgement for an individual. This includes criminal convictions and the imposition of civil penalties, any history as a regulated entity under any drugs legislation, the person's previous business experience, financial circumstances and background, the person's connections and associations (including relatives) and whether the person is of 'good repute', taking into account their character, honesty and professional and personal integrity. The new definition of relative in subsection 4(1) is very wide. Also relevant is the Secretary's judgement about whether the applicant has the capacity to comply (or to continue to comply, when considering whether to revoke the licence) with the conditions of any licence (including whether his or her financial circumstances might limit that capacity) and any history of compliance. These requirements are an assessment of an applicant's capacity to discharge their obligations under a licence. Matters that might assist in this assessment might include business plans and previous track record of operating a regulated business. The financial capacity of a licence holder is important to ensure that someone who could become insolvent or bankrupt, does not become vulnerable to approaches from organised crime offering financial inducements. In the case of assessing a body corporate, the Secretary can consider the same history, connections and associations, capacity and performance of a body corporate, and in relation to the directors and officers, their connections and associations (including relatives), whether they are of good repute, their previous experience and whether they were involved in any offence committed by the body corporate. The Secretary can also consider whether any shareholder of the body corporate who is in a position to influence the management of the body corporate was such at the time of any offence committed by the body corporate, and the shareholder's previous business experience. This information will be used by the Secretary to form an opinion of the capacity of the body corporate to undertake (or to continue to undertake) the activities associated with a licence. 45

These requirements are included to ensure that persons who have links to criminal elements or could be in a position to be unduly influenced by criminal elements are not permitted to participate in the licit narcotic drug system. Financial status and business experience is clearly relevant as it could be a point of vulnerability to outside influence. Once licensed, the holder is required as a condition of the licence, to inform the Secretary of any matter that may affect whether the holder is fit and proper or a business associate of the holder is fit and proper. The Secretary is not obliged to consider all the matters listed in new sections 8A and 8B in coming to a view about whether a person is a fit and proper person to hold a licence or to be associated with the holder of a licence. Neither is the list of matters in the sections the only things that the Secretary can consider for that purpose. Manufacturers of drugs under the Act have not previously been subject to a 'fit and proper' test, which has been identified as a weakness with the current provisions. Applying these provisions to manufacturers is necessary to ensure a balanced and consistent administration of the entire system. Manufacturers will, obviously, have access to cultivated cannabis and therefore represent a diversion risk. Similarly, other narcotics such as morphine have a diversion risk that these provisions will better manage. New section 8C (Part does not affect spent convictions provisions) makes it clear that nothing in Part 2 of Chapter 1 affects the operation of Part VIIC of the Crimes Act 1914 (which includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions, and require persons aware of such convictions to disregard them). Item 10 - Part II This item will repeal Part II of the Act and replace it with new Chapter 2 (Licensing the cultivation of cannabis plants and the production of cannabis etc.), Chapter 3 (Licensing the manufacturing of drugs) and Chapter 4 (Monitoring and enforcement). Chapter 2 consists of 3 Parts - Part 1 (Introduction), Part 2 (Licences and permits) and Part 3 (Offences and civil penalties relating to medicinal cannabis). There are two types of cultivation licences and permits being proposed:  a medicinal cannabis licence and related permit that deals with cultivation and production for manufacture into a medicinal cannabis product and  a cannabis research licence and related permit which deals with licences for cultivation and producing for the purposes of undertaking research (for instance, into strains and cannabinoid content) and related scientific purposes. This is necessary as the Single Convention allows cultivation for 'medicinal and related scientific purposes' and the activities that would be authorised in each situation are slightly different. 46

Licences authorise a person to cultivate cannabis plants, produce cannabis or cannabis resin and undertake activities related to cultivation or production. Permits will indicate the type of cannabis plant that may be cultivated and the quantity. The reason why there are separate licences and permits is to allow the Commonwealth to manage the levels of cultivation and production, consistent with our international obligations to prevent stock accumulation, and to enable reporting to the International Narcotics Control Board on production and consumption to set annual estimates. The permits provide a responsive mechanism for managing these obligations while working within the international framework and mirror the existing arrangements for drug manufacturing licences, which are mandated in the Single Convention. The Secretary must be satisfied that supply is for manufacture with a Chapter 3 licence. A condition of granting a cultivation and production licence and permit will be the demonstration of a clear relationship between the cultivator and/or the producer and a manufacturer. This secures the supply chain and limits the number of potential applicants - an applicant will not be able to apply based on speculation that they will be able to supply a market; the applicant will need to be able to demonstrate genuine supply arrangements to the Secretary. This condition also has the effect of limiting supply to domestic purposes only initially. This is necessary to establish the system of controls and to ensure they are robust, demonstrating to the international community, in particular the International Narcotics Control Board and potential trading partners, that Australia has an appropriate system for managing the risks of diversion. However, provision is made to allow additional uses through regulations. This will allow the Commonwealth to control the timing on exports subject to successful implementation of a domestically focussed system. Any future export would have to be consistent with the Single Convention. With the granting of licences, the Secretary must specify what the licence authorises and may impose a number of conditions. Cultivation of cannabis plants and the production of cannabis and cannabis resin are dealt with separately, as these are separate activities under the Single Convention. The Secretary can, however, grant a licence for one or the other, or both. The proposed licensing and permit system will also allow licence holders to acquire and possess cannabis seeds and to be able to propagate cannabis plants (cloning) to enable the development and ongoing maintenance of strains and, potentially in the future, intellectual property. There is no provision for renewal of a licence - any application from a current licence holder is required to go through the same process as a person who is the holder of a licence. The obvious difference is an applicant's history of compliance will be very relevant in considering any subsequent application. 47

If a person, or their relevant business associates, does not meet the fit and proper person test, then the Secretary is not given any discretion and must refuse the licence. The content of the 'fit and proper person' test is outlined above (see item 9). Other elements that would be considered when considering an application are such things as the ability of the person to maintain appropriate physical security and whether the granting of the licence would compromise Australia's obligations under the Single Convention. The obligations under a Single Convention are important as the international community does not consider narcotics as 'trade commodities', but rather tightly controlled substances produced only to meet specific need. Parties to the Convention are required to ensure that stock does not accumulate. Australia reports annually to the International Narcotics Control Board on production and consumption figures for all drugs covered by the Single Convention. Thus, if an application for cultivation were to be assessed as potentially creating excess production, for example, inconsistent with Australia's obligations, it could be refused even if the other legislative tests were met. Part 1 - Introduction Part 1 consists of new section 8D that is a simplified outline of the Chapter. Medicinal cannabis licences and cannabis research licences granted under the Chapter can authorise the cultivation of cannabis plants for producing cannabis or cannabis resin for medicinal purposes and the obtaining of cannabis plants for that purpose or the production of cannabis or cannabis resin for medicinal purposes and activities related to such cultivation or production. A cannabis research licence can authorise the cultivation of cannabis plants for producing cannabis or cannabis resin for research relating to medicinal cannabis and the obtaining of cannabis plants for that purpose or the production of cannabis or cannabis resin for research relating to medicinal cannabis and activities related to such cultivation or production. A licence holder, however, needs a permit before such activities can be undertaken. Licences are subject to conditions set out in the Act and regulations and the Secretary can impose conditions and also vary or revoke licences and permits. The Chapter also includes offences and civil penalties relating to the cultivation of cannabis plants and the production of cannabis and cannabis resin. Part 2 - Licences and permits Part 2 of Chapter 2 consists of 4 Divisions - Division 1 (Medicinal cannabis licences and permits), Division 2 (Cannabis research licences and permits), Division 3 (Conditions of cannabis licences) and Division 4 (Variation and revocation of cannabis licences and cannabis permits). 48

Division 1 - Medicinal cannabis licences and permits Division 1 of Part 2 contains new sections under which applications can be made for the grant of medicinal cannabis licences and medicinal cannabis permits, and decisions made by the Secretary on those applications. A person can apply under new section 8E (Person may apply for a medicinal cannabis licence) for a medicinal cannabis licence that authorises one or more activities:  the cultivation of cannabis plants, in accordance with one or more medicinal cannabis permits, for the purpose of producing cannabis or cannabis resin for medicinal purposes and, if appropriate, the obtaining of cannabis plants for such cultivation;  the production of cannabis or cannabis resin for medicinal purposes, in accordance with one or more medicinal cannabis permits;  activities relating to such obtaining, cultivation or production, including the supply of cannabis plants, cannabis or cannabis resin, the packaging, transport, storage and possession and control of cannabis plants, cannabis or cannabis resin and the disposal or destruction of cannabis plants, cannabis or cannabis resin. Under the definition in subsection 4(1), a cannabis plant includes the seeds of a cannabis plant. An application must be made in the form or manner approved by the Secretary and contain all the information, and be accompanied by, all the documents, required by the regulations or specified by the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the licence under new section 10P. The Secretary is required to make a decision on the application (see new section 8F (Secretary must make a decision on an application for a medicinal cannabis licence) and for that purpose must have regard to the information and documents provided by the applicant (including as a result of being asked by the Secretary to provide more information under new subsection 14J(1)), any advice or information received in response to a request made to a Commonwealth agency or other person under new section 14K or provided by the head of a State or Territory agency in response to a notice from the Secretary under new subsection 14L(1). The Secretary must in particular take into account any advice provided by an agency of the State or Territory in which activities proposed to be authorised by the licence will take place. The Secretary may have regard to any other matters considered relevant, including any other matter relating to the distribution, use and possession of cannabis plants cultivated or obtained, or cannabis or cannabis resin produced under the licence. The applicant must allow access to the land or premises for an inspection. 49

New section 8G (General circumstances in which Secretary must refuse to grant a medical cannabis licence) provides that a licence must be refused if the Secretary is:  not satisfied on reasonable grounds that the applicant is a fit and proper person to hold the licence and each of the applicant's relevant business associates for the application (whether in relation to a business relating to the medicinal cannabis licence or in relation to any other business) is a fit and proper person to be associated with the holder of a medicinal cannabis licence; or  satisfied on reasonable grounds that the applicant has engaged in conduct that constitutes a serious offence (as defined in subsection 4(1)) during the 10 years immediately before the date of the application (where the applicant is a body corporate, this would apply to the directors); or  satisfied on reasonable grounds that the grant of the licence would not be consistent with Australia's obligations under the Single Convention; or  not satisfied on reasonable grounds that the applicant will take all reasonable measures to ensure the physical security of cannabis plants, cannabis or cannabis resin in the applicant's possession, or under the applicant's control, that are cultivated or produced under the licence; or  not satisfied on reasonable grounds of the suitability of the location, facilities or proposed security arrangements at the land or premises where activities authorised by the licence will take place; or  satisfied on reasonable grounds that one or more circumstances exist that are prescribed by the regulations as circumstances in which a licence must not be granted. The application must also be refused if:  the application fee (if any) has not been paid or  the applicant has not provided the Secretary with any additional information sought under new subsection 14J(1). A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. A business associate is a 'relevant business associate' for the application if the Secretary considers it reasonable, in the circumstances of the application, to take that business associate into account. Under new section 8H (Exception in special circumstances), the Secretary would be able to grant a licence notwithstanding that the Secretary was satisfied that the applicant (or a director) had engaged in conduct that constitutes a serious offence. This would only be possible where:  the conduct was a serious offence only by reason that it involved cannabis cultivation or production, or the supply of cannabis or cannabis resin or products containing cannabis or cannabis resin,  the conduct was fully disclosed in the application, and  the applicant satisfied the Secretary that, were the licence to be granted, the applicant could comply with all the requirements of the licence and the Act. Even if the Secretary were so satisfied, the Secretary would not be obliged to grant the licence. If a licence were granted in these circumstances, additional conditions could be imposed on the licence if the Secretary thought it appropriate to do so. It is not 50

expected that the Secretary would exercise this discretion other than in exceptional circumstances. New section 8J (Particular circumstances in which Secretary must refuse to grant a medicinal cannabis licence) sets out other circumstance in which an application must be rejected. Under new subsection 8J(1) the Secretary must reject an application for a licence that authorises the cultivation only (ie not production) if not satisfied on reasonable grounds that the cultivation is not for the purposes of supply to the holder of a medical cannabis licence that authorises production, or is not for a prescribed purpose. Under new subsection 8J(2), the Secretary must also reject an application for a licence that authorises production (with or without cultivation) if not satisfied on reasonable grounds that the production is for the purposes of:  supply to the holder of a licence under this Act that authorises the manufacture of one or more drugs that are medicinal cannabis products or the manufacture of a drug for the purposes of research relating to medicinal cannabis products  the applicant holds such a manufacture licence, or  the production of the cannabis or cannabis resin for medicinal purposes is for a purpose prescribed by the regulations. This will ensure that a licence cannot be granted unless the applicant can demonstrate a lawful use for the result of the licensed activities. This will discourage applications being made unless the applicant has appropriate arrangements in place for a supply chain that contemplates lawful use. Regulations can prescribe additional uses if future circumstances justify any extension. Once a licence is granted, these limitations are imposed through the statutory condition in new section 10J. There are no time limits imposed on the Secretary in making a decision as, depending on the circumstances, consideration of matters relating to fit and proper persons may take considerable time. The Secretary will be reliant on information provided by third parties, principally Commonwealth law enforcement agencies and State and Territory agencies and it will not be possible to impose time restrictions on these bodies. Legislative timeframes may impose inappropriate constraints on complex decision making. The licence will be subject to the statutory conditions set out in new sections 10E to 10K and also any conditions prescribed in the regulations. The ability of the Secretary, under new section 8K, to impose additional conditions will provide flexibility and allow conditions to be tailored to the applicant's particular circumstances. The Secretary must inform the successful applicant as soon as practicable providing a copy of the licence (see new section 8L). Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a licence in that State or Territory and the grant relates to land or premises in that State or 51

