ODC consults with industry on upcoming changes to licenses and more
The ODC has a lot on it’s plate right now – re-configuring their operational structure, dealing with the influx of new applicants, managing existing license holders, and planning for the implementation of the 26 recommendations that came out of the McMillan review.
This week the ODC have been holding industry information sessions in Melbourne, Sydney and Brisbane to keep everyone up-to-date with some of the goings on. FreshLeaf attended their Sydney event and this is our summary of what, in our opinion, are the most interesting and relevant bits.
License fees and charges set to increase
We kicked off with a very detailed explanation of why the ODC will be increasing their fees and charges in 2020. This is the initial part of a long consultation period that may result in new prices being finalised in June 2020. So no new prices yet, but watch this space.
The challenge with funding the ODC specifically is that it’s meant to operate on a cost-recovery basis. And they based their initial fee structure on the assumption that new license applications would take 25 hours to process (polite grinning smiles from the audience). Of course, processing times have ended up taking orders of magnitude more than 25 hours. So now they have a better idea of the work involved, they can cost accordingly. Discussion paper to come. Fair enough.
The tricky part is that unlike the TGA, who get to keep the revenue they make from industry, the ODC gives all of its money back to the government and is then issued money from the general account. So, as one attendee pointed out, there’s no guarantee that the ODC will end up receiving all these new funds they raise from industry under the new pricing structure. The new funding the ODC secured in November 2018 for new staff will only last until June 2020 so hopefully everything comes together in time. But we’ll have to wait and see what the 2020 federal budget includes.
Cultivation, research and manufacture licenses being replaced with single license
In other news, it looks increasingly likely Australia will end up with a unitary license covering any/all commercial medicinal cannabis activities. Gone will be the days of cultivation, research and manufacture licenses. This should help simplify things and reduce work duplication in the ODC, which is good.
Another discussion paper will be coming out about the stages in which new licenses will be issued. For example, should applicants get a license before their facility is constructed and inspected? Or prior, to allow them to go out and fundraise more effectively? Depending on what we end up with, there will be some issues around grandfathering existing license applicants and holders into the new system, but that shouldn’t be a huge problem.
Ongoing delays in processing licenses still a problem
But as one attendee told us after the meeting was over, if licenses were being issued within 3 months or so of applying, it wouldn’t matter when you need to get your site inspected. And there were plenty of examples of applicants who have been commercially jeopardised due to the well-known delays at the ODC.
One attendee informed the room that they have faced challenges in complying with mandatory reporting requirements on overseas stock exchanges because they can’t update their shareholders on when (or even in which year) their cultivation license is expected to be processed. Another told us privately it had taken over 600 days from lodging their application to being issued with a license. Quite a bit longer than 25 hours.
But there’s good news for existing license holders going for permits. The Drug Control Section is taking responsibility for assessing applications for new sites, which will free the Medicinal Cannabis Section up to focus on ongoing compliance activities, including issuing permits. According to some attendees, they have already seen significant improvements in turnaround times for permits. This should only continue to improve as other quality-of-life changes are made to internal ODC processes and procedures.
Imports vs. domestic products
Lastly, the issue of imports vs. domestic products was raised. And the ODC confirmed that there were no plans whatsoever to restrict or halt the import of cannabis products to Australia. The expectation is that domestic supply will be able to successfully compete with imports and the Australian industry will not be disadvantaged. The commitment to this model is good for patients who will likely see cheaper products due to price competition not only between importers but also between importers and local manufacturers.
In the meantime, patient access in Australia continues to improve. October was another record month for SAS-B approvals, and November saw Western Australia make some significant improvements to their State framework. FreshLeaf estimates that 2019 will close off with about 28,000 SAS-B approvals for the year and around 10,000 patients currently active. If the numbers keep going the way they have been, we could reasonably expect to see over 15,000 active patients by March 2020. And for the foreseeable future, this increasing demand will continue to be met by imports.
FreshLeaf Analytics, a division of Southern Cannabis Holdings, is the leading supplier of data about the medicinal cannabis industry in Australia. We have access to medicinal cannabis product, pricing and clinical data sets from some of Australia’s leading healthcare companies and organizations including healthcare clinics, pharmacies, product suppliers and the TGA. The FreshLeaf Analytics team provides custom research, analysis and consulting services in the Medicinal Cannabis market in Australia. The FreshLeaf Analytics team can be contacted on +61 2 8203 8741 or [email protected]