Tens of millions of dollars… still no local medicinal cannabis industry. What’s gone wrong?

Medicinal cannabis is legal, so why are desperate patients being forced to buy off the black market? Kelly Dennett reports.

A visit of various Auckland pharmacies reveals the health of the Medicinal Cannabis Scheme. At its heart, the varying cost of one of just five approved prescription medicinal cannabis products: a 40ml bottle of Tilray CBD oil.

“I could go down the road here in Ponsonby… and (a pharmacy) might charge me, say, $320,” says Dr Mark Hotu. “Then I could go over to St Luke’s to Chemist Warehouse and maybe get the same bottle for $280. At a North Shore chemist, I could get the same bottle for $540. Then, I could zoom on down to Rotorua, where a patient recently found a bottle that cost over $600.” A 40ml bottle lasts about a month.

About 50 patients visit Hotu at his Ponsonby Green Doctors clinic weekly, seeking relief from ailments ranging from insomnia to chronic pain. They can choose from imported product at varying costs. Come September though, importers’ and international manufacturers’ grace period to gain product approval ends, having already been extended after the Medicinal Cannabis Scheme came into force in April 2020.

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Products that patients previously used may no longer be available to them and they’ll be left with four Tilray products. (A fifth, a Sativex mouthspray, has approval for distribution.) . The difference between the aforementioned Tilray, and cheaper alternatives, is a significant $80-100, Hotu says.

“We do get a lot of people who ask for New Zealand grown stuff,” Hotu says, laughing. “It would have been nice to prescribe medicinal cannabis from products that were grown here in clean, green New Zealand.”

More than a year after the Scheme launched to regulate more widespread prescription of medicinal cannabis no local producer has gained Medsafe approval to sell its product locally, with industry blaming onerous standards costing them millions. About five local companies are inching their way towards approval, but even then, there is cynicism about when – and whether it can compete on prices.

The lag has seen initial jubilation at the opportunity for a billion-dollar industry and relief for patients, bubble over into frustration on both sides: from the pharmaceutical companies that have invested millions into a product it cannot yet sell, to the underground green fairy communities coming to the discrete rescue of patients who can’t afford thousands for prescriptions.

“I don’t think anyone anticipated that it would be quite this hard, least of all Medsafe,” says Eqalis director of pharmaceuticals Mitch Cuevas. “They’ve done the best they can (but) even by their own admission, they did not expect it to be so difficult.”

Cuevas had a successful career in consumer goods, manufacturing and pharmaceuticals for decades when he became intrigued by announcement of New Zealand’s first specialist medicinal cannabis prescription.

Fast-forward the better part of a decade, and Eqalis has spent about $6 million getting manufacturing underway (the company also imports product) through two indoor and outdoor grow operations in the Bay of Plenty .“We’ve chosen to be quite cost conscious,” Cuevas says. “Some will have spent significantly more than that.” While they hope to have a locally grown product on the market this year, it’s been a long slog.

Under the regime, local companies must hold a licence for various activities including importing product, growing and manufacturing. For the latter it must show it has robust security. The Ministry of Health has granted about 40 of 65 licence applications, including 30 for cultivation, and eight for possession for manufacture.

But the most complex hurdle, industry says, is obtaining Good Manufacturing Practice (GMP) certification which involves precise quality testing, some of which is offshore, in Australia and India. New Zealand standards are considered to be the highest in the world, and include things like checking for pesticides, stability, and micro toxins. How close is industry to gaining approval? The Ministry would only say Medsafe had five current applications for a licence to manufacture medicines “indicating a number of manufacturers are progressing to meet the required standard.”

While rigorous testing is typical for pharmaceuticals, the variability of working with plant matter ensures complication. And simply exporting to countries with lower standards isn’t the answer. They need compliance here, and exporting to a market in which international competitors haven’t spent the same on compliance will strain margins, Cuevas says.

While eventually, potentially next year, Cuevas hopes to be selling locally grown product for about $100 a unit, for patients needing prescriptions now, “The largest danger is we get to the end of this period and there’s only one product on the market and patients would be forced to change (prescriptions). And there’s no way they would interact the same way.”

A single overseas supplier like Tilray could assume a monopoly position and do what it wants with pricing. “And there’s nothing we can do about it. (The cost) is just out of reach for most New Zealanders, who are being forced into either trying to buy it online or through local green fairies. I wouldn’t say (the scheme) is a failure, but it’s progressing much, much slower than the Government had intended.”

Sally King sees the emails flying between Medsafe staffers and industry members in the early hours of the morning, and the New Zealand Medical Cannabis Council executive director is positive that it’s doing what it can to get local product over the line. She gives the marathon versus a sprint analogy, acknowledging that’s not an easy sell for people who are sick, or dying.

“The narrative has been quite pessimistic over the last year. It’s something of a pity because what we are missing is the bigger picture. We are forgetting the broader arc which is, that New Zealand has taken a really brave step to legitimise this extraordinary plant and put in regulations that are world-class but very difficult to achieve.”

Manufacturers are struggling to meet requirements for approval but, “they’re not the wrong requirements, and that’s something I want to emphasise. We have to build trust in the prescriber community. There’s nothing very different in the expectations for medicinal cannabis with other medicines, it’s just much harder to achieve because we’re talking about a plant. Imagine you were trying to grow a flower with a very narrow specification, to the same size, same scent, same levels. Everybody finds it a real challenge.”

Pearl Schomburg is less forgiving. “