The Government's confirmation today of new regulations for the manufacturing and distribution of medicinal cannabis products will have major repercussions for the companies established in this space.
These rules will finally create a path for businesses that have, until now, burnt through funds to start earning revenue and ease some of the concerns of investors.
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The problem, however, is that there's still some way to go before any business earns a cent on the speculative money thrown into the industry so far.
That said, today's announcement sets the stage for an interesting 2020 for the industry. Here are five key takeaways.
In the lead up to the regulations, some businesses expressed concerns that the cost of cannabis manufacturing and distribution licences might be prohibitive once the new laws came into effect.
Paul Manning, the co-chief executive at Helius Therapeutics, tells the Herald that today's announcement confirmed a reasonable pricing regime, with the main licences available for under $1000.
The only exception to this is the licence to manufacture medicines, which will cost the applicant $13,750.
Manning says the expense associated with this is understandable given there is a lot more involved in developing a medicine than simply growing a cannabis plant. He says this higher price will ensure that standards are maintained at a level that ensures New Zealand only produces quality medicinal products safe for human consumption.
Nothing will sell in April
Time is placing increasing pressure on Kiwi cannabis companies that have poured tens of millions of dollars into their businesses, without extracting any revenue so far.
And while the new regulations are set to come into effect in April next year, this does not automatically mean that Kiwi companies will be able to sell the products they've been working on.
These companies will first have to apply to the regulatory agency for licences to conduct their activities. This could lead to months-long delays as businesses wait for the agency to approve their licences.
Setek chairman Peter Dunne said that although the Ministry of Health expects to issue 110 medicinal cannabis licences in the first year, it acknowledged difficulty in estimating the number of industry participants in the emerging industry.
"While the licence fees are fair and the estimated number of licences may be reasonably
accurate, we are still of the view that the ministry may find itself under-resourced to manage a sudden surge in licence applications," the former Member of Parliament said.
"Moreover, we think the ministry may have underestimated the time and cost of monitoring - especially planned and unplanned surveillance audits – and subsequent enforcement action where breaches and/or illegal activities are identified."
Dunne warned that if the licensing regime is not resourced sufficiently and managed effectively it could lead to a bottleneck in applications.
"Should this occur, it will – at best – lead to patients paying more for relatively expensive
overseas products. At worst, patients with limited financial means may continue to suffer
unnecessarily or turn to the black or grey market, which is precisely what the ministry is trying to avoid."
Health Minister Dr David Clark today also settled the debate over quality standards in announcing that testing undertaken by laboratories or manufacturers must be certified compliant with Good Manufacturing Practice (GMP).
There were previously questions over whether the standard should instead be based on Good Production Practice (GPP), which has slightly lower standards, but the Government has decided to err on the side of the more stringent regulatory guidance dictated by GMP.
This will justify the decision by some Kiwi businesses operating in the space to invest extra money on having their facilities GMP certified.
"There was a lot of debate about whether GMP should be the standard but I think in the end both prescribers and industry agreed that sick people need certainty about the consistency and safety of their medication," said Rua Bioscience CEO Manu Caddie in response to this decision.
Specialist signoff scrapped
Helius' Manning says another important take-away from the regulations is the decision to scrap the requirement of specialist sign-off.
Manning said that the Government had previously mulled a controversial rule that would have required patients to seek specialist sign-off after seeing their doctors.
The cannabis boss says this would have simply made it more difficult for patients to get access to medicines that could be prescribed by a general practitioner GP.
An independent survey conducted by Horizon Research on behalf of Helius Therapeutics earlier this year found that 64 per cent of GPs felt that they should be able to prescribe medicinal cannabis products if deemed suitable for a patient.
Operating in the dark
Even after the regulations come into effect, many of New Zealand's medicinal cannabis firms could face a long future of operating in the dark - from a marketing perspective at least.
This is due to the narrow Medicines Act rules related to marketing products that are not approved medicines in New Zealand.
New Zealand may be one of the few counties in the world that allow for the advertising of medicines, but it will be some time before any locally produced cannabis products are approved as medicines.
Manning, who spent much of his working career in the marketing industry, says it could take as long as two years before any local products reach the stage of being confirmed as medicines.
In the meantime, he says, businesses will face strict rules which preclude them from advertising anything they sell to customers or doctors.
"Advertising even includes sending a representative of our company to a doctor to talk about what we're doing," says Manning.
"This means we can't be proactive and talk to anyone about anything. We have to wait for them to come talk to us."