The Office of Drug Control (ODC) has recently announced changes to the cost recovery arrangements for the Medicinal Cannabis Scheme as the result of amendments to the Narcotic Drugs (Licence Charges) Regulations 2016. The changes came into effect from 15th July 2020.
What is the Medicinal Cannabis Cost Recovery Framework?
The Medicinal Cannabis Scheme implements a partial cost recovery scheme, in line with the Australian Government Cost Recovery Guidelines (RMG 304). The framework involves government entities charging individuals or non-government organisations some or all of the costs of a regulatory activity. The costs of activities under the Narcotic Drugs Act 1967 are recovered through fees and levies (or annual charge):
- Fees – the charge when a good, service or regulation is provided directly to a specific entity or organisation. application fee.
- Levies – the charge when a good, service of regulation is provided to a group of individuals or organisations. annual licence charge.
A review of the Medicinal Cannabis Cost Recovery Framework was held during late 2019/early 2020. As a result, an engagement paper was prepared for stakeholder/industry feedback. The outcomes of the review have recently been communicated by the ODC and are outlined below.
Note: To date, these changes are applicable only to medicinal cannabis licence/permits and cannabis research licence/permits. It is anticipated that the ODC will communicate decisions regarding manufacture licence/permits in late 2020.
What are the changes?
Table 1 summarises the original and updated ODC fees and charges. The changes include:
- An increase in fees to reflect the effort and time involved with assessing a licence application and to consider indexation.
- Introduction of new fees for licence variations to reflect the effort involved in assessing each application, as well as the introduction of a ‘simple’ and ‘complex’ licence variation.
- A change to the planned inspection fee from an hourly rate to a flat rate.
- A change the structure of the annual licence levy so that it now has three components:
- A licence charge imposed the anniversary date of the licence.
- A site charge imposed from the date the first permit is granted, and then each year thereafter on the anniversary date of the licence.
- Compliance follow-up charges to recover costs for addressing non-compliance.
Table 1: Comparison of ODC fees and charges
Simple vs Complex Licence and Permit Variations
Historically, a flat fee has been charged for licence and permit variations, regardless of their nature (as per Table 1). As part of the review of the cost recovery arrangements, the ODC has introduced a tiered approach, and has provided a definition of a ‘simple’ vs ‘complex’ variation:
- Simple: The assessment will not require significant effort to assess.
- Complex: The assessment will require significant effort to assess.
The associated costs to assess the variation have also been amended, based on the level of effort required (as per Table 1).
This definition is welcomed, as it has often been a source of confusion among our clients. Often, we are asked what constitutes a ‘minor’ or ‘major’ variation, what aspects of the licence or permit can be varied, and how long will it take? Questions that are often difficult to answer.
Table 2 provides further guidance regarding the amendments for both licence and permit variations.
Table 2: Licence and permit variations – Simple vs Complex
NOTE: To date, no information has been provided regarding the processing timelines of a simple vs complex variation.
Want more information?
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If you want more information on this topic, please feel free to get in touch contact us at one of our offices around the world.