Eve Hemp Pty Limited v Secretary to the Department of Health

This restricted level for THC in cosmetics is equivalent to 10 mg/kg. … • As noted previously it is not appropriate to have any other 'products for purposes other than internal human use' exempt due to the issues around the ND Act and Single Convention. 21 The impugned considerations involved in these reasons for decision are: a) the conformity of the Poisons Standard with other Commonwealth statutes, including the Narcotic Drugs Act 1967 (Cth) (ND Act), the Criminal Code Act 1995 (Cth) …and the Customs (Prohibited Imports) Regulations 1956 (Cth)…; b) the conformity of the Poisons Standard with an international treaty, the Single Convention on Narcotic Drugs…; and c) the conformity of the Poisons Standard with the laws of certain comparable foreign jurisdictions, such as Canada. 22 As noted, the applicants' arguments involve two alternatives: that s 52E(1) is a code which, on its proper construction, does not permit consideration of the regulatory treatment of cannabis and THC under Commonwealth, international and foreign law; or that the regulatory treatment of cannabis and THC under Commonwealth, international and foreign law is a matter outside the range of permissible considerations under s 52D(2) of the TGA because this is outside the subject-matter, scope and purpose of Part 6-3 of the TGA which concerns public health. The respondent's answers also involve alternatives. First, that s 52E(1) is not a code of permissible considerations and the regulatory treatment of a poison under Commonwealth, international and foreign law is within the subject-matter, scope and purpose of the TGA including Part 6-3. Second, that if s 52E(1) is a code of permissible considerations it is artificial to conceive of "public health" and the regulation of substances by law, be it international or domestic law, as distinct and separate. It is the psychoactive properties of the cannabinoids found in cannabis, one of which is THC, which engage both public health concerns and the regulation of the substances. Given this, the impugned considerations are within the scope of s 52E(1)(f) of the TGA, which refers to "any other matters that the Secretary considers necessary to protect public health". Third, that the impugned considerations, or at least those of them concerning consistency with international regulations, were made relevant by the guidelines and recommendations as referred to in ss 52E(2) and (3).