Territory, the Secretary must also advise the head of the agency in writing of the grant (see new section 25B). The licence must set out the things listed in new section 8M (Matters to be specified in a medicinal cannabis licence):  the name of the licence holder;  the activities authorised by the licence and the extent to which those activities are authorised only in accordance with a permit;  the land and premises at which the cultivation and production is authorised,  the premises at which related activities are authorised;  the persons authorised to engage in activities authorised by the licence,  any conditions imposed by the Secretary under new section 8K;  the period for which the licence is in force;  that the Secretary may, in accordance with new section 15, require the destruction of cannabis plants, cannabis or cannabis resin in the possession of, or under the control of, the licence holder. The undertaking of cultivation or production, or any connected activities, not authorised by the licence is an offence and a civil penalty (see new section 11B and new section 11D) and thus grounds for revocation of the licence (see new section 10P). The Secretary must notify the unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). Unless sooner revoked under new section 10P, or surrendered by the holder in accordance with any regulations made for the purposes of new section 11A, a medicinal cannabis licence ceases to be in force at the end of the period specified in the licence (new section 8N (Period in force of a medicinal cannabis licence)). Once licensed, the holder cannot cultivate cannabis plants or produce cannabis or cannabis resin without a permit. The holder can make an application under new section 8P (Holder of medicinal cannabis licence may apply for a medicinal cannabis permit). The application must be made in the approved form or manner and contain all the information, and be accompanied by all the documents required by the regulations or the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the permit or relevant licence under new section 10P. The Secretary is required to make a decision on the application (see new section 9) and can grant if appropriate in all the circumstances to do so. The Secretary can, but is not obliged to, refuse to grant the permit if satisfied on reasonable grounds that the holder of the relevant medicinal cannabis licence has breached a condition of the licence. This will allow the Secretary to exercise some discretion taking into account the nature of the breach and the circumstances in which it occurred. 52

The Secretary must, however, refuse if any application fee has not been paid or the applicant has not provided the Secretary with any additional information sought by the Secretary under new subsection 14J(1). The Secretary must inform the successful applicant as soon as practicable providing a copy of the permit (see new section 9A). Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a permit in that State or Territory and the grant relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency in writing of the grant (see new section 25B). If the permit is for cultivation, the Secretary can specify what is authorised including one or more of the following (new subsection 9B(1)):  the types and strains of cannabis plants that may be cultivated;  the maximum size of the cannabis crop that may be cultivated;  the maximum number of cannabis plants that, in the opinion of the Secretary, having regard to Australia's obligations under the Convention, it is necessary for the licence holder to have in the holder's possession or control at any time for the normal conduct of business;  the period during which cannabis plants may be cultivated;  the period for which the permit is in force;  any matter prescribed by the regulations. If the permit is for production, the Secretary can specify what is authorised including one or more of the following (new subsection 9B(2)):  the maximum quantity of cannabis or cannabis resin that may be produced;  the maximum quantity of cannabis or cannabis resin that, in the opinion of the Secretary, having regard to Australia's obligations under the Convention, it is necessary for the holder of the licence to have in the holder's possession at any time for the normal conduct of business;  the period during which the cannabis or cannabis resin may be produced;  the period for which the permit is in force;  any matter prescribed by the regulations. These very specific limitations in the permit will allow the Commonwealth to discharge its estimate and reporting obligations to the International Narcotic Control Board. More than one permit can be granted in relation to a licence concurrently. The Secretary must advise an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). Unless sooner revoked under new section 10P, or surrendered by the holder in accordance with any regulations made for the purposes of new section 11A, a permit ceases to be in force at the end of the period specified in the permit (new section 9C). 53

Division 2 - Cannabis research licences and permits A person can apply under new section 9D for a cannabis research licence that authorises one or more activities:  the cultivation of cannabis plants, in accordance with one or more cannabis permits, for the purpose of producing cannabis or cannabis resin for research relating to medicinal cannabis and, if appropriate, the obtaining of cannabis plants for that purpose;  the production of cannabis or cannabis resin for research relating to medicinal cannabis, in accordance with one or more cannabis research permits;  activities relating to such cultivation or production, including packaging, transport, storage and possession and control of cannabis plants, cannabis or cannabis resin and the disposal or destruction of cannabis plants, cannabis or cannabis resin. Under the definition in subsection 4(1), a cannabis plant includes the seeds of a cannabis plant. An application must be made in the approved form or manner and contain all the information, and be accompanied by all the documents required by the regulations or the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the licence under new section 10P. The Secretary is required to make a decision on the application (see new section 9E (Secretary must make a decision on an application for a cannabis research licence)) and for that purpose must have regard to the information and documents provided by the applicant (including as a result of being asked by the Secretary to provide more information under new subsection 14J(1)), any advice or information received in response to a request made to a Commonwealth agency or other person under new section 14K or provided by the head of a State or Territory agency in response to a notice from the Secretary under new subsection 14L(1). The Secretary must in particular take into account any advice provided by an agency of the State or Territory in which activities proposed to be authorised by the licence will take place. The Secretary may have regard to any other matter considered relevant, including any other matter relating to the distribution, use and possession of cannabis plants, cultivated or obtained, or cannabis or cannabis resin produced under the licence. The applicant must allow access to the land or premises for an inspection. New section 9F (General circumstances in which Secretary must refuse to grant a cannabis research licence) provides that a licence must be refused if:  the Secretary is not satisfied on reasonable grounds that the applicant is a fit and proper person to hold the licence and each of the applicant's relevant business associates for the application (whether in relation to a business 54

relating to the medicinal cannabis licence, or in relation to any other business) is a fit and proper person to be associated with the holder of a medicinal cannabis licence; or  the Secretary is satisfied on reasonable grounds that the applicant has engaged in conduct that constitutes a serious offence (as defined in subsection 4(1)) during the 10 years immediately before the date of the application (where the applicant is a body corporate, this would apply to the directors); or  the Secretary is satisfied on reasonable grounds that the grant of the licence would not be consistent with Australia's obligations under the Single Convention; or  the Secretary is not satisfied on reasonable grounds that the applicant will take all reasonable measures to ensure the physical security of cannabis plants, cannabis or cannabis resin in the applicant's possession, or under the applicant's control, that are cultivated or produced under the licence; or  the Secretary is not satisfied on reasonable grounds of the suitability of the location, facilities or proposed security arrangements at the land or premises where activities authorised by the licence will take place; or  the Secretary is satisfied on reasonable grounds that one or more circumstances exist that are prescribed by the regulations as circumstances in which a licence must not be granted; or  the application fee (if any) has not been paid; or  the applicant has not provided the Secretary with any additional information sought under new subsection 14J(1). A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. A business associate is a 'relevant business associate' for the application if the Secretary considers it reasonable, in the circumstances of the application, to take that business associate into account. Under new section 9G, the Secretary would be able to grant a licence notwithstanding that the Secretary was satisfied that the applicant (or a director) had engaged on conduct that constitutes a serious offence. This would only be possible where:  the conduct was a serious offence only by reason that it involved cannabis cultivation or production, or the supply of cannabis or cannabis resin or products containing cannabis or cannabis resin;  the conduct was fully disclosed in the application; and  the applicant satisfied the Secretary that were the licence to be granted, the applicant could comply with all the requirements of the licence and the Act. Even if the Secretary were so satisfied, the Secretary would not be obliged to grant the licence. If a licence were granted in these circumstances, additional conditions could be imposed on the licence if the Secretary thought it appropriate to do so. It is not expected that the Secretary would exercise this discretion other than in exceptional circumstances. 55

Under new section 9H, the Secretary must also refuse to grant a cannabis research licence if the Secretary is not satisfied on reasonable grounds of the following:  if the licence will authorise the cultivation of cannabis plants - the cultivation is for the purposes of research relating to medicinal cannabis;  if the licence will authorise the production of cannabis or cannabis resin - the production of cannabis or cannabis resin is for the purposes of research relating to medicinal cannabis by the applicant, or for the purposes of supplying to the holder of a manufacture licence that authorises the manufacture of a drug for the purpose of research relating to medicinal cannabis products;  the applicant has the appropriate financial resources, other resources and expertise that are necessary to carry out such research, or is included in a class of persons prescribed by the regulations. This will ensure that a licence cannot be granted unless the applicant can demonstrate a lawful use for the result of the licensed activities. This will discourage applications being made unless the applicant can demonstrate either they will conduct the research themselves or it will be supplied to the holder of a manufacture licence authorised to undertake relevant research. Regulations can prescribe additional uses if future circumstances justify any extension. There are no time limits imposed on the Secretary in making a decision as, depending on the circumstances, consideration of matters relating to fit and proper persons may take considerable time. The Secretary will be reliant on information provided by third parties, principally Commonwealth law enforcement agencies and State and Territory agencies, and it will not be possible to impose time restrictions on these bodies. Legislative timeframes may impose inappropriate constraints on complex decision making. The licence will be subject to the statutory conditions set out in new sections 10E to 10K and also any conditions prescribed in the regulations. The ability of the Secretary, under new section 9J, to impose additional conditions will provide flexibility and allow conditions to be tailored to the applicant's particular circumstances. The Secretary must inform a successful applicant as soon as practicable providing a copy of the licence (see new section 9K (Notification of decision)). Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a licence in that State or Territory and the grant relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency in writing of the grant (see new section 25B). The licence must set out the things listed in new section 9L:  the name of the licence holder;  the activities authorised by the licence and the extent to which those activities are authorised only in accordance with a medicinal cannabis permit;  the land and premises at which cultivation and/or production is authorised; 56

 the premises at which activities relating cultivation and/or production is authorised;  the persons authorised to engage in activities authorised by the licence;  any conditions imposed by the Secretary under new section 9J;  the period for which the licence is in force;  that the Secretary may, in accordance with new section 15, require the destruction of cannabis plants, cannabis or cannabis resin in the possession of, or under the control of, the licence holder. The undertaking of cultivation or production, or any connected activities, that are not authorised by the licence is an offence and a civil penalty (see new section 11B and new section 11D) and thus grounds for revocation of the licence (see new section 10P). The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). Unless sooner revoked under new section 10P, or surrendered by the holder in accordance with any regulations made for the purposes of new section 11A, a cannabis research licence ceases to be in force at the end of the period specified in the licence (new section 9M (Period in force of a cannabis research licence)). The licence holder cannot cultivate or produce without a permit granted by the Secretary. The holder can make an application under new section 9N (Holder of a cannabis research licence may apply for a cannabis research permit). An application must be made in the approved form or manner and contain all the information and be accompanied by all the documents required by the regulations or the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the permit or relevant licence under new section 10P. The Secretary is required to make a decision on the application (see new section 9P (Secretary must make a decision on an application for a cannabis research permit)) and can grant if considered appropriate in all the circumstances to do so. The Secretary can, but is not obliged to, refuse to grant the permit if satisfied on reasonable grounds that the applicant has breached a condition of the licence. This will allow the Secretary to exercise some discretion taking into account the nature of the breach and the circumstances in which it occurred. The Secretary must refuse if any application fee has not been paid or the applicant has not provided the Secretary with any additional information sought under new subsection 14J(1). The Secretary must inform the successful applicant as soon as practicable providing a copy of the permit (see new section 10 (Notification of decision)). Where the head of 57

an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a permit in that State or Territory and the grant relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency in writing of the grant (see new section 25B). New section 10A (Matters to be specified in a cannabis research permit) sets out what must be set out in the permit. If the permit is for cultivation, the Secretary can specify what is authorised including one or more of the following (new subsection 10A(1)):  the types and strains of cannabis plants that may be cultivated;  the maximum size of the cannabis crop that may be cultivated;  the maximum number of cannabis plants that, in the opinion of the Secretary, having regard to Australia's obligations under the Convention, it is necessary for the licence holder to have in the holder's possession or control at any time for the normal conduct of business;  the period during which cannabis plants may be cultivated;  the period for which the permit is in force;  any matter prescribed by the regulations. If the permit is for production, the Secretary can specify what is authorised including one or more of the following (new subsection 10(2)):  the maximum quantity of cannabis or cannabis resin that may be produced;  the maximum quantity of cannabis or cannabis resin that, in the opinion of the Secretary, having regard to Australia's obligations under the Convention, it is necessary for the holder of the licence to have in the holder's possession at any time for the normal conduct of business;  the period during which the cannabis or cannabis resin may be produced;  the period for which the permit is in force;  any matter prescribed by the regulations. These very specific limitations in the permit will allow the Commonwealth to discharge its estimate and reporting obligations to the International Narcotic Control Board. More than one permit can be granted in relation to a licence concurrently. The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). Unless sooner revoked under new section 10P, or surrendered by the holder in accordance with any regulations made for the purposes of new section 11A, a permit ceases to be in force at the end of the period specified in the permit (new section 10B (Period in force of a cannabis research permit)). Division 3 - Conditions of cannabis licences Imposing conditions is integral in maintaining the control that is intended to be achieved in this Act. The conditions prescribed or imposed relate to activities or 58

procedures that are associated with the cultivation of cannabis plants and the production of cannabis and cannabis resin, and breaching of conditions is a key offence under the Act (see new sections 11C and 11E). New section 10C (Cannabis licence is subject to conditions) makes it clear that cannabis licences are subject to the following:  conditions set out in the Division (as statutory conditions these conditions apply automatically);  conditions that are prescribed in regulations (the types of conditions that can be prescribed are set out in new section 10D);  conditions that were imposed by the Secretary at the time of the grant of the licence, or later under new section 10M, as varied under that section, that have not been revoked under that section. New section 10D (Conditions that may be prescribed or imposed) includes a list of the matters in relation to which conditions can be prescribed or imposed by the Secretary. The list is not exhaustive. The Secretary is not limited to these conditions and may impose other conditions as the Secretary thinks appropriate given the circumstances of any individual grant. This allows the Secretary to tailor conditions based on the specific information available and provides for a flexible and responsive regulatory system. The nature of the conditions is such that they support Australia's obligations under the Single Convention (such as security, record-keeping and reporting) and also any relevant codes of practice, technical or procedural guidelines or standards relevant to the cultivation and production of cannabis. The matters in new section 10D are:  matters relating to the activities authorised by the licence including activities authorised in accordance with a permit;  the supply, delivery, dealing in any way with, transportation and disposal of cannabis plant cultivated or obtained, or cannabis or cannabis resin produced under the licence or in accordance with a permit;  the use of names or symbols that may suggest or imply a particular effect upon humans of cannabis or cannabis resin, but not so as to prevent the specification of factual material;  waste disposal;  the destruction of cannabis plants, parts of cannabis plants, cannabis or cannabis resin, including the specification of circumstance in which it must not occur without the Secretary's permission, or must occur;  documentation and record-keeping in respect of activities to which the licence relates;  facilities and containment in respect of the manufacture authorised by the licence, including requirements relating the security of premises and the certification of premises or facilities to specified containment levels;  the safety, security and surveillance of premises;  access to land and premises on which activities authorised by a licence, are to be, or have been undertaken; 59

