New Zealand released recreational marijuana legislation that is set to be voted on in a nationwide referendum in September.
Local business leaders are calling the proposed legislation – the Cannabis Legalization and Control Bill – “world-leading” for provisions that would reserve market share for micro-cultivators, prioritize indigenous-run business and allow for consumption lounges.
However, the bill would also ask the Cannabis Regulatory Authority to establish a yearly cap on the amount of cannabis available for sale in the licensed market.
And it would set potency limits through controls on the amount of THC permitted in cannabis products.
If the referendum wins approval from voters, the incoming government will be able to introduce legislation to Parliament.
That means the outcome of the general election could be as important as the cannabis referendum itself.
“I think this is world-leading legislation,” Manu Caddie, regulation and innovation lead for Rua Bioscience in New Zealand’s Tairawhiti region.
“The bill is very good for businesses that have community well-being as a priority, and it seems well-suited to supporting growers to move from the illicit market into legal production fairly easily, and for indigenous communities and, explicitly at the family level, to be fully included in the new industry.
“That feels unprecedented.”
The release of the final version of the draft law comes about four months after the initial version was issued.
Zoe Reece, founder and CEO of Ora Pharm in the Waikato district, said two points caught her attention.
“Firstly, the inclusion of processes to establish a harm-reduction strategy, which includes the requirement for independent scientific research, and secondly, the introduction of a consultation process with the public by the licensing authority,” she said.
“This gives the public more surety around measures being taken to ensure harm reduction under the proposed bill.”
The bill states that its purpose is to “authorize, regulate, and control the cultivation, processing, use, and sale of cannabis in New Zealand, with the intent of reducing harms from cannabis use.”
Supply chain
The bill proposes to tightly regulate all aspects of the cannabis supply chain, from seed and growing to retail sale.
It would effectively ban vertical integration by limiting to one the type of license a person may hold, meaning businesses allowed to grow cannabis could not operate a company where cannabis is sold or consumed.
The authority would set an annual cultivation cap on the total quantity of dried cannabis, or its equivalent, for sale or supply “by holders of a cannabis production license with a cultivation activity authorization or a micro-cultivation activity authorization to holders of a cannabis production license with a processing activity authorization.”
When setting the annual cap, the authority would determine the share of the cap to be awarded among holders of cultivation licenses, including micro-cultivation license holders.
The bill also contains a provision to contain the amount of market share one company could possess.
The authority would not be allowed to authorize a license holder to supply or sell more than 20% of the annual cultivation cap allocated.
“I hope the provisions around market share limit the size of companies and avoid the idiocy of markets like Canada where founder/investor greed seems to have been the overriding driver of industry expansion,” Caddie told Marijuana Business Daily.
“The proposed rules should enable small and medium-sized companies to be sustainable without the need for overinflated valuations and the boom and bust experienced elsewhere.”
Assessing cultivation applications
Three principles would help guide the agency in its assessment of cultivation-activity authorizations. They include:
- Representing or partnering with communities disproportionately harmed by cannabis, including Maori and people from economically deprived areas.
- The generation of social benefit and building of community partnerships by engagement with individuals, whanau and communities in the design and delivery of their activities.
- The promotion of employment opportunities and career pathways in the cannabis industry for Maori and those from economically deprived areas.
For micro-cultivation authorizations, the factors are:
- The micro-cultivation cap set by the authority.
- The geographical spread of existing and prospective micro-cultivators.
“Efforts have been made to ensure the commercial benefits are shared around the country, which is great,” Paul Manning, co-CEO of Auckland-based Helius Therapeutics, told MJBizDaily.
“There will be opportunities for small-scale growers – of which New Zealand has many – and larger operations like ours.
“Regulations are geared toward a smaller, local industry and away from larger ‘corporate cannabis’ – but I believe a range of business opportunities will exist for well-organized and well-resourced local producers like Helius.”
Need to know
- A person may grow not more than two cannabis plants, and the maximum number of plants that can be grown on a property is set at four.
- The bill proposes to limit a person 20 or older to no more than 14 grams of dried cannabis, or its equivalent, in their possession in a public place.
- To be eligible to hold licenses, an individual must reside in New Zealand.
- To be eligible to hold licenses, a corporate body must be incorporated in New Zealand or all the partners of the partnership reside in New Zealand.
“The first products to become available would be dried and fresh cannabis, plants and seeds. As time goes by, more product types would be permitted via regulation including edibles and concentrates,” Rhys Cohen, FreshLeaf’s principal consultant, wrote in an analysis.
“Interestingly, some product types would be banned from the outset including beverages.”
The draft legislation 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 mattl@mjbizdaily.com.