Is s 52E(1) a code? 23 While I accept that there are aspects of s 52E(1) which might support the conclusion that it is an exhaustive statement of relevant considerations, I conclude to the contrary. 24 First, the chapeau, in terms, identifies the matters the Secretary or delegate must consider. It does not identify the matters the Secretary may consider. This is an important difference from the provision as considered in Roche in which mandatory (must) and permissible (may) considerations were both identified. Another important difference is that the opening words to s 52E(2) are now "In exercising a power under subsection 52D(2)…" whereas the opening words to s 52E(2) relevant to the decision in Roche were "In taking into account the matters referred to in subsection (1)…". It is apparent from [73] in Roche that these two factors led Branson J to conclude that s 52E(1), in its form before amendment, was an exhaustive statement of permissible considerations. Neither factor remains in the new form of s 52E(1). 25 Second, as the respondent submitted, given that s 52E(1), in terms, identifies only those matters which the Secretary must consider, the applicants' argument depends on implying a limitation which does not appear in the language of the section. The section does not say that the Secretary must have regard "only" to the enumerated matters, but this is the effect of the applicants' submission. 26 Third, and contrary to the applicants' submission, it is not immediately apparent that s 52E(1) comprehensively addresses every conceivable characteristic or property of a substance that could affect public health and safety. As the respondent submitted, while the meaning of "necessary" in s 52E(1)(f) may not be confined to "absolutely necessary" it is difficult to accept that the Secretary is prohibited from having regard to any matter that the Secretary considers merely desirable or convenient to protect public health in exercising the power under s 52D(2). 27 Fourth, the distinctions which the applicants seek to draw between the "matters" which are enumerated in s 52E(1) and the obligation of compliance with the guidelines in s 52E(2) and the permissible sources of information in s 52E(3) to (5), in support of the argument that those sections do not extend the scope of permissible matters beyond those in s 52E(1), strikes me as too fine and too fraught with the risk of misdirection (as the applicants allege occurred in this case) to infer that they represent a manifestation of legislative intention. As the applicants would have it the Secretary must comply with guidelines and have regard to recommendations or advice but only to the extent that such involve matters within the scope of s 52E(1) and must otherwise disregard matters in guidelines and recommendations or advice which are outside the scope of the s 52E(1) matters. Accordingly, the fact that s 52E(f) is confined in terms, and does not simply refer to "any other matter the Secretary considers relevant" does not provide unequivocal support to the applicants' construction. 28 Fifth, once the distinction between "matters" and "information" is seen as lacking the clarity and precision upon which the applicants rely, the references to "a matter mentioned in section 52E of the Act" which appear in regs 42ZCZL(1)(a) and 42ZCZQ(1)(a) of the Therapeutic Goods Regulations 1990 (Cth) do not provide support to the applicants' construction. 29 Sixth, the context of the enactment of the amended form of s 52E, introduced by the Therapeutic Goods Amendment (2009 Measures No 2) Act 2009 (Cth) (the 2009 amendment), is the decision in Roche in which Branson J held that s 52E(1) is a code of permissible considerations based on two characteristics of s 52E neither of which appear in the amended form of the section. It is difficult not to infer that the two sets of amendments subsequent to Roche were intended to clarify acceptance of the legislative character of a decision under s 52D(2) and to overcome the effect of the decision to the extent it was held that s 52E(1) was an exhaustive statement of relevant considerations. 30 Seventh, that at least the first set of amendments were intended to clarify that a decision under s 52D(2) is of a legislative character but that earlier decisions were not invalid, is plain from the terms of s 52D(4) and (4A) and the Explanatory Memorandum for the Therapeutic Goods Amendment (Poisons Standard) Bill 2008 (Cth), the latter of which refers to Roche. As to the 2009 amendments, the Explanatory Memorandum for the Therapeutics Goods Amendment (2009 Measures No 2) Bill 2009 (Cth) is consistent with the respondent's argument. It states that s 52E(1) sets out the matters the Secretary must consider. There is a common sense difference between the matters which must be considered and those which may be considered. It states that the Poisons Standard may incorporate international standards and other instruments, as provided for in s 52D(4B), which is difficult to reconcile with international or domestic regulation being considerations which are prohibited from being taken into account either at all or at least insofar, as the applicants would have it, those regulations are not concerned with public health. It refers to s 52E(2) as operating "further to these matters", being the matters in s 52E(1) and that s 52E(3) and (4) involve things to which the Secretary must "also" have regard. This is consistent with the construction for which the respondent advocates. 31 Eighth, this does not mean that the power in s 52D(2) is unconfined. In making a decision under s 52D(2) the Secretary must have regard to the matters in s 52E(1) and may have regard to matters within the subject-matter, scope and purpose of Part 6-3 of the TGA construed in context. 32 Ninth, no other part of s 52E(1) obviously suggests a contrary conclusion, in contrast to the position in Roche relating to the unamended form of s 52E. In particular, the words "where relevant" in the opening words to s 52E(1), to my mind, are nothing more than a direction that the Secretary need not consider one of the mandated matters if it is not relevant to the decision being made. 33 For these reasons I accept the respondent's argument that s 52E(1) does not constitute an exhaustive statement of the matters to which the Secretary may have regard in exercising the power under s 52D(2).

Are the impugned considerations within s 52E(1)(f)? 34 It is not necessary to answer the question whether, if s 52E(1) is an exhaustive statement of the matters to which the Secretary may have regard in exercising the power under s 52D(2), the impugned considerations are within the scope of s 52E(1)(f). Despite this, I should record two things. One is that there is an inherent attractiveness to the respondent's arguments that it is artificial to attempt to distinguish between matters relevant to public health on the one hand and regulation of substances for other than public health reasons on the other hand. As the respondent submitted, whatever the form a regulation may take in relation to substances, be it criminal sanctions, a licensing or permit scheme or something else, it is not obvious that these regulations have nothing to do with public health. As such, having regard to consistency with other regulations of a substance, be they domestic or international, is not obviously a matter separate and distinct from considerations of public health. The other is that, this said, I accept that the reasons of the delegate, as expressed, are directed at the issue of consistency with other regulations in pursuit of the object of consistency. Unless a liberal approach is taken to the scope of s 52E(1)(f) it is not immediately apparent that the impugned considerations engage that provision. However, I agree with Branson J in Roche at [74] that no narrow approach should be taken to the concept of what the Secretary may consider to be necessary to protect public health. Given that there was no challenge based on the necessity of consistency with other regulations, I would conclude that the impugned considerations are within the scope of s 52E(1(f).