 measures to manage risks posed to the health and safety of people, or to the environment;  data collection, including studies to be conducted;  information that is to be provided, whether on request by the Secretary or on a regular basis, and the times at which or periods within which, such information is to be provided;  the taking of samples of any thing to which the licence relates and the removal and testing of such samples;  auditing and reporting;  actions to be taken in case of loss, theft, spoilage or destruction of cannabis plants cultivated or obtained, or cannabis or cannabis resin produced under (or purportedly under) the licence;  compliance with a code of practice or a technical, procedural guideline or prescribed quality standard;  contingency planning;  matters relating to the employment of staff and engagement of contractors;  advertising to the public by the licence holder in relation to cannabis plants, cannabis or cannabis resin. The matters concerning advertising and use of names and symbols will help ensure that the cannabis cultivated or produced is not presented or advertised in an irresponsible way and is consistent with the object to facilitate patient access in appropriate cases and through appropriate channels. Cannabis licence conditions can also include conditions requiring the holder to be adequately insured against any loss, damage, or injury that may be caused to human health, property or the environment by licensed activities. The statutory conditions set out in new sections 10E to 10K apply automatically to all cannabis licences. It is important that all those authorised under a licence to engage in the obtaining or cultivation of cannabis plants or related activities, or in the production of cannabis or cannabis resin or related activities, are aware of any matter that may affect the circumstances in which those activities are carried out and potentially the legality of their actions. Under new section 10E (Condition that cannabis licence holder inform people of obligations), the licence holder has the responsibility of informing those persons about all conditions that are relevant to the person (and their variation or revocation), the revocation of the licence or any related permit and about any direction given by the Secretary in relation to the licence under Part 3 of Chapter 5. This obligation is important because under new sections 11C and 11E of the Act, any person authorised by a licence to engage in those activities can commit an offence if any licence condition is breached. A key condition is that the licensee is responsible for employing only suitable persons to work in the industry and exclusion criteria (which the employer must adhere to) are 60

imposed under new section 10F (Condition that cannabis licence holder employ or engage suitable staff). It would be a breach of this condition for the licensee to employ any person under 18 years, a person who has been convicted of a serious offence (as defined in subsection 4(1)) in the last five years, or a person who comes within a class of persons set out in the regulations or a person who is taken not to be suitable under the regulations. The 'taken not to be suitable' regulations can cover matters such as a person's criminal record and their employment history. This condition is important in ensuring that not only licence holders and their business associates are fit and proper, but that they only employ persons who do not represent a significant risk for diversion of narcotic material, given that during the course of their employment, they are likely to have access to material with a black market value. The Secretary can impose conditions in relation to the employment of staff and engagement of contractors and regulations can also be made for that purpose (see new section 10D), which provides other mechanisms for ensuring that appropriate systems are in place to minimise this risk. New section 10G (Condition that certain activities are undertaken in accordance with a cannabis permit) ensure that a permit is necessary before a range of activities can be undertaken under a medicinal cannabis licence or a cannabis research licence. Thus, any breach of a permit will necessarily involve a breach of a licence condition and thus be grounds for licence revocation under new section 10P and also an offence under new section 11C or section 11E. In order to ensure that the Secretary can effectively monitor compliance with the Act, it is important that access to licensed premises is not predicated on a warrant or the consent of the occupier. In line with other Commonwealth regulatory schemes (including under the Therapeutic Goods Act 1989 and the Gene Technology Act 2000), it is a condition under new section 10H (Conditions about monitoring and inspection) that the Secretary or a person authorised by the Secretary can enter licensed premises for the purposes of monitoring manufacturing activity, checking whether it is being carried out as authorised by the licence in accordance with a permit, and whether the licence conditions are being complied with, and to take samples and remove them for testing. Authorised inspectors will be able to exercise the powers conferred by new section 14C to enter licensed premises that are subject to this statutory condition. Failure to allow the authorised inspector to enter the land or premises will be a breach of condition and thus grounds for cancellation of the licence under new section 10P and also an offence under new section 11C and section 11E. New section 10J (Condition that medicinal cannabis licence holder be a party to certain contracts) is designed to ensure that the holder of a medicinal cannabis licence undertakes licensed activities by requiring the holder to have appropriate contracts in place during any time that a permit is in force. 61

New subsection 10J(1) will ensure that a licence holder authorised only to cultivate cannabis plants only supplies to the holder of a medical cannabis licence that authorises production, or for a prescribed purpose. New subsection 10J(2) will ensure that where the licence authorises production of cannabis or cannabis resin, the holder is required (unless the holder is also licensed under the Act to manufacture drugs that are medicinal cannabis products or the manufacture of drugs is for the purposes of research relating to medicinal cannabis products) to have a contract with the holder of such a licence. The licence holder will be under a continuing obligation under new section 10K (Condition that licence holder notify the Secretary of certain matters) to inform the Secretary about a range of matters that are relevant to whether the licence should be revoked as soon as reasonably practicable after it comes to the person's attention, including:  matters that may affect whether the licence holder is a fit and proper person to hold the licence, or whether a business associate of the licence holder is a fit and proper person to be associated with the holder of such a licence;  a breach of the licence;  any other matter that may require or permit the Secretary to revoke the licence. A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. The licence holder cannot refuse to inform the Secretary of a relevant matter just because the information it might tend to incriminate the holder or subject the holder to a penalty. By reason of new section 24B, the privilege against self-incrimination is abrogated in relation to information required to be provided to the Secretary under this section (see further under item 30 below). However, any such matter cannot be used in evidence in any criminal proceedings (including under the Act) except where it relates to the provision of false or misleading information to the Commonwealth. Nor can the information be used in any civil proceedings for the contravention of a civil penalty provision (such as new section 11C). It can, however, be taken into account for the purposes of a decision about whether to revoke the licence or other regulatory decision, or any review of such a decision, and also in relation to a contravention of new section 14M (Failure to give information or documents within specified period). Breach of any licence condition is a ground for revocation (see new section 10P) and would normally also be an offence and give rise to a civil penalty (see new sections 11C and 11E). Division 4 - Variation and revocation of cannabis licences and cannabis permits Under new section 10M (Variation of cannabis licences and cannabis permits) the Secretary can at any time vary a cannabis licence or cannabis permit by writing given to the holder either in response to an application by the holder or on the Secretary's initiative. 62

The Secretary must not do so if:  the Secretary is satisfied on reasonable grounds that the variation would not be consistent with Australia's obligations under the Single Convention;  the Secretary is satisfied on reasonable grounds that one or more circumstances exist that are prescribed by the regulations as circumstances in which a licence or permit must not be varied;  the application fee has not been paid; or  the applicant has not complied with a requirement under new subsection 14J(1) to provide the Secretary with additional information in relation to the application. Conditions can be varied and any activities or persons authorised by the licence can be varied. Any variation takes effect on the day specified in the notice. The Secretary must give a copy of the licence so varied to the holder. Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of a variation to a licence or permit in that State or Territory and the variation is to a licence or permit relating to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new subsection 15F(2) section 25B). This ability to apply for variation allows a licence holder more flexibility in operating their business, particularly where they can demonstrate that a previously imposed condition is no longer necessary. This also provides the licence holder with the ability to prompt the Secretary to remove a condition that was put in place to address a specific issue. Under new section 10N (Applications for variation of cannabis licence and permits) the holder of a licence can apply for a variation of the licence or permit. An application must be in writing. An application must be made in the approved form or manner approved, and contain all the information and be accompanied by all the documents required by the regulations or by the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the licence under new section 10P. The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). The Secretary must revoke a cannabis licence under new section 10P (Revocation of cannabis licence and cannabis permit) if satisfied that:  the licence holder has engaged in conduct that constitutes a serious offence (whether or not a court has found the person guilty of such an offence) since the licence was granted (where the licence holder is a body corporate, this would apply to the directors);  the licence holder is no longer a fit and proper person to hold the licence; 63

 a business associate of the licence holder is not a fit and proper person to be associated with the holder of a manufacture licence (this might be a person who has become a business associate of the person since the licence was granted). A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. The Secretary can revoke the licence or a cannabis permit that relates to the licence, if the Secretary is satisfied on reasonable grounds that:  a condition of the licence has been breached or the licence holder has committed an offence against this Act;  the licence or permit was obtained or varied on the basis of information that was false or misleading in a material particular or omitted a matter or thing without which the information was misleading in a material particular;  the continuation in force of the licence or permit would not be consistent with Australia's obligations under the Single Convention;  the location, facilities or security arrangements at the land or premises at which activities authorised by the licence take place are not suitable;  the licence holder has ceased to carry on all activities authorised by the licence;  the licence holder or another person has undertaken activities authorised by the licence to be undertaken at specified land or premises other than at that land or those premises;  the licence holder is not taking all reasonable measures to ensure the physical security of cannabis plants, cannabis or cannabis resin in the holder's possession or under the holder's control;  the licence holder has not provided information required by a notice given under new subsection 14J(2) within the time specified in the notice; or  circumstances prescribed by regulations exist. Any revocation takes effect on the day specified in the relevant notice and any permit that relates to a licence is taken to be revoked at the same time. Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the revocation of a licence or permit in that State or Territory and the licence revoked relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new section 25B). Before revoking a licence, the Secretary is under new section 11 (Secretary to notify of proposed revocation) required to give the holder written notice and provide the opportunity to make written submissions within a period of not less than 30 days. The Secretary must have regard to any submissions made by the holder. Under new section 11A (Suspension or surrender of cannabis licences and cannabis permits), regulations may provide for the suspension or surrender of cannabis licenses and cannabis permits. 64

Part 3 - Offences and civil penalties relating to medicinal cannabis The offences created by Part 3 only apply to those cultivating cannabis plants or producing cannabis or cannabis resin under a licence granted under Chapter 2. Thus, there is no offence for unlicensed cultivation of cannabis plants or production of cannabis or cannabis without a licence. Such activities are already offences under Commonwealth, State and Territory legislation and their enforcement and prosecution and enforcement remains a matter for relevant law enforcement agencies. A licence holder contravenes new section 11B (Unauthorised cultivation of cannabis plants etc.) if the holder obtains or cultivates a cannabis plant for the production of cannabis or cannabis resin, or does anything in connection with such an activity that is not authorised by the licence. The criminal penalty for such a contravention is imprisonment for 10 years, or 600 penalty units, or both. A licence holder contravenes new section 11D (Unauthorised production of cannabis or cannabis resin) if the holder produces cannabis or cannabis resin or does anything in connection with such an activity or proposed activity that is not authorised by the licence. The criminal penalty for such a contravention is imprisonment for 10 years, or 600 penalty units, or both. In line with the policy set out in the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the strict liability offence is limited to 60 penalty units for an individual and 300 penalty units for a body corporate. The maximum penalty under the civil penalty provision is 1,000 penalty units. By reason of subsection 82(5) of the Regulatory Powers (Standard Provisions) Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. A person who is authorised by a cannabis licence to cultivate cannabis plants or to engage in activities related to such cultivation contravenes new section 11C (Breach of condition of cannabis licence - cultivation) if the person breaches a condition of the cannabis licence and the condition is not prescribed by the regulations for the purposes of paragraph 11C(1)(c). Unlike new section 11B, this section is not limited to licence holders so as to ensure that all those authorised by a licence can be held liable for contraventions in which they are involved. A person who is authorised by a cannabis licence to produce cannabis or cannabis resin or to engage in activities related to such production contravenes new section 11E (Breach of condition of cannabis licence - production) if the person breaches a condition of the licence and the condition is not prescribed by the regulations for the purposes of paragraph 11E(1)(c). Unlike new section 11D, this section is not limited to licence holders so as to ensure that all those authorised by a licence can be held liable for contraventions in which they are involved. Regulations can be made that would allow specific conditions to be excluded from the offence provision in appropriate circumstances. Breach of such a condition by a licence holder would still be grounds for revocation of the licence and a matter to be 65

taken into account in any future application for a licence. The criminal penalty for such a contravention is imprisonment for 10 years, or 600 penalty units, or both. In line with the policy set out in the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the strict liability offence is limited to 60 penalty units for an individual and 300 penalty units for a body corporate. The maximum penalty under the civil penalty provision is 1,000 penalty units. By reason of subsection 82(5) of the Regulatory Powers (Standard Provisions) Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. Chapter 3 (Licensing the manufacturing of drugs) Chapter 3 (Licensing the manufacturing of drugs) consists of 3 Parts - Part 1 (Introduction), Part 2 (Licences and permits) and Part 3 (Offences and civil penalties relating to manufacture of drugs). Part 1 (Introduction) Part 1 consists of new section 11F (Simplified outline of this Chapter) summarises the contents of the Chapter. Manufacture licences granted under the Chapter can authorise the manufacture of a drug (as defined in subsection 4(1)) and related activities including for the purposes of research relating to medicinal cannabis products. A licence holder however, needs a permit before manufacture of a drug can be undertaken. Licences are subject to conditions set out in the Act and regulations, and the Secretary can impose conditions and also vary or revoke licences and permits. The Chapter also include offences and civil penalties relating to manufacture licences. There is no provision for renewal of a licence - any application from a current licence holder is required to go through the same process as from a person who does not hold a licence. The obvious difference is that an applicant's history of compliance will be very relevant in consideration of any subsequent application. These licensing provisions replace existing manufacturing provisions in the Act that have not been substantively updated since 1967. As a result, the provisions do not represent best practice, contemporary regulation. The new licensing scheme as set out in Chapter 3 includes for the first time a requirement for an applicant/licence holder and their business associates to be fit and proper persons. It would be incongruous to require cultivation and production licence holders to be fit and proper while manufacturing licence holders are not held to the same standard, given that manufacturing could represent a similar risk of diversion. To apply a higher standard to one part of the production chain (cultivation/production) would inadvertently focus criminal activity on the other part of the production chain (manufacture), where entry is legally easier. This would seriously compromise Australia's ability to meet its public health goals and international obligations with respect to preventing diversion. 66

