Medicinal cannabis industry gets the regulatory changes it craved - but will they stick post-election?

National Party health spokesman Dr Shane Reti. Photo / Mark Mitchell

The medicinal cannabis industry is on the brink of getting a series of regulatory changes it’s wanted for three years - cutting red tape and making it easier to export.

After a series of proposed changes got the green light from Cabinet, the Ministry of Health Manatū Hauora said on Tuesday that it would begin drafting changes to the regulations that govern the industry.

The pending changes are “a game-changer” for exports, according to the New Zealand Medicinal Cannabis Council (NZMCC), which represents growers and processors. Executive director Sally King said she was “quietly thrilled”.

Since the industry got the green light in 2019, its exports have had to meet strict NZ quality standards, regardless of the regulations in any given offshore target market - leading to what King called “acute” issues accessing offshore markets.

Now, the focus will be shifted to a Kiwi exporter meeting the importing country’s standards.

The pending changes also include a raft of technical changes the industry had been pushing for since 2020.

The largest of three NZX-listed medicinal cannabis companies, Cannasouth Group, said in a market filing that “The forthcoming regulatory changes are poised to have a significant impact on Cannasouth’s growth trajectory.”

And in follow-up comments to the Herald, its chief executive Mark Lucas said, “They are much-needed changes to unlock our export pathway, allowing us to scale our business and, in turn, reduce costs for New Zealand patients.”

Cannasouth CEO Mark Lucas: "We’re confident about these changes’ longevity, regardless of any shifts in the political landscape. Both sides of the aisle have shown support for medicinal cannabis. These changes are common sense.” Photo / Alan Gibson

One wrinkle: Public consultation, and the process of formally drafting amendments once that consultation concludes, could take until the end of the year, the Ministry of Health says.

Southern Medicinal director Greg Marshall told the Herald that vague definitions in the ministry’s announcement meant it was unclear if the regulatory changes would prove effective. There were many elements that needed to be brought into sharp resolution.

“Microbial limits and stability testing remain significant barriers and have not been specifically dealt with,” Marshall said.

“There are still details to be ironed out,” NZMCC’s King said.

The upshot is the changes might not be signed off until after October, and the possible election of a National-led Government with Dr Shane Reti as Minister of Health.

That could be why there was only muted trading in Cannasouth, and its NZX peers Rua Bioscience and Greenfern, following the ministry’s August 1 announcement.

"These proposed changes enable all NZ cannabis companies to compete on the international stage. They're a big step forward and I’m thrilled" - Guy Haddleton, founder and major shareholder in NZ's largest privately-held medicinal cannabis firm, Helius Therapeutics. Photo / Jason Oxenham

Investors appeared to be keeping their powder dry until the pending changes made it over the finish line, with the election hump in between.

So what is Reti’s take? The National spokesman was unable to respond to Herald questions over Wednesday and Thursday.

Perhaps surprising to some, given his social conservatism in other areas, Reti - who spent 17 years as a Northland GP - has long been a supporter of NZ’s youngest industry.

Although still a non-drinker, Reti has convinced National to support medicinal cannabis and he is quick to draw the distinction, the Listener reported earlier this month. “It’s on the basis of the evidence.”

Indeed, in 2018, before the Government legalised medical cannabis, he drafted a private member’s bill that would have gone further than Labour’s legislation, subsidising treatment and funding information campaigns.

The industry sees him in their corner.

“We’re confident about these changes’ longevity, regardless of any shifts in the political landscape. Both sides of the aisle have shown support for medicinal cannabis. These changes are common sense,” Cannasouth’s Lucas said.

Lucas added, “For Cannasouth Group, the timing is ideal. Being GMP licensed for dried flower products, oral solutions, and cannabis-based ingredients means we can streamline our finished product production and export processes, leading to significant time and cost savings. As we begin to commercialise our products, these changes provide us with clearer planning, broader opportunities, and greater agility to address rapidly growing market demands.”

The ministry said on Tuesday it has received approval to make changes to the Misuse of Drugs (Medicinal Cannabis) Regulations 2019 “to better support economic and research opportunities for the medicinal cannabis industry sector”.

Beyond reducing the need for exports of various products that did not meet NZ’s minimum quality standard, rules were set to be streamlined in a number of areas to make it easier for licensed companies to import cannabis ingredients; “areas of duplicate testing” were set to be reduced, and rules around pesticides and containers updated.

“Following consultation, Manatū Hauora will commence drafting amendment regulations to bring these changes into effect, with the aim to have these in place by the end of 2023, subject to approval,” the ministry said.

Helius Therapeutics chief executive Carmen Doran: “The key medicinal cannabis regulatory changes mean that more patients in Aotearoa, New Zealand will be able to access medicines as export drives scale and innovation for the industry here at home.”

Although it will potentially soon be easier for medicinal cannabis companies to export, a number of domestic market challenges remain, including the fact that Pharmac, citing a lack of long-term clinical data, has so far declined to subsidise any of their product, rendering it uncompetitive with the much larger black market;; a prohibition on marketing; a range of factors that have made many GPs loath to prescribe, and NZ authorities not allowing over-the-counter sales of low-strength product in pharmacies a la Australia.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.