Are the impugned considerations within the scope of the TGA? 35 I would answer this question in the affirmative. A number of indicators in the statute suggest that consistency or inconsistency with other regulations of substances, be they domestic or international regulations, are within the subject-matter, scope and purpose of Part 6-3 of the TGA. 36 Section 52AA recognises that Part 6-3 is part of a mosaic of regulations and that, insofar as access controls are concerned, that mosaic is intended to constitute a uniform system. To achieve this, consideration of other regulations is necessary. Contrary to the applicants' submissions this does not suggest to me that the legislative intent was for the Secretary's role to be strictly confined to the list of matters in s 52E(1), leaving it to the other parts of the mosaic to deal with all other potentially relevant matters. As the respondent submitted, the legislative character of the making or amendment of the Poisons Standard under s 52D(2) supports an approach to construction of the power which is less confined than the applicants would have it. 37 Section 52D, as the respondent submitted, not only empowers the Secretary to amend or make the Poisons Standard but also empowers the Secretary to decide when the amendment or new standard is to take effect. It is inconceivable that in exercising that power the Secretary would be prohibited from taking into account a broad range of considerations including the potential impact on existing circumstances. 38 The guidelines referred to in s 52E(2) and recommendations or advice referred to in s 52E(3) are not expressly confined to the matters in s 52E(1). An argument that these provisions were confined in this way was rejected in Roche. The applicants make the same argument in the present case but it remains unpersuasive, as discussed below. If the guidelines or recommendations or advice deal with a matter outside of the subject-matter, scope or purpose of Part 6-3 of the TGA then the Secretary may be misled into error. But the lack of any terms confining the guidelines or recommendations or advice also operates against any narrow view of the subject-matter, scope or purpose of Part 6-3 of the TGA. 39 The same conclusion is supported by the fact that the Secretary may seek advice from "any person" as set out in s 52E(4)(b), which would include legal advice about the operation of other regulations of the same substance, and that ss 52E(5), 52E(2) to (4) do not limit the information the Secretary may consider in exercising a power under s 52D(2). 40 Section 52EC required a review of the operation of Part 6-3 which was to report on matters not confined to s 52E(1). 41 The fact that the power may be delegated to an international organisation as provided for in s 57(1)(d)(iii), as the respondent submitted, makes it unlikely that the legislature intended the Secretary to disregard the international regulation of substances. If this is so, there is no good reason to conclude that consistency with domestic regulations is a prohibited consideration. 42 For these reasons I conclude that the impugned considerations were not prohibited from being taken into account by the delegate in deciding to amend the Poisons Standard.

Guidelines and recommendations of joint committee 43 As discussed, I do not accept that the guidelines in s 52E(2) or recommendations and advice of the committees in s 52E(3) are confined to the matters in s 52E(1). As in Roche I prefer the contrary view, with the result that the only limitations on the guidelines, recommendations and advice are those implied by the subject-matter, scope and purpose of Part 6-3 of the TGA. This conclusion is supported by the absence of any express words of limitation, and the unsatisfactory nature of the distinctions between "matters" and "information" which the applicants draw. 44 The guidelines with which the Secretary was bound to comply under s 52E(2) include consideration of various matters including factors for prohibited substances in Schedule 9 which are as follows (emphasis in the original): 1. The substance is included in either Schedule IV to the United Nations Single Convention on Narcotic Drugs, 1961 or in Schedule I to the United Nations Convention on Psychotropic Substances 1971. 2. The substance has either no currently established therapeutic value, or taking into consideration the danger to the health of individuals and of the community (both immediate and imminent) associated with the use of the substance as compared to the therapeutic advantages of the substance, the benefits are substantially outweighed by the risks. Dangers are such to warrant limiting use to strictly controlled medical and scientific research. 3. The substance has no currently established therapeutic value and is likely to present a high risk of dependency, abuse, misuse or illicit use. A high level of control is required through prohibition of use, possession, administration, prescription, sale or distribution to prevent abuse, misuse or diversion into illicit activities. 45 While I accept that paragraph 1 above involves the fact of inclusion in Schedule IV to the Single Convention on Narcotic Drugs, 1961 I also consider it artificial to suggest that this fact must be taken into account but other related matters, such as the reason for the inclusion, must be disregarded. Further, as the respondent submitted, if the applicants are correct, then the reference to "illicit use" in paragraph 3 is misconceived. Yet there is no sound reason in the text or context to accept such a confined approach to the Secretary's power or to the content of the guidelines or the recommendations and advice from the advisory committees. The fact that the guidelines also refer to suitable evidence in support of an application for scheduling or rescheduling of a substance includes evidence and information from so-called "comparable jurisdictions" weighs against the applicants' approach to the legislation. 46 Insofar as the recommendations and advice of the advisory committees are concerned, this was said: Input was sought from an observer from the Office of Drug Control. They advised that the public submission on the scheduling proposal failed to recognise that products made from hemp oils and hemp seed oils containing more than 50 mg/kg of cannabinoids were considered to be drugs. Australia would be deemed to be in breach of the UN Single Convention on Narcotic Drugs if such products are available. Narcotics cannot be included in food or imported in foods or cosmetics as this is illegal. Under the UN Convention the definition of cannabis relates to its industrial use not as a food, and members noted that FSANZ is currently consulting about the use of hemp seed oil in food. The committee advised the delegate to seek advice from other jurisdictions in relation to appropriate cut-off levels, and that the delegate should seek further advice from the Department of Health on the legal issues relating to the UN convention. 47 For the reasons already given I do not accept that this involved the misdirection of the delegate to an irrelevant consideration. 48 It follows that the respondent's third alternative answer to the applicants' claim is also persuasive.