It would similarly be inappropriate to limit the fit and proper person test to just the manufacture of medicinal cannabis products. Other narcotic drugs (morphine, from which heroin can be manufactured, for example) represent, arguably, higher public health risks than cannabis and so a similar level of control is necessary in order to protect public health. Other changes introduced to the existing manufacture licence system under the Act include improved penalty provisions to ensure they are sufficiently deterrent in nature, as the existing $1000 fine for unauthorised manufacturing, for example, no longer has the same value as it had in 1967 (see new sections 13E and 13F). Civil penalties are also introduced, for consistent operation of the provisions in new Chapter 2. The decision making power for licences will no longer reside with the Minister for Health, but rather with the Secretary of the Department of Health. This facilitates an internal review process to be undertaken by the Minister for Health, rather than the existing review of initial decisions by the Administrative Appeals Tribunal. Applicants and licence holders will thus have more timely recourse in case of dispute over decisions by seeking a review by the Minister. This also makes the process consistent with the new licensing provisions for cultivation and production in Chapter 2 of the Act. Similar provisions are included for the variation and revocation of manufacture licences as are included in Chapter 2 in relation to cannabis licences. Part 2 - Licences and permits Part 2 consists of three Divisions - Division 1 (Manufacture licences and permits), Division 2 (Conditions of manufacture licences) and Division 3 (Variation and revocation of manufacture licences and manufacture permits). Division 1 - Manufacture licences and permits A person can apply under new section 11G (Person may apply for a manufacture licence) for a manufacture licence that authorises one or more activities - the manufacture of a drug (as defined in subsection 4(1)), activities relating to such manufacture, including the supply of the drug, packaging, transport, storage and possession and control of the drug and the disposal or destruction of the drug. An application must be made in the approved form or manner and contain all the information, and be accompanied by all the documents required by the regulations or the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the licence under new section 13B. Under new section 11H (Secretary must make a decision on an application for a manufacture licence), the Secretary is required to make a decision on the application 67

and for that purpose must have regard to the information and documents provided by the applicant (including as a result of being asked by the Secretary to provide more information under new subsection 14J(1)), any advice or information received in response to a request made to a Commonwealth agency or other person under new subsection 14K(1) or provided by the head of a State or Territory agency in response to a notice from the Secretary under new subsection 14L(1). The Secretary must in particular take into account any advice provided by an agency of the State or Territory in which activities proposed to be authorised by the licence will take place. The Secretary may have regard to any matter relating to the conduct of activities authorised by the licence and the distribution, use and possession of drugs manufactured under the licence. The applicant must allow access to the land or premises for an inspection. New section 11J (General circumstances in which Secretary must refuse to grant a manufacture licence) sets out the circumstances in which a licence must be refused:  the Secretary is not satisfied that the applicant and each of the applicant's relevant business associates for the application is a fit and proper person to hold the licence, or to be associated with the holder of the licence;  the Secretary is satisfied on reasonable grounds that the applicant has engaged in conduct that constitutes a serious offence (as defined in subsection 4(1)) during the 10 years immediately before the date of the application (where the applicant is a body corporate, this would apply to the directors);  the Secretary is satisfied on reasonable grounds that the grant of the licence would not be consistent with Australia's obligations under the Single Convention;  the Secretary is not satisfied on reasonable grounds that the applicant will take all reasonable measures to ensure the physical security of drugs or narcotic preparations in the applicant's possession, or under the applicant's control, that are cultivated or produced under the licence;  the Secretary is not satisfied on reasonable grounds of the suitability of the location, facilities or proposed security arrangements at the land or premises where activities authorised by the licence will take place;  the Secretary is satisfied on reasonable grounds that one or more circumstances exist that are prescribed by the regulations as circumstances in which a licence must not be granted;  the application fee (if any) has not been paid;  the applicant has not provided the Secretary with any additional information sought under new subsection 14J(1). A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. A business associate is a 'relevant business associate' for the application if the Secretary considers it reasonable, in the circumstances of the application, to take that business associate into account. Under new subsection 11K(3), the Secretary would be able to grant a licence of the kind referred to in subsection 11K(1) (see below) notwithstanding that the Secretary 68

was satisfied that the applicant (or a director) had engaged in conduct that constitutes a serious offence. This would only be possible where:  the conduct was a serious offence only by reason that it involved cannabis cultivation or production, or the supply of cannabis or cannabis resin or of products containing cannabis or cannabis resin,  the conduct was fully disclosed in the application, and  the applicant satisfied the Secretary that were the licence to be granted, the applicant could comply with all the requirements of the licence and the Act. Even if the Secretary were so satisfied, the Secretary would not be obliged to grant the licence. If a licence were granted in these circumstances, additional conditions could be imposed on the licence if the Secretary thought it appropriate to do so. It is not expected that the Secretary would exercise this discretion other than in exceptional circumstances. New section 11K (Particular rules about manufacture licences involving cannabis etc.) sets out additional circumstances in which the application must be refused where the manufacture authorises the manufacture of a drugs that includes, or is from, any part of the cannabis plant (as described in subsection 11K(1)). In such a case, the Secretary must refuse to grant the licence if not satisfied on reasonable grounds that either:  the drug is for the purposes of research in relation to medicinal cannabis products, and o the applicant has the appropriate financial resources, other resources and expertise that are necessary to carry out such research or o the applicant is included in a class of persons prescribed by the regulations  the drug is a medicinal cannabis product that will be supplied for the purposes of use in a clinical trial that is, or is likely to be, approved under the Therapeutic Goods Act 1989 or notified to the Secretary under that Act, is registered under that Act, or is otherwise supplied in accordance with an approval or authority under that Act, or in circumstances prescribed by the regulations. This will ensure that a licence cannot be granted unless the Secretary is satisfied that any medicinal cannabis product manufacturer will be for patients in clinical trials, patients whose access to the drug has been approved, for instance by a medical practitioner authorised under the Therapeutic Goods Act or where the drug has been approved for general marketing in Australia by the Therapeutic Goods Administration. If in future there is justification for providing for other uses, regulations can be made for that purpose. Once a licence is granted, these limitations are imposed through the statutory conditions in new sections 12L and 12M. There are no time limits imposed on the Secretary in making a decision as, depending on the circumstances, consideration of matters relating to fit and proper persons may take considerable time. The Secretary will be reliant on information provided by third parties, principally Commonwealth law enforcement agencies and State and Territory 69

agencies and it will not be possible to impose time restrictions on these bodies. Legislative timeframes may impose inappropriate constraints on complex decision making. The licence will be subject to the conditions set out in new sections 12G to 12N and also any conditions prescribed in the regulations. The ability of the Secretary, under new section 11L to impose additional conditions will provide flexibility and allow conditions to be tailored to the applicant's particular circumstances. The Secretary must inform the successful applicant as soon as practicable providing a copy of the licence (see new section 11M (Notification of decision)). Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a licence in that State or Territory and the grant relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new section 25B). The licence must set out the things listed in new section 11N (Matters to be specified in a manufacture licence):  the name of the licence holder;  the activities authorised by the licence (including the drug to be manufactured under the licence), and the extent to which those activities are authorised only in accordance with a manufacture permit;  the premises at which manufacture of drugs is authorised to be carried out and the premises at which any connected activities are authorised to be carried out;  the persons authorised to engage in activities authorised by the licence (this can be done by class);  the conditions imposed by the Secretary under new section 11L;  the period for which the licence is in force;  that the Secretary may require under new section 15 the destruction of drugs or narcotic preparations in the possession, or under the control of, the licence holder;  the purposes for which, or the circumstances in which, any medicinal cannabis product manufactured under the licence is to be supplied. The production of a drug or the doing of any thing in connection with the production of a drug that is not authorised by the licence is an offence and a civil penalty (see new section 13E) and thus grounds for revocation of the licence (see new section 13B). The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). Unless sooner revoked under new section 13B, or surrendered by the holder in accordance with any regulations made for the purposes of new section 13D, a manufacture licence ceases to be in force at the end of the period specified in the licence (new section 11P (Period in force of a manufacture licence)). A licensed holder cannot manufacture a drug without a permit. The holder can make an application for a permit under new section 12 (Holder of licence may apply for a manufacture 70

permit). An application must be made in the approved form or manner and contain all the information, and be accompanied by all the documents required by the regulations or the Secretary. The application fee must be paid. Were it to become apparent at a later time that the applicant provided information that was false or misleading in a material particular or omitted anything without which the information was misleading in a material particular, there would be grounds for revocation of the permit or relevant licence under new section 13B. The Secretary is required to make a decision on the application (see new section 12A (Secretary must make a decision on an application for a manufacture permit)) and can grant if it considered appropriate to do so. The Secretary can, but is not obliged to, refuse to grant the permit is satisfied on reasonable grounds that the holder of the relevant manufacture licence has breached a condition of the licence. This will allow the Secretary to exercise some discretion taking into account the nature of the breach and the circumstances in which it occurred. The Secretary must refuse if any application fee has not been paid or the applicant has not provided the Secretary with any additional information sought under new subsection 14J(1). The Secretary must inform a successful applicant as soon as practicable providing a copy of the permit (see new section 12B (Notification of a decision)). Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of the grant of a permit that State or Territory and the grant relates to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new section 25B). The permit can specify what is authorised including one or more of the following (new section 12C (Matters to be specified in a manufacture permit)):  the maximum quantity of the drug that may be manufactured at premises specified in the permit;  the maximum quantity of the drug that, having regard to prevailing market conditions, it is necessary in the opinion of the Secretary for the licence holder to have in the holder's possession at any time for the normal conduct of business;  the period during which the drug may be manufactured;  the period for which the permit is in force;  any matter prescribed by the regulations. These very specific limitations in the permit will allow the Commonwealth to discharge its estimate and reporting obligations to the International Narcotic Control Board. The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). 71

Unless sooner revoked under new section 13B, or surrendered by the holder in accordance with any regulations made for the purposes of new section 13D, a permit ceases to be in force at the end of the period specified in the permit (new section 12D (Period in force of a manufacture permit). Division 2 - Conditions of manufacture licences Imposing conditions is integral in maintaining the control that it is intended to be achieved in this Act. The conditions prescribed or imposed relate to activities or procedures that are associated with the manufacture of drugs, and breaching of conditions is a key offence under the Act (see new section 13F). New section 12E (Manufacture licence is subject to conditions) makes it clear that manufacture licences are at any time subject to the following:  conditions set out in the Division (as statutory conditions these conditions apply automatically);  conditions that are prescribed in regulations (the types of conditions that can be prescribed are set out in new section 12F);  conditions that were imposed by the Secretary at the time of the grant of the licence, or later under new section 13, as varied under that section, that have not been revoked under that section. New section 12F (Conditions that may be prescribed or imposed) includes a list of the matters in relation to which conditions can be prescribed or imposed by the Secretary. The list is not exhaustive. The matters are:  matters relating to the activities authorised by the licence including activities authorised in accordance with a permit;  the supply, delivery, dealing in any way with, transportation and disposal of drugs manufactured under the licence;  the use of names or symbols that may suggest or imply a particular effect upon humans of a drug or narcotic preparation that contains cannabis or cannabis resin, but not so as to prevent the specification of factual material;  matters relating to the employment of staff and engagement of contractors;  waste disposal;  the destruction of drugs, narcotic preparations and by-products of such drugs or preparations;  documentation and record-keeping in respect of activities to which the licence relates;  facilities and containment in respect of the manufacture authorised by the licence, including requirements relating the security of premises and the certification of premises or facilities to specified containment levels;  the safety, security and surveillance of premises;  access to land and premises on which activities authorised by a licence are, are to be, or have been undertaken;  measures to manage risks posed to the health and safety of people, or to the environment;  data collection, including studies to be conducted; 72

 information that is to be provided, whether on request by the Secretary or on a regular basis, and the times at which or periods within which, such information is to be provided;  the taking of samples of any thing to which the licence relates and the removal and testing of such samples;  auditing and reporting;  actions to be taken in case of loss, theft, spoilage or destruction (however occurring) of drugs or narcotic preparations produced, under (or purportedly under) the licence;  compliance with a code of practice or a technical or procedural guideline (however described);  contingency planning;  matters relating to the employment of staff or the engagement of contractors;  advertising to the public by the licence holder in relation to drugs or narcotic preparations that contain cannabis plants, cannabis or cannabis resin. The matters concerning advertising will help ensure that the drugs produced are not advertised in an irresponsible way and, in the case of the manufacture of drugs that includes or is from the cannabis plant, is consistent with the object to facilitate access allow patient access in appropriate cases and through appropriate channels. The Secretary can also issue directions in relation to the labelling of drugs under new section 15A. The statutory conditions set out in new sections 12G to 12N apply automatically to all manufacture licences granted after Chapter 3 comes into effect. It is important that all those authorised under a licence to engage in the manufacture of drugs or activities related to such manufacture are aware of any matter that may affect the circumstances in which those activities are carried out and potentially the legality of their actions. Under new section 12G (Condition that manufacture licence holder inform people of obligations), the licence holder has the responsibility of informing those persons about all conditions that are relevant to the person (and their variation or revocation), the revocation of the licence or any related permit, and the giving of directions in relation to the licence by the Secretary under Part 3 of Chapter 5. This obligation is important because under new section 13F of the Act, any person authorised by a licence to manufacture drugs or engage in activities related to such manufacture can commit an offence if any licence condition is breached. A key condition is that the licensee is responsible for employing only suitable persons to work in the industry and exclusion criteria (which the employer must adhere to) are imposed under new section 12H (Condition that manufacture licence holder employ or engage suitable staff). It would be a breach of this condition for the licensee to employ any person under 18 years, a person who has been convicted of a serious offence (as defined in subsection 4(1)) in the last five years, if the person comes within a class of persons set out in the regulations, or is taken not to be suitable under the regulations. The circumstances set 73

