New Zealand’s adult-use cannabis law would allow consumption lounges but impose cultivation limits

New Zealand recreational cannabis, New Zealand’s adult-use cannabis law would allow consumption lounges but impose cultivation limits

(This story has been updated to include comments from Rua Bioscience CEO Manu Caddie.)

New Zealand has unveiled a draft law detailing the strict controls that would apply to recreational marijuana businesses and consumers if voters choose to legalize adult use in a 2020 referendum.

The draft Cannabis Legalization and Control Bill would allow for a wide range of business opportunities, including those related to cultivation, manufacture and retail.

However, the law would effectively ban online sales and advertising and authorize a regulatory body to establish limits on THC and cultivation.

The binding referendum will take place alongside the 2020 general election.

The draft law is expected to undergo significant revision before the vote is held.

“My aim is to have the final draft bill available by early next year, so there is time to argue for change,” Justice Minister Andrew Little said in a statement.

The law would impose a progressive excise tax on recreational cannabis products based on weight and potency, meaning higher taxes would apply to marijuana containing more THC.

Manu Caddie, CEO of Rua Bioscience in New Zealand’s Tairawhiti region, said the draft law is an excellent starting place for the country.

“It doesn’t include expungement, which many people would like it to, but I think that’s for a year or two down the track once the electorate has acclimatized to a regulated environment,” he said.

“There are equity provisions built into the draft legislation, but more details on those – around licensing regime to address the negative legacy of prohibition – will be provided early in the new year.”

Cannabis Regulatory Authority

The proposed law establishes and empowers a Cannabis Regulatory Authority to oversee regulation of the marijuana supply chain in New Zealand.

One of the goals of the agency would be to lower the overall use of cannabis over time, according to the law. The authority would be required to prepare a national plan on how it would accommodate that goal as well as other objectives of the law.

Some of the Cannabis Regulatory Authority’s functions would include:

  • Licensing and authorizing activities in the cannabis supply chain.
  • Setting the criteria and conditions for licenses and authorizations.
  • Setting limits on the allowable levels of THC.
  • Monitoring and enforcing compliance.
  • Developing good practice guidelines for home cultivation.

The possession limit would be set at the equivalent of 14 grams of dried cannabis, which is also the daily purchasing and gifting limit.

The law provides strict rules for retailers, including a ban on the sale of alcohol and tobacco on the same premises as adult-use cannabis.

The law would allow home cultivation under strict conditions, including a limit of two plants per adult and a maximum of four plants per household.

“Controlled activities” the Cannabis Regulatory Authority would license and regulate include:

  • Importing cannabis seeds.
  • Cultivating and manufacturing.
  • Production and processing.
  • Analytical testing.
  • Wholesaling.
  • Retailing.
  • Operating cannabis consumption premises.
  • Transporting cannabis and cannabis products.
  • Conducting research.

Consumption lounges

If the referendum is approved by the electorate, licensing and regulating cannabis consumption premises would fall under the purview of the Cannabis Regulatory Authority.

According to the law, the purpose of consumption premises would be to offer a safe space for a person to consume cannabis.

A proprietor operating a consumption lounge would be required to comply with prescribed regulations, including restrictions on hours of operation and products for sale in the space.

A licensed consumption space would be allowed to sell non-cannabis foods and nonalcoholic beverages.

The government has not decided yet whether it will allow holders of consumption lounge permits to also sell adult-use cannabis on-site.

To be determined

Because the draft law faces scrutiny from lawmakers and by the public in the coming months, it is expected to undergo revisions.

A large portion of the law is incomplete, including provisions related to how Maori interests are to be considered throughout the legal regime. Maori are indigenous Polynesian people of New Zealand.

The section of the law related to “market allocation” is yet to be concluded. It will detail how regulators would establish mechanisms to prescribe cultivation limits grown under license.

“The total amount of cannabis grown under license will be limited to a level that is adequate for meeting current demand and will be able to be reduced over time,” the proposed law stipulates.

Rhys Cohen, principal consultant for North Sydney-based data firm FreshLeaf Analytics, said the draft legislation is a political balancing act.

“The commercial framework needs to function well enough to compete with the black market,” he wrote in an email interview with Marijuana Business Daily. “But it also needs to appeal to concerned voters and demonstrate appropriate safeguards are being implemented.”

“That’s why they’ve included both highly restrictive advertising regulations alongside home grow and licensed consumption venues.”

He said there is much to be determined, but businesses likely would be able to work within the proposed rules if they become law.

“I would say that for cannabis companies having a 14-gram max purchase per day probably works in their favor to some extent, as they can keep prices reasonably high. And edibles will be permitted off the bat, it looks like, which is good.

Also to be determined is:

  • The constitution of the Cannabis Regulatory Authority.
  • How the regulator would determine maximum limits on THC.
  • To what extent, if at all, a person can be licensed to operate a consumption and retail premises.
  • An excise tax applied to fresh cannabis at the point of production.
  • The duration and non-transferability of licenses.
  • Standards of licensed cannabis production.
  • Testing requirements for fresh cannabis and finished manufactured products prior to sale.
  • Requirements for cannabis license holders on reporting data.
  • A section on an infringement offenses regime.
  • Amendments to other enactments.

The Cannabis Legalization and Control Bill is available here.

The Cabinet paper on the cannabis referendum is available here.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at