Another matter 49 There is one other matter which requires comment. It is the applicants' complaint that the delegate misunderstood the Single Convention and the Narcotic Drugs Act 1967 (Cth) and thus necessarily took into account an irrelevant consideration. This argument was articulated late in the day but, as I understand it, it is that if the Secretary is permitted to take into consideration the consistency of the Poisons Standard with other regulations then it must follow that the Secretary is required to correctly identify the operation of these regulations. In the present case, it is submitted, the delegate plainly misunderstood both the Single Convention and the Narcotic Drugs Act and thus considered irrelevant matters. 50 I do not accept this argument. 51 There may be force in the submission that the delegate's reasons disclose a misunderstanding of the Single Convention and the Narcotic Drugs Act. As to the Single Convention, the delegate appears to have recited but perhaps not appreciated the significance of the fact that the Convention does not apply to cannabis plants exclusively for industrial purposes. It is not apparent how the product's exemption could create any inconsistency with the Single Convention as feared by the delegate. As to the Narcotic Drugs Act, it is apparent that it has a limited field of operation concerned, as it is, with the licensing of the cultivation of cannabis plants for medicinal purposes. Given this field of operation, I do not see how there could be inconsistency with this Act. 52 The problem for the applicants is that it cannot be the case that the Secretary, in considering a permissible matter, is bound to be right about the content of the matter. As the respondent submitted, this would involve a challenge to the merits of the decision, not its legality. In other words, while it perhaps may not have resulted in a meritorious decision, the delegate was entitled to misunderstand the Single Convention and the Narcotic Drugs Act. Perhaps for good reason, the applicants did not suggest the decision was so unreasonable that no reasonable person exercising the power could have made it or that the decision was irrational. The challenge was limited to the taking into account of irrelevant considerations.

Conclusion 53 I do not accept any of the challenges to the validity of the decision. As a result, the originating application must be dismissed, with costs. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

SCHEDULE OF PARTIES NSD 1048 of 2017 Applicants Fourth Applicant: DARING PTY LTD (ACN 104 819 767) (TRADING AS MARGARET RIVER HEMP COMPANY) Fifth Applicant: LARIESE PTY LTD (ACN 155 192 108) Sixth Applicant: THE HEMP CORPORATION PTY LTD (ACN 603 031 241) Seventh Applicant: DHARMIC PTY LTD (ACN 118 727 898) (TRADING AS OZHEMP) Eighth Applicant: JAMES VOSPER Ninth Applicant: CATHERINE COWAN Tenth Applicant: LUKE WIGHTLEY Eleventh Applicant: REGINA WIGHTLEY Twelfth Applicant: HEMP HEMP HOORAY PTY LTD (ACN 619 537 003) Thirteenth Applicant: TEXTILE & COMPOSITE INDUSTRIES (ACN 132 341 372) Fourteenth Applicant: CHARLES BELA KOVESS