out in regulations made for the purpose of determining whether a person is considered 'not to be suitable', could cover matters such as a person's criminal record and their employment history. This condition is important in ensuring that not only licence holders and their business associates are fit and proper, but that they only employ persons who do not represent a significant risk for diversion of narcotic material, given that during the course of their employment, they would have access to material with a black market value. The Secretary is able to impose conditions in relation to the employment of staff and engagement of contractors and regulations can also be made for that purpose (see new section 12F), which provides other mechanisms for ensuring that appropriate systems are in place to minimise this risk. By reason of the new section 12J (Condition that manufacture of drugs is in accordance with a manufacture permit), it would be a breach of condition for the licence holder or other persons authorised under the licence to manufacture the drug to which the licence relates, other than in accordance with a manufacture permit. Thus, any breach of a permit will necessarily involve a breach of a condition of the licence and thus be grounds for revocation of the licence under new section 13B and also an offence under new section 13F. In order to ensure that the Secretary can effectively monitor compliance with the Act, it is important that access to licensed premises is not predicated on a warrant or the consent of the occupier. In line with other Commonwealth regulatory schemes (including under the Therapeutic Goods Act 1989 and the Gene Technology Act 2000), that it is a condition under new section 12K (Condition about monitoring and inspection) that the Secretary or a person authorised by the Secretary can enter licensed premises for the purposes of monitoring manufacturing activity, checking whether it is being carried out as authorised by the licence in accordance with a permit, and whether the licence conditions are being complied with, and to take samples and remove them for testing. Authorised inspectors will be able to exercise the powers conferred by new section 14C to enter licensed premises that are subject to this statutory condition. Failure to allow the authorised inspector to enter the land or premises will be a breach of condition and thus grounds for cancellation of the licence under new section 13B and also an offence under new section 13F. New sections 12L and 12M apply only to a manufacture licence that authorises the manufacture of a drug that includes or is from any part of a cannabis plant, and reflect that limitations on the power of the Secretary to issue such a licence in new section 11K. New section 12L (Condition for manufacture licences authorising manufacture of drugs that are medicinal cannabis products) makes it a condition on a licence that authorises the manufacture of drugs that are medicinal cannabis products that the holder does not supply those products other than as mentioned in new section 11K, that is, it will be supplied for the purposes of use in clinical trials under the Therapeutic Goods Act or notified to the Secretary under that Act, is registered under 74

that Act, or is otherwise supplied in accordance with an approval or authority under that, or in circumstances prescribed by the regulations New section 12M makes it a condition on a licence that authorises the manufacture of one or more drugs for the purposes of research in relation to medicinal cannabis products that the manufacture is undertaken solely for that purpose. The licence holder will be under a continuing obligation under new section 12N (Condition that licence holder notify the Secretary of certain matters) to inform the Secretary about a range of matters that are relevant to whether the licence should be revoked including:  any matter that may affect whether the licence holder is a fit and proper person to hold the licence, or whether a business associate of the licence holder is a fit and proper person to be associated with the holder of such a licence;  a breach of the licence of which the licence holder becomes aware;  any other matter of which the licence holder becomes aware that may require or permit the Secretary to revoke the licence. A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. The licence holder cannot refuse to inform the Secretary of a relevant matter just because the information might tend to incriminate the holder or subject the holder to a penalty. By reason of new section 24B, the privilege against self-incrimination is abrogated in relation to information required to be provided to the Secretary under this section (see further under item 30 below). However, any such matter cannot be used in evidence in any criminal proceedings (including under the Act) except where it relates to the provision of false or misleading information to the Commonwealth under the Criminal Code. Nor can the information be used in any civil proceedings for the contravention of a civil penalty provision (such as new subsection 13F(4)). It can however be taken into account for the purposes of a decision about whether to revoke the licence or other regulatory decisions, or proceedings arising out of such decisions, and also in relation to a contravention of new section 14M (Failure to give information or documents within specified period). Breach of the conditions imposed on a licence is grounds for revocation (see new section 13B) and would normally also be an offence and give rise to a civil penalty (see new section 13F). 75

Division 3 - Variation and revocation of manufacture licences and manufacture permits Under new section 13 (Variation of manufacture licences and manufacture permits) the Secretary can vary a manufacture licence or permit by writing given to the holder either in response to an application by the holder or on the Secretary's initiative. The Secretary must not do so if:  the Secretary is satisfied on reasonable grounds that the variation of the licence or permit would not be consistent with Australia's obligations under the Convention;  the Secretary is satisfied on reasonable grounds that one or more circumstances exist that are prescribed by the regulations as circumstances in which a licence or permit must not be varied;  the application fee has not been paid;  the applicant has not complied with a requirement under new subsection 14J(1) to provide the Secretary with additional information in relation to the application. Conditions can be varied and any activities or persons authorised by the licence can be varied. Any variation takes effect on the day specified in the notice. The Secretary must give a copy of the licence so varied to the holder. Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised of a variation to a licence or permit in that State or Territory and the variation is to a licence or permit relating to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new section 25B). This ability to apply for variation allows a licence holder more flexibility in operating their business, particularly where they can demonstrate that a previously imposed condition is no longer necessary. This also provides the licence holder with the ability to prompt the Secretary to remove a condition that was put in place to address a specific issue. Under new section 13A (Applications for variation of manufacture licences and permits), a licence holder can apply for a variation. An application by the holder of a manufacture licence for a variation of the licence or of the permit must be in writing. An application must be made in the approved form or manner and contain all the information and be accompanied by all the documents required by the regulations or by the Secretary. Any applicable application fee must be paid. The inclusion of information that is false or misleading in a material particular or the omission of any matter or thing without which the information is misleading in a material particular is grounds for revocation of the licence under new section 13B. The Secretary must notify an unsuccessful applicant as soon as practicable and give reasons and a notice of the applicant's right to have the decision reviewed (new section 15F). The Secretary must revoke a manufacture licence under new section 13B if satisfied that: 76

 the licence holder has engaged in conduct that constitutes a serious offence (whether or not a court has found the person guilty) since the licence was granted (where the licence holder is a body corporate, this would apply to the directors);  that the licence holder is no longer a fit and proper person to hold the licence;  a relevant business associate of the licence holder for the revocation is not a fit and proper person to be associated with the holder of a manufacture licence (this might be a person who has become a business associate of the person since the licence was granted). A business associate for this purpose is anyone who comes within that definition in relation to any business of the applicant or licence holder, not just the business relating to the licence. The Secretary can revoke the licence or a manufacture permit that relates to the licence, if the Secretary is satisfied on reasonable grounds that:  a condition of the licence has been breached or the licence holder has engaged in conduct that constitutes an offence against this Act;  the licence or permit was obtained or varied on the basis of information that was false or misleading in a material particular or omitted a matter or thing without which the information was misleading in a material particular;  the continuation in force of the licence or permit would not be consistent with Australia's obligations under the Single Convention;  the location, facilities or security arrangements at the land or premises at which activities authorised by the licence take place are not suitable for those activities;  licence holder has ceased to carry on all activities authorised by the licence;  the licence holder or another person has undertaken activities authorised by the licence to be undertaken at specified premises other than at those premises;  the licence holder is not taking all reasonable measures to ensure the physical security of drugs in the holder's possession or under the holder's control;  the licence holder has not provided information required by a notice given under new subsection 14J(2) within the time specified in the notice; or  circumstances prescribed by regulations exist. Any revocation takes effect on the day specified in the relevant notice and any related permit is taken to be revoked at the same time as the licence. Where the head of an agency of a State or Territory has notified the Secretary of a wish to be advised if a permit of the revocation of a licence or permit in that State or Territory and the revocation is of a licence or permit relating to land or premises in that State or Territory, the Secretary must also advise the head of the agency (see new section 25B). Before revoking a licence, the Secretary is required under new section 13C (Secretary to notify of proposed revocation) to give the holder written notice of the proposed revocation and provide the opportunity to make written submissions within a period of not less than 30 days. The Secretary must have regard to any submissions made by the holder. 77

Under new section 13D (Suspension or surrender of manufacture licences and manufacture permits), regulations may provide for the suspension or surrender of manufacture licences and manufacture permits. Part 3 - Offences and civil penalties relating to manufacture of drugs The offences created by Part 3 only apply to those manufacturing drugs under a licence issued by the Secretary under Chapter 3. Thus there is no offence for the unlicensed manufacture of drugs. Such activities are already offences under Commonwealth, State and Territory legislation and enforcement and prosecution will remain a matter for relevant law enforcement agencies. A licence holder contravenes new section 13E if the holder manufactures drugs or does anything in connection with such manufacture that is not authorised by the licence. The criminal penalty for such a contravention is imprisonment for 10 years, or 600 penalty units, or both. This is effectively the same as for the current manufacturing offence under section 20 of the Act but with the fine substantially increased from the $4,000 in that section to reflect the conversion rate that would otherwise apply under subsection 4B(2) of the Crimes Act 1914. In line with the policy set out in the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the strict liability offence is limited to 60 penalty units for an individual and 300 penalty units for a body corporate. The maximum penalty under the civil penalty provision is 1,000 penalty units. By reason of subsection 82(5) of the Regulatory Powers (Standard Provisions) Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. A person who is authorised by a manufacture licence to manufacture drugs in accordance with a manufacture permit or to engage in activities related to such manufacture, contravenes new section 13F (Breach of condition of a manufacture licence), if the person breaches a licence condition. Unlike new section 13E, this section is not limited to licence holders so as to ensure that all those involved in the activity can be held liable for breaches in which they are involved. Regulations could be made that would allow specific conditions to be excluded from the offence provision. Breach of such a condition by a licence holder would still be grounds for revocation of the licence and a matter to be taken into account in any future application for a licence. The criminal penalty for such a contravention is imprisonment for 10 years, or 600 penalty units, or both. This is effectively the same as for the current manufacturing offence under section 20 of the Act but with the fine substantially increased from the $4,000 in that section to reflect the conversion rate that would otherwise apply under subsection 4B(2) of the Crimes Act. 78

In line with the policy set out in the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the strict liability offence is limited to 60 penalty units for an individual and 300 penalty units for a body corporate. The maximum penalty under the civil penalty provision is 1,000 penalty units. By reason of subsection 82(5) of the Regulatory Powers (Standard Provisions) Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. Chapter 4 (Monitoring and enforcement) Chapter 4 (Monitoring and enforcement) contains four Parts- Part 1 (Introduction), Part 2 (Appointment of authorised inspectors), Part 3 (Monitoring, inspection, investigation etc. under the Regulatory Powers Act) and Part 4 (Monitoring and searching licensed premises). This Chapter allows an authorised inspector to:  monitor whether the Act has been, or is being, complied with and whether information given in compliance or purported compliance with the Act is correct, under Part 2 of the Regulatory Powers Act,  investigate whether any offence or civil penalty provision under the Act or an offence against the Crimes Act 1914 or the Criminal Code that relates to the Act, under Part 3 of the Regulatory Powers Act, and  exercise Part 2 monitoring powers in relation to licensed premises without a warrant or consent. The Chapter also provides:  that each civil penalty provision in the Narcotic Drugs Act is enforceable under Part 4 of the Regulatory Powers Act,  that a person can be given an infringement notice under Part 5 of the Regulatory Powers Act in relation to a contravention of an infringement notice provision under the Narcotic Drugs Act,  for the Secretary to accept an undertaking relating to compliance with a provision of the Narcotic Drugs Act under Part 6 of the Regulatory Powers Act, and  that an injunction under Part 7 of the Regulatory Powers Act can be used to prevent a person from contravening a provision of the Narcotic Drugs Act or to compel compliance with a provision of that Act. Part 1 - Introduction New section 13G (Simplified outline of this Chapter) explains that authorised inspectors will have monitoring, inspection and enforcement powers under the Regulatory Powers Act to ensure that the Act is being complied with and will have additional monitoring powers in relation to licensed premises. The Chapter also provides for the application of the Regulatory Powers Act in relation to civil penalties, infringement notices, enforceable undertakings and injunctions. 79

Part 2 - Appointment of authorised inspectors New section 13H (Appointment of authorised inspectors) allows for the Secretary to appoint officers and employees of an agency of a State or Territory that has functions relating to health, agriculture or law enforcement as well as Australian Public Service employees, officers and employees as authorised inspectors. This will facilitate the efficient use of available resources should the States and Territories agree to make staff available for this purpose. Part 3 - Monitoring, inspection, investigation etc. under the Regulatory Powers Act New section 13J (Powers of issuing officers) makes additional provision to those in subsections 34(3) and 75(3) of the Regulatory Powers Act in relation to issuing officers (defined in subsection 4(1) as Judge or a court created by the Parliament, a Deputy President of the Administrative Appeals Tribunal (AAT) or a non-presidential member of the AAT who is enrolled as a legal practitioner of the High Court or of the Supreme Court of a State or Territory for at least five years). The effect of these additional provisions is that an issuing officer will only be able to exercise a power conferred by Part 2 if, having indicated in writing that they consent, the issuing officer is nominated by the Minister for the purpose. The section provides that the powers are conferred in a personal capacity and where the person is a Judge, not as a court or a member of a court. It also gives to a Deputy President or non-presidential member of the AAT exercising a power conferred by the Part the same protection and immunity as a Justice of the High Court. New section 13K provides authorised inspectors with monitoring powers by triggering Part 2 of the Regulatory Powers Act (which creates a framework for monitoring whether legislation has been, or is being, complied with and whether information given in compliance or purported compliance with legislation is correct). New subsection 13K(1) provides that a provision is subject to monitoring under Part 2 if it is an offence against the Narcotic Drugs Act or a civil penalty provision of the Act. New subsection 13K(2) provides that information given in compliance or purported compliance with a provision of the Narcotic Drugs Act is subject to monitoring under Part 2. New section 13K(3) provides that, for the purposes of Part 2:  the Secretary is an authorised applicant (which means the Secretary can apply for a monitoring warrant under Part 2 of the Regulatory Powers Act);  authorised inspectors are authorised persons (which means they can exercise the general monitoring powers set out in section 19 of the Regulatory Powers Act);  the Secretary is the relevant chief executive officer (which means the Secretary must issue an identity card to those exercising powers under Part 2);  those defined in subsection 4(1) of the Narcotic Drugs Act as issuing officers are issuing officers (which means that subject to the operation of new section 80

13J, they can issue monitoring warrants under Part 2 of the Regulatory Powers Act); and  a relevant court as defined in subsection 4(1) of the Narcotic Drugs Act (the Federal Court of Australia , the Federal Circuit Court of Australia a court or a State or Territory that has jurisdiction in relation to matters arising under this Act) are relevant courts (which means that each is a court in relation to a matter that arises because of the exercise of powers under Part 2 of the Regulatory Powers Act). New subsection 13K(4) will allow an authorised inspector to be assisted in exercising functions or duties under Part 2 of the Regulatory Powers Act. New section 13L (Modifications of Part 2 of the Regulatory Powers Act) provides for additional monitoring powers beyond those in Part 2 of the Regulatory Powers Act - to take samples of any thing on premises entered under Part 2 of the Regulatory Powers Act and the power to remove and to test such samples. This power is appropriate given the nature of the industry regulated under the Narcotic Drugs Act. New section 13M (Investigation powers under Part 3 of the Regulatory Powers Act) provides authorised inspectors with investigating powers by triggering Part 3 of the Regulatory Powers Act (which creates a framework for gathering material that relates to the contravention of offence provisions and civil penalty provisions). New subsection 13M(1) provides that a provision is subject to investigation under Part 3 if it is an offence against the Narcotic Drugs Act or a civil penalty provision of the Act. New section 13M(2) provides that, for the purposes of Part 3:  the Secretary is an authorised applicant (which means the Secretary can apply for an investigation warrant under Part 3 of the Regulatory Powers Act);  authorised inspectors are authorised persons (which means they can exercise the general monitoring powers set out in section 49 of the Regulatory Powers Act);  the Secretary is the relevant chief executive officer (which means the Secretary must issue an identity card to those exercising powers under Part 3);  those defined in subsection 4(1) of the Narcotic Drugs Act as issuing officers are issuing officers (which means that subject to the operation of new section 13J, they can issue investigation warrants under Part 3 of the Regulatory Powers Act); and  a relevant court as defined in subsection 4(1) of the Narcotic Drugs Act are relevant courts (which means that it is the court in relation to a matter that arises because of the exercise of powers under Part 3 of the Regulatory Powers Act). New subsection 13M(4) will allow an authorised inspector to be assisted in exercising functions or duties under Part 3 of the Regulatory Powers Act. New section 13N (Civil penalties under Part 4 of the Regulatory Powers Act) provides that each civil penalty provision of the Narcotic Drugs Act and in regulations made 81

under the Act is enforceable under Part 4 of the Regulatory Powers Act (which creates a framework for the use of civil penalties to enforce civil penalty provisions). The section provides that:  the Secretary is an authorised applicant for purposes of Part 4 of the Regulatory Powers (which means that the Secretary can apply to a relevant court for an order that a person pay the Commonwealth a pecuniary penalty), and  each relevant court (as defined in subsection 4(1) of the Narcotic Drugs Act) is a relevant Court for those purposes (which means that such a court can make such an order). Subsection 13N(4) makes clear that Part 4 of the Regulatory Powers Act as it applies to the civil penalty provisions in the Act does not make the Crown liable to a pecuniary penalty. New section 13P (Provisions subject to an infringement notice) sets out which provisions are subject to an infringement notice under Part 5 of the Regulatory Powers Act (which creates a framework for the use of infringement notices where an infringement officer reasonably believes that a provision has been contravened). The section includes strict liability offences under any regulations made under the Act. In line with the Attorney-General's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, infringement notices will be used to deal with less serious and less factually complex contraventions of a provision, where initiating court proceedings would be disproportionately costly. New subsection 13P(2) provides that for the purposes of Part 5 of the Regulatory Powers Act:  the Secretary is an infringement officer (which means that the Secretary can give a person an infringement notice under Part 5); and  the relevant chief executive (which means the Secretary can decide on applications for an extension of time to pay, and for withdrawal of notices). New section 14 makes enforceable undertakings available to enforce provisions of the Narcotic Drugs Act by providing that the provisions of that Act are enforceable under Part 6 of the Regulatory Powers Act (which creates a framework for accepting and enforcing undertakings relating to compliance with offence provisions and civil penalty provisions). The section provides that:  the Secretary is an authorised person (which means that the Secretary can accept a written undertaking under Part 6, cancel the undertaking or apply to a relevant court for an order that in the event that the undertaking has been breached), and  a relevant court (as defined in subsection 4(1)) is a relevant court (which means that the court can make an order on such an application by the Secretary). 82

The Secretary will have discretion whether or not to publish an enforceable undertaking accepted under Part 6. New section 14A makes injunctions available to enforce provisions of the Narcotic Drugs Act by providing that the provisions of that Act are enforceable under Part 7 of the Regulatory Powers Act (which creates a framework for using injunctions to enforce provisions). The section provides that:  the Secretary is an authorised person (which means that the Secretary can apply to a relevant court for an injunction under Part 7 if a person has engaged, is engaging or proposes to engage in conduct in contravention of a provision enforceable under Part 7), and  a relevant court (as defined in subsection 4(1)) is a relevant court (which means that the court can grant an order restraining a person from engaging in the conduct or requiring to person to do a thing). New section 14B (Extension to external Territories) ensures that the parts of the Regulatory Powers Act as they apply to a provision mentioned in this Part extends to every external Territory to which the provision extends. (New section 6 inserted by item 6 extends the Narcotic Drugs Act to the external Territories.) Part 4 - Monitory and searching licensed premises Authorised inspectors will, under new section 14C, be able to enter licensed premises without consent or a warrant for the purposes of determining whether the Act and any regulations and licence conditions and any applicable directions given under new sections 15, 15A, and 15B are being complied with, and to decide whether to exercise a power under the Act. However, the powers can only be exercised during the business hours of the premises. An authorised inspector will be able to exercise all the powers that can be exercised under Part 2 of the Regulatory Powers (Standard Provisions) Act, including as those powers are extended by new section 13L. It is a breach of the statutory licence condition in new sections 10H and 12K for a person authorised to undertake activities under a licence not to allow the Secretary or a person authorised by the Secretary to enter the land or premises on which that activity is being undertaken for the purposes of inspecting and monitoring. Various other obligations that would otherwise apply in relation to the exercise of monitoring powers under Part 2 of the Regulatory Powers Act will also apply:  an authorised inspector must announce that he or she is authorised to enter and show their identify card and explain the reasons for entering the premises (new section 14D),  the occupier is entitled to observe the exercise of powers but not impede their exercise (new section 14E), and 83

 the occupier must provide the authorised inspector and anyone assisting the authorised inspector with all reasonable facilities and assistance (new section 14F). It is a strict liability offence under new section 14F for the occupier of premises entered under new section 14C to fail to provide all reasonable facilities and assistance. It is a strict liability offence under new section 14G for any person to obstruct or hinder an authorised inspector performing functions or exercising powers under the Act. This offence would extend to authorised inspectors exercising powers under subsection 24(1). The maximum penalty for each is 30 penalty units. Item 11 - Part III (heading) This item repeals the heading to Part III. Item 12 - sections 15, 16, 17, 18, 19 and 20 This item repeals sections 15, 16, 17 18, 19 and 20. Item 13 - Before section 21 Item 13 will insert before section 21 of the Act a new heading (Chapter 5 - General) and insert five new Parts - Part 1 (Introduction), Part 2 (Obtaining and disclosing information and documents), Part 3 (Directions powers), Part 4 (Review of decisions) and Part 5 (Other matters). Part 1 contains new section 14H, which is a simplified outline of Chapter 5. The Chapter deals with information gathering and disclosure, the powers of the Secretary to issue directions, internal and external review of decisions under the Act and a number of miscellaneous provisions, including delegations, serving notices, requirements relating to drugs passing through Australia and regulations. This Chapter will also contain provisions for a review of the operation of the Act and the new section 25A (to be inserted by Schedule 2.) Part 2 (Obtaining and disclosing information and documents) consists of two Divisions - Division 1 (Obtaining information and documents for purposes relating to licences) and Division 2 (Disclosure of certain information). Division 1 In establishing this cultivation scheme, the Commonwealth will allow for the first time the licit cultivation of a plant that has an established black market and very high value within that market (thousands of dollars per plant). Such a scheme might seem attractive to elements that might use the licensing scheme to cover for illicit activities. The fit and proper person test is introduced to, as much as possible, exclude persons that might be tempted to engage in criminal activity and is one of the key elements for the Commonwealth to manage the risk of diversion that is an obligation under the Single Convention. 84

Assessing whether or not a person and their business associates are fit and proper (or remain fit and proper) will reply on information from three primary sources - the applicant or licence holder themselves; Commonwealth agencies; and State and Territory agencies. It is also necessary to obtain information to assess whether proposed cultivation, production or manufacturing premises are suitably located. For example, it would be inappropriate to locate a cannabis cultivation enterprise, with the risk of attracting criminal elements, close to sensitive and vulnerable populations, such as school children. State and Territory land management issues must also be considered. New section 14J (Secretary may require further information or documents) sets out the powers of the Secretary to ask for information or documents for the purposes of determining whether a licence or permit should be granted under the Act or should be revoked, or whether any other regulatory action should be taken in relation to a licence holder. In relation to applicants, the information or documents can be such as the Secretary reasonably requires in relation to the application. The assessment of an application for a licence may be an iterative process that requires clarification of information already provided, particularly where that information is relevant to the applicant's fitness to hold a licence. While it is not an offence for an applicant for a licence or permit given a notice under subsection 41(1) to fail to give the Secretary the relevant information or documents, the Secretary must refuse to grant the licence or permit if the applicant does so (see new subsections 8G(1),9(4), 9F(1) and 9P(4) in relation to cannabis licences and permits and new subsections 11J (1) and 12A(4) in relation to manufacture licences and permits). In relation to licence holders, the Secretary can require information or documents about matters relating to the licence (new subsection 14J(2)). This subsection is very broad in its scope and includes information about whether the person is fit and proper person to hold a licence or to be associated with the holder of a licence (new subsection 14J(5)). The status of a person as 'fit and proper' may change over time. While the licence holder is obligated, as a condition on the licence, to inform the Secretary of any matters that may affect whether they or any business associate continues to be fit and proper (see new sections 10K and 12N), information from other sources may cause the Secretary to question whether the licence holder or a relevant business associate remains fit and proper. The Secretary then needs to be able to make appropriate enquiries to satisfy himself or herself that the person remains fit and proper and whether or not to consider revocation of the licence or to vary the licence, for instance through the imposition of new conditions. The Secretary may also need to make enquiries for the purpose of determining whether to vary existing conditions or impose new ones, or to consider whether to exercise a direction under new sections 14P, 15 or 15B. 85

By reason of new section 24B, the privilege against self-incrimination is abrogated in relation to information sought by the Secretary under this section (see further under item 30 below). Information or documents can be sought under this section at any time that a licence is in force. The licence holder must be given at least 14 days to respond to a notice under this subsection. It is an offence under new section 14M not to give the relevant information or documents within the period specified in the notice. It is also an offence under Division 137 of the Criminal Code to provide false or misleading information or documents in response to such a notice. New section 14K (Secretary may request information or documents from any source) allows the Secretary to request information from any source including Commonwealth agencies. These will be an important source of information about whether or not a person is a fit and proper person under the test set out in new sections 8A and 8B. The section makes it clear that the collection of information by the Secretary under this section is authorised by the Act for the purposes of the Privacy Act 1988 and that the disclosing of information in response is also taken to be authorised by the Act for the purposes of the Privacy Act and the Australian Border Force Act 2015 (which prevents disclosure unless authorised or required under a law of the Commonwealth, a State or Territory). New section 14L (Secretary may require information or documents from other sources) allows the Secretary to require the head of a State and Territory agency to provide information relevant to an application for, or variation to or revocation of, a licence or permit or otherwise in relation to a licence or permit. The information or documents can relate to a person, location or premises. The Secretary cannot give such a notice unless the Secretary reasonably believes that the head of the agency has, or can reasonably require, the information or documents and the information or documents are relevant for the purposes of considering an application for a licence or permit, or are otherwise relevant to a licence or permit. Information provided by the State or Territory in which premises in which licensed activities are or are proposed to be carried will be a vital element in consideration by the Secretary of the matters that can be taken into account both for the purposes of a grant or revocation, including for instance, the suitability of the location, facilities or location or proposed security arrangements of the relevant land or premises (see new paragraphs 8G(1)(e), 9F(1)(e) and 11J(1)(e) in relation to the grant of a licence, and paragraphs 10P(2)(e) and 13B(2)(e) in relation to the revocation of a licence). The head of the State or Territory agency must respond to the extent that he or she can reasonably acquire the information or documents. It will also be made clear that the collection by the Secretary of personal information under this section is authorised under the Act for the purposes of the Privacy Act and 86

that the disclosure by those requested for information under the section is taken to be authorised for any State or Territory law that primarily relates to the protection of privacy of individuals and prohibits or regulates the use or disclosure of personal information. It is an offence under new section 14M (Failure to give information or documents within a specified period) for a person required by new subsection 14J(2) to give the Secretary information or documents within a specified time to fail to do so (maximum fine of 100 penalty units for an individual and 500 penalty units for a body corporate) and a civil penalty of a maximum of 500 penalty units is payable for a contravention. Under subsection 82(5) of the Regulatory Powers Act, a court can order a body corporate who has contravened a civil penalty provision to pay five times the pecuniary penalty specified in the new subsection 14M(4). Division 2 - Disclosure of certain information New section 14N (Authorised disclosure of information) allows the disclosure by the Secretary of information under the Act in particular circumstances and such disclosure will be authorised for the purposes of the Privacy Act. The section will allow disclosure of information to an agency of the Commonwealth or a State or Territory that is responsible for, or deals with, matters relating to health, therapeutic goods, poisons, industrial chemicals, agriculture, land management, environmental matters and the registration of pharmacies or the regulation of pharmacists, or with law enforcement, criminal intelligence or fraud. Disclosure can also be made by the Secretary if it is in accordance with regulations made under the section for the purposes of public safety or research relating to medicinal cannabis or the regulation of health professionals. New Part 3 - Directions Powers New Part 3 creates a regime under which the Secretary can give directions to a licensee from time to time, and on a former licensee in certain circumstances. Failure to comply with a direction is an offence, a ground for revocation of the licence and would be relevant to whether a licence should be granted in the future. New section 14P (Directions with respect to security of premises and handling of things) is an updated version of section 12 of the Act, which is being repealed by item 10 above. This section empowers the Secretary to give a direction to the holder of a licence under the Act of the following kinds:  directing the person to take specified measures for ensuring the security of land or premises covered by the licence;  directing the person to take specified measures for regulating or controlling the entry of persons or vehicles into that land or those premises;  directing the person to take specified measures for preventing the entry or departure of persons or vehicles such land or premises other than at specified places; 87

 directions appropriate in relation to cannabis plants cultivated by the person or in the person's possession or control, cannabis or cannabis resin produced by the person or in the person's possession on control, or drugs or narcotic preparations manufactured by the person or in the person's possession or control, or substances used in such manufacture in the person's possession or control, including directions in relation to their handling at a place other than the land or premises at which the cultivation, production or manufacture occurred; and  such other directions in relation to the licence or permit as the Secretary considers appropriate. The importance of maintaining a secure environment for cultivation and production cannot be overstated as it is a high risk for diversion. Similarly, should there be, for some reason, cannabis plants, cannabis or cannabis resin, drugs or narcotic preparations that are in excess of that allowed under the licence, do not meet licensing requirements or were otherwise cultivated, produced or manufactured in breach of the licence, then the Secretary should have the power to direct the licence holder (or former licence holder), to take action to secure and destroy the crop. This is important as a key obligation under the Single Convention is to prevent the accumulation of stock. New section 15 (Directions with respect to destruction, etc.) empowers the Secretary to give directions specifically requiring the destruction of, or other dealings with cannabis plants, cannabis resin, drugs or narcotic preparations in the person's possession or control. The Secretary can do so if satisfied on reasonable grounds that:  the cannabis plants were cultivated or obtained, the cannabis or cannabis resin was produced or the drugs or narcotic preparations were manufactured in breach of the licence;  the cannabis plants were cultivated or obtained, the cannabis or cannabis resin was produced or the drugs or narcotic preparations were manufactured in circumstances prescribed by the regulations; or  circumstances prescribed by the regulations for the purposes of new paragraph 15(1)(c) exist. The Secretary can carry out the destruction or dealing, direct that the holder or person in charge of the things to be destroyed do so or arrange for another person with appropriate qualifications or expertise to do so (both of which can be supervised by the Secretary). Should the Commonwealth incur costs associated with the actions required to destroy material under this section, new subsection 15(4) allows the Commonwealth to take action against the person to whom the notice was given to recover the amount. It should be noted that each licence under Chapter 2 or Chapter 3 must specify that the Secretary may in accordance this section require the destruction of cannabis plants, cannabis or cannabis resin or drugs or narcotic preparations in the possession or under the control of the licence holder (see new sections 8N, 9L and 11N). This makes it clear that the licence holder is aware that such a direction could be made if relevant circumstances arise. 88

New section 15A (Directions with respect to manufacturing and labelling of drugs) is in similar terms to section 13 of the Act, which is being repealed by item 10 above. It allows the Secretary to give written directions to the holder of manufacture licence in relation to the operation connected with the manufacture of drugs and narcotic preparations and the labelling of drugs and narcotic preparations manufactured by the holder. New section 15B (General matters about directions) makes it clear that directions given by the Secretary can relate to cannabis plants, cannabis, cannabis resin or drugs generally, cannabis plants, cannabis, cannabis resin or drugs of a kind, or in respect of cannabis plants, cannabis, cannabis resin or drugs specified in the direction. The section also provides that in the event of an inconsistency between a condition of a licence and a direction given under Part 3 of Chapter 5, the condition is of no effect to the extent of the inconsistency. It is an offence under new section 15C (Failure to comply with a direction) to comply with a direction given under this Part (maximum fine of 500 penalty units for an individual and 2,500 penalty units for a body corporate), and a civil penalty of a maximum of 600 is payable for a contravention. Under subsection 82(5) of the Regulatory Powers Act, a court can order a body corporate who has contravened a civil penalty provision to pay five times the pecuniary penalty specified in the new subsection 15C(4). This section does not apply to a failure by a person to comply with a direction under new paragraph 15A(b) (labelling). It is an offence under new section 15D (Supply of a drug or narcotic preparation not labelled in accordance with a direction) for a manufacturer given a direction by the Secretary under new paragraph 15A(b) to supply a drug or narcotic preparation that is not labelled in accordance with that direction. A maximum fine of 500 penalty units for an individual and 2,500 penalty units for a body corporate and a civil penalty of a maximum of 600 penalty units for an individual is payable for a contravention. Under subsection 82(5) of the Regulatory Powers Act, a court can order a body corporate who has contravened a civil penalty provision to pay five times the pecuniary penalty specified in the new subsection 15(4). This section is similar to section 18 of the Act, which is being repealed by item 12 above. New Part 4- Review of decisions New Part 4 creates a regime for internal and external review in relation to decisions made by the Secretary. New section 15E (Reviewable decisions) lists the decisions of the Secretary that are subject to internal review by the Minister, or his or her delegate. They include decisions in relation to the grant, variation or revocation or a licence or permit, the imposition of conditions and the giving of directions to a licence holder or former licence holder. The reviewable decisions also include decisions to grant a medicinal cannabis licence and permit under new section 8F and new section 9, respectively, and to grant a cannabis research licence and permit under new section 9E and new 89

section 9P, respectively. The State or Territory in which such a licence is granted is able to seek a review of decisions to grant a medicinal cannabis or cannabis research licence, or to vary such a licence (see new subsection 15G). New section 15F (Notice of reviewable decisions) provides for the giving of notice after a reviewable decision is made. New subsection 15F(1) requires the decision-maker to give the licence holder or former licence holder or applicant, written notice of the decision as soon as practicable and given reasons and notice of the right of the person to have the relevant decision reviewed. In the case of a decision to grant a medicinal cannabis licence or a cannabis research licence or to vary such a licence, new subsection 15F(2) requires the decision-maker to notify the head of agency in the State or Territory in which the land or premises affected by the licence are located provided that there is a notice in force under new subsection 25B(2) (inserted by item 33 below). This is a notice given by the head of an agency in a State or Territory that indicates a wish to be advised if a licence or permit that relates to land or premises situated wholly or partly in the State or Territory is granted, varied, or revoked. In such a case, the Secretary must under new subsection 15F(1A) give written notice of the decision to the head of the relevant agency as soon as practicable with reasons, and notice of the right of the State or Territory to have the decision reviewed. New section 15G (Internal review of reviewable decisions - application for review) provides for a person who has been given a notice under new section 15F (including the head of an agency of a State or Territory under new subsection 15F(1A)) can apply to the Minister for a review of that decision. The request must be in writing, set out the reasons for the request and be made within 90 days after the date of the notice. New sections 15H, 15J and 15K set out the process of an internal review conducted by the Minister. Under new section 15H (Internal review of reviewable decisions - review of decision) the Minister must undertake the review personally or have it reviewed by a person who has a delegation to undertake such a review who was not involved in make the relevant decision and who occupies a position at least as senior as the person who made the decision. The person making the internal review decision (the reviewer) is not required to consider any information provided by the applicant for review other than that provided by the applicant in the application unless additional information has been sought by the reviewer under new section 15K. The reviewer can affirm, vary or set aside the Secretary's decision, and if set aside, decide whether to make a new decision in its place. For instance, if the decision under review is to revoke a licence and that decision is set aside because the reviewer comes to the view that the licence should not be revoked, there is no need for a new decision to be made. 90

Under new section 15J (Internal review of reviewable decision - notice of decision) the review must give the applicant written notice of the decision as soon as practicable and given reasons. The initial decision by the Secretary is taken to be affirmed if the applicant has not received notice of the decision within 60 days after the application for review was made. The time during which the applicant is responding to a request for additional information under new section 15K is not taken into account for this purpose. Under new section 15K (Minister or internal reviewer may require further information) the internal reviewer can require the applicant to provide additional information about the application. New section 15L (Review of decisions under this Division by Administrative Appeals Tribunal) makes provision for review by the Administrative Appeals Tribunal. Under new subsection 15L(1), the applicant may request that the decision made by the Minister or their delegate be reviewed by the Administrative Appeals Tribunal. New subsection 15L(2) makes it clear that if a reviewable decision is the grant of a medicinal cannabis licence or a cannabis research licence or its variation under Chapter 2 and the person who made the decision gives a notice under new subsection 15F(2) to the head of an agency in the State or Territory in which the land or premises to which the licence relates are located then the State or Territory concerned may be a 'person whose interests are affected' for the purposes of subsections 27(2) and 30(1A) of the Administrative Appeals Tribunal Act 1975. The effect of the subsection is to ensure that an agency of a State or Territory can be an applicant for review by the Administrative Appeals Tribunal in relation to decisions to grant a licence located in that State or Territory, and to become a party to a review by the Administrative Appeals Tribunal of such a decision. Item 13 will also insert a new heading before section 21 - Part 5 - Other matters. Item 14 - Section 21 Section 21 provides for a court to order, where it convicts a person for an offence under Part III of the Act, the forfeiture of goods in respect of which the offence was committed. All the sections in Part III of the Act (other than section 21) are being repealed by item 12 above. The amendment to be made by item 14 ensures that it covers any the conviction of a person for any offence under the Act. Item 15 - Part lV - heading This item will repeal the heading to Part IV (a new Part heading is inserted by item 13 above). Items 16, 17 and 18 - Subsections 22(1) and (4) These items will make minor amendments consequential on the new definition of premises in subsection 4(1). They have no effect on the operation of the section that 91

gives the Comptroller-General of Customs power to take action in relation to drugs passing through Australia. Items 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 and 29 - amendments to sections 23 and 24 Section 24 allows the Secretary, by notice, to require a licensed manufacturer of drugs, a manufacturer of narcotic preparations and wholesale dealer in drugs to keep such records, and to give to the Secretary such returns and information as are specified in a notice about a range of matters - the manufacture of drugs or narcotic preparations by the person, dealings in drugs and narcotic preparations and stocks of drugs and narcotic preparations in the possession or control of the person. Under subsection 25(1), a person authorised by the Secretary as an authorised inspector can enter the premises on which the manufacturing or wholesaling business is carried out in respect of a notice has been given by the Secretary, and exercise a number of powers including taking samples, inspecting processes of manufacture and inspecting books and documents and take extracts or copies. Under subsection 25(2), a person appointed as an authorised inspector by the Comptroller-General of Customs can enter premises at which a person is licensed to manufacture drugs to inspect for the purposes of ascertaining whether a direction should be given by the Comptroller-General under section 12 of the Act in relation to the security of the premises. Item 19 inserts a new heading into section 23 - Requirement to keep records and furnish reports. Items 20 and 21 remove from subsection 23(1) any reference to a licensed manufacturer so that the provision will only operate in relation to persons who are not licensed under new Chapter 3 (that is, wholesalers and manufacturers of narcotic preparations who are not required to be licensed under the Act). The obligations of holders of manufacturing licences in relation to record-keeping and reporting etc. are now set out in new Chapter 3. Item 22 updates the offence provisions in section 23 for failing to comply with a notice - 60 penalty units for the strict liability offence and 500 penalty units as a civil penalty. By reason of subsection 82(5) of the Regulatory Powers Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. Item 23 inserts a new heading into section 24 - Inspection of certain premises. Items 24, 25 and 26 make consequential amendments to subsection 24(1) to reflect the fact that authorised inspectors are now appointed by the Secretary under new section 13H and that the holders of manufacture licences will no longer be covered by section 23 as amended. Item 27 repeals subsections 24(2), (3), (3A) and (3B) which are offences relating to obstructing and hindering and authorised inspector and not providing an authorised 92

inspector with all reasonable facilities and assistance. They are replaced with an updated offence to apply where the occupier of person in charge of the premises does not provide an authorised inspector with reasonable facilities and assistance for the effective exercise of the inspector's powers (new subsection 24(2)). New subsection 24(3) creates a strict liability offence with a penalty of 60 penalty units for a contravention of new subsection 24(2) and 500 penalty units as a civil penalty. By reason of subsection 82(5) of the Regulatory Powers Act, a court can order a body corporate who has contravened this provision to pay five times the pecuniary penalty. Under subsection 24(3C), as amended by item 28, the offence in new subsection 24(3) does not apply if the occupier or person in charge has a reasonable excuse. New section 14G is a general offence for the obstructing and hindering of an authorised inspector exercising powers under the Act and will therefore apply to any inspections untaken under the amended section 24. Item 29 repeals subsections 24(3D) and (4). Item 30 - After section 24 Item 30 will insert two new sections 24A and 24B after section 24. New section 24A (Physical elements of offences) There are a number of new sections that provide that a person commits an offence if the person contravenes another provision (generally an earlier subsection in the same section) including new sections 11B, 11C, 11D, 11E, 13E, 13F, 14M, 15C and 15D. For example, new subsections 11C(1) and (2) provide as follows: (1) A person contravenes this subsection if: (a) the person is authorised by a cannabis licence to cultivate cannabis plants, in accordance with a cannabis permit, or to engage in activities related to such cultivation; and (b) the person breaches a condition of the cannabis licence; and (c) the condition is not prescribed by the regulations for the purposes of this paragraph. Fault-based offence (2) A person commits an offence if the person contravenes subsection (1). Note: See section 24A in relation to the physical elements of the offence. Penalty: Imprisonment for 10 years, or 600 penalty units, or both. As a result of subsection 4D(1) of the Crimes Act 1914, the offence is the subsection with the word 'Penalty' at its foot (subsection 11C(2)). New section 24A (Physical elements of offences) clarifies that the physical elements of the offence (which are relevant for the purposes of Chapter 2 of the Criminal Code) 93

are set out in the subsection that sets out the conduct that is prohibited (that is, subsection 11C(1) in the example). New section 24B (Privilege against self-incrimination) abrogates the privilege against self-incrimination in certain circumstances. Neither a licence holder, nor an applicant for a licence or permit who has been required by the Secretary under new subsection 41(1) to provide further information or documents, is excused from giving information to the Secretary on the grounds that the information might tend to incriminate the person or expose the person to a penalty. The privilege is also abrogated in relation to information that a licence holder is required by provide to the Secretary under the statutory conditions in sections 10K and 12N (this is information that might affect whether the licence holder is fit and proper, the breach the licence or another other matter that may be relevant to whether the Secretary revokes a permit or licence). However such information or the giving of such information cannot be used against the person in criminal proceedings or in civil proceedings for a civil pecuniary penalty. This means that the information can be used by the Secretary to determine whether a licence or permit should be granted, or whether a licence should be revoked. Without this, the effectiveness of the scheme in protecting against the diversion of cannabis to illicit use would be seriously undermined. An exception to the criminal proceedings immunity is in relation to proceedings under or arising out of sections 137.1 or 137.2 (which deal with the giving of false and misleading information and documents to the Commonwealth) or subsection 149(1) of the Criminal Code (which deals with the obstruction of Commonwealth officials). For example, in relation to an application for a variation to a cultivation permit (for instance to allow the cultivation of additional cannabis plants), the Secretary is entitled under new subsection 14J(1) to require the applicant licence holder to provide information relevant to the application. If the right to the privilege against self-incrimination applied, the person would legally be allowed to withhold self-incriminating information, such as information about past breaches of conditions of the licence that were relevant to the cultivation of cannabis plants (for instance relating to a failure to provide appropriate security) that would be relevant to whether the variation should be granted. However, as the privilege does not apply in relation to new section 14J, the person would be legally obliged to provide the information to the Secretary. This self-incriminating information would not be admissible as evidence in criminal court proceedings against that person (for instance for the offence of breaching the condition) or in civil proceedings for contravention of a civil penalty provision. It could, however, be taken into account for the purposes of a decision about whether to grant a licence or to revoke or vary a licence and also in relation to a contravention of new section 14M (Failure to give information or documents within specified period). 94

Item 31 - Subsections 25(1), (2) and (3) Section 25 provides for the delegation of powers and functions under the Act. This item will make consequential amendments to remove the references to the Customs Minister. References to 'the Minister' in the Act will be to the Minister with responsibility for administering the National Health Act 1953. Item 32 - At the end of section 25 Item 23 will add a new subsection (4) that prevents the Secretary from delegating a power or function under subsection (1) to an officer of employee of an agency of a State or Territory without the agreement of that State or Territory. Item 33 - Before section 26 Item 33 will insert a new section 25B before section 26. Under new section 25B (Secretary to notify States and Territories of certain matters) the Secretary will be required to notify the agency of a State or Territory about matters relating to the grant, variation or revocation of a permit or licence if:  the head of the agency has notified the Secretary of a wish to be advised of the grant, variation or revocation of a licence permit that relates to land or premises in the State or Territory; and  the Secretary grants, varies or revokes a licence or permit relating to land or premises in that State or Territory. Item 34 - At the end of section 26 Section 26 makes provision for the service of a notice on a person under the Act. This item will add a new subsection at the end of section 26 that provides that when a notice or document is sent to a fax number or electronic address, or other electronic means, is to have been 'given' on the business day after it was sent. This will provide some certainty about when the period of 30 days has elapsed after a notice sent by the Secretary under new subsections 11(3) or 13C(3) informing a licence holder of the intention to revoke a licence and inviting the holder to make a submission within 30 days was 'given' for the purposes of those subsections. Item 35 - After section 26 This item will insert a new section 26A (Review of operation of the Act). Under this section, the Minister must cause a review to be undertaken as soon as possible after the second anniversary of the commencement of Schedule 1 to the Narcotic Drugs Amendment Act 2016 and for the report to be tabled in each House of the Parliament by the third anniversary of the commencement of that Schedule. 95

Item 36 - Section 27 This item will repeal section 27 and replace it with two new sections. Under new section 27 (Regulations) regulations can be made in relation to a range of matters including the following:  access to land and premises and the conditions of entry, use of security passes and other identification systems by employees and other persons,  the testing of samples;  authorising persons engaged by a licence holder but not otherwise authorised by the relevant licence to transport cannabis plants, cannabis and cannabis resin obtained, cultivated or produced under the licence;  the making of quality standards for the cultivation and production of cannabis and cannabis resin;  regulating, restricting or prohibiting premises, vehicles, equipment or machines used or intended to be used for or in connection with activities relating to licences;  regulating, restricting or prohibiting the advertising to the public of cannabis plants, cannabis, cannabis resin by licence holders;  regulating the manner in which cannabis plants, cannabis, cannabis resin and drugs and narcotic preparations that contain cannabis or cannabis resin are presented for supply;  empowering the Secretary to do things in relation to cannabis plants, cannabis and cannabis resin, drugs and narcotic preparations that have been seized under the Act. Regulations can also be made modifying the operation of Chapters 2 and 3 of the Act if an applicant for a licence or a licence holder is an agency of a State or Territory. The areas that may warrant modification are some aspects of the definition of 'fit and proper' test, which would not be relevant or appropriate in such a situation and the circumstances in sections 8G, 8J, 9F, 9H, 11J and 11K where the Secretary is prohibited from granting a licence and where the Secretary under new sections 10P and 13B is required to revoke a licence. These regulations would have to be consistent with Australia's obligations under the Single Convention. New section 28 (General provisions relating to regulations) provides that regulations can be made for the imposition of penalties of not more than 50 penalty units for contravention of the regulations, for the imposition of civil penalties of not more than 50 penalty units for an individual and 250 penalty units for a body corporate, for the charging of fees and for review of decisions made under the regulations. New subsection 28(2) creates an exception to the limitation on the incorporation by reference rule in subsection 14(2) of the Legislative Instruments Act 2003 that would not otherwise allow regulations to be made in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force from time to time. This will allow, for instance, the incorporation by reference of standards that are relevant to the cultivation of contaminant-free plants. 96

Schedule 2 - Amendments relating to authorisation of State and Territory agencies Narcotic Drugs Act 1967 The amendments made to the Narcotic Drugs Act 1967 (the Act) are intended to come into effect before the amendments to the Act made by the provisions in Schedule 1. Their purpose is to allow the Secretary to approve a State or Territory agency to engage in activities that would otherwise require a licence under new Chapter 2 or 3 of the Act - that is, cultivation of cannabis plants, production of cannabis and cannabis resin and manufacture of drugs that contain cannabis or cannabis resin. This will allow Victoria to proceed with its programme announced in October 2015. Item 1 - Subsection 4(1) This item will insert four new definitions in subsection 4(1) that are relevant to the new section 25A inserted by item 2 below. Along with the rest of the definitions in subsection 4(1), they will stay in place only until the amendments made by Schedule 1 come into effect (when subsection 4(1) will be replaced with definitions which include the four new definitions). The definitions do not affect the operation of the Act so far as it applies to licences that are extant at the time that Schedule 2 comes into operation. The newly defined terms include a definition of a cannabis plant to make clear that it includes any parts of a plant of the genus cannabis. Cultivate a cannabis plant is given a wide meaning but does not include what would be covered by the definition of production under the Single Convention, that is, the separation of cannabis or cannabis resin from a cannabis plant. Item 2 - After section 25 Item 2 will insert a new section (Certain State and Territory agencies are authorised to cultivate cannabis plants, produce cannabis etc. and manufacture drugs). Under this section the Secretary can approve an agency of a State or Territory to cultivate and produce cannabis for medical or research purposes, and also manufacture products from cannabis, which would otherwise require a licence under Chapter 2 or Chapter 3. This is being inserted to allow the earliest possible patient access. Regulation making will take some time and, as described earlier, the main part of the Bill would not come into effect for some months after Royal Assent. Authorising State and Territory agencies as soon as possible will allow cultivation to commence before the main parts of the Act come into effect, facilitating patient access by early 2017. This provision is not intended to be used on a permanent basis. It will facilitate earliest access by patient groups to licit sources of medicinal cannabis products manufactured from cannabis cultivated in Australia than would otherwise be possible. The agency would have to satisfy the Secretary that this activity:  would not conflict with Australia's obligations under the Single Convention, 97

 that the agency will take all reasonable measures to ensure the physical security of cannabis plants, cannabis resin and drugs and narcotic preparations manufactured in accordance with the section (so as to ensure that the risk of diversion is minimised), and  that appropriate reporting arrangements will apply (so as to allow compliance with Australia's reporting obligations under the Single Convention). The Secretary can impose conditions on the approval and by reason of subsection 33(3) of the Acts Interpretation Act 1901, can revoke or vary such conditions. Those conditions about the persons authorised to undertake activities under the approval (new subsection 25A(4)). While the Secretary can revoke the approval by writing at any time (new subsection 25A(3)), the expectation is that the operation of, and ongoing need for any such approval, would be under constant monitoring by the Secretary in consultation with the relevant agency. A copy of any approval, imposition of conditions or revocation must be provided to the head of the relevant agency as soon as reasonably practicable after the event (new subsection 25A(5)). An approval by the Secretary under the section is not a legislative instrument (new subsection 25A(6)). This does not change the status of such an approval (which is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003), but has been included to assist readers. 98

Schedule 3 - Transitional provisions This Schedule contains provisions allowing the continuation of extant manufacturing licences granted under the Narcotic Drugs Act 1967 and the modification of some provisions of the Act as amended by the provisions in Schedule 1 in their application in particular circumstances. Item 1 - Saving of manufacturing licences in force as at the commencement of Schedule 1 and applying old law to them Item 1 will have the effect of continuing to apply the Narcotic Drugs Act as in force immediately before the commencement of Schedule 1 to licences that were in force at the commencement of Schedule 1. This ensures that the licences to manufacture granted under section 9 of that Act and any permits granted under section 11 of that Act, as well as any directions given under Part II of that Act, will remain in effect when Schedule 1 comes into operation as if the Narcotic Drugs Act had not been amended by Schedules 1 and 2. The holder of any such licence wishing to renew the licence at the end of the period for which it is in force under the Narcotic Drugs Act (as continued by reason of item 1) will need to apply under the Act as it is amended by the provisions in Schedule 1. Item 2 - Transitional regulations Item 2 creates a general regulation making power to address transitional issues and provide for the application of the amended Act in particular circumstances. Such regulations will be able to provide that a specified licence, authorisation or permit (however described) in force under a law of a State or Territory immediately before the commencement of Schedule 1 is taken to be a licence granted under the Act as amended by the amendments in Schedules 1 and 2. The purpose of the regulation-making power is to provide for the continuation of a small number of authorisations that have been granted under the New South Wales Hemp Act 2008 and under the New South Wales Drug Misuse and Trafficking Act 1985 allowing the cultivation of cannabis for research relating to medicinal cannabis. Regulations made under this provision could provide that these authorisations etc. are taken to be granted under the Narcotic Drugs Act (as amended by Schedules 1 and 2). This would ensure their ongoing validity once Schedule 1 commences. Because the regulatory requirements under which the authorisations are currently operating differ from those in Schedule 1, it will be necessary to modify the operation of the amended Narcotic Drugs Act in its operation in relation to these authorisations. The regulations would be developed in close consultation with the New South Wales Government which would include consideration of how the authorisations (as taken to be granted under the amended Narcotic Drugs Act) could continue to be subject to testing and inspection by New South Wales officers (there is provision in the 99

Schedule 1 amendments for the Secretary to appoint State and Territory officers and employees as authorised inspectors under the Act). Of prime importance in the development of the regulations would be to ensure that Australia fulfilled its obligations under the Single Convention. Item 3 - Definitions Item 3 inserts three definitions that are used in Schedule 3 - new law, which means the Narcotic Drugs Act 1967 in force on and after the commencement of Schedule 1; old law, which means the Narcotic Drugs Act 1967 in force immediately before the commencement of Schedule 1; and commencement, which means commencement of Schedule 1. 100

Schedule 4 - Amendments to the Schedule Narcotic Drugs Act 1967 Item 1 - First and Second Schedules Item 1 will repeal Schedules 1 and 2 of the Narcotic Drugs Act 1967 and replace them with an updated version of the Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol. 101

Schedule 5 - Consequential amendment Therapeutic Goods Act 1989 Item 1 - After subsection 19(7) Under paragraph 19(1)(a) of the Therapeutic Goods Act 1989 the Secretary can approve the use by individual medical practitioners (and those authorised under State and Territory law to approve the administration of particular medicines) of specified unapproved medicines for individual, identified patients. This is known as the Special Access Scheme Category B and an approval under the paragraph allows medical practitioners and others with appropriate medical training and qualifications to prescribe a medicine (that is not approved by the Therapeutic Goods Administration for general marketing in Australia) to patients with the pre-approval of the Secretary. The effect is that the person importing or supplying the unapproved medicine is not caught by the offences in the Therapeutic Goods Act that would otherwise apply to the importer or supplier. This item adds a new subsection to section 19 of the Act and would allow the making of regulations for the purposes of paragraph 19(1)(a). This will allow regulations to be made about the circumstances in which unapproved medicines that are medical cannabis products can be accessed through the Special Access Scheme Category B. Other provisions affecting access to medicinal cannabis products, not approved for general marketing in Australia, can be made by amendments to the Therapeutic Goods Regulations 1990. 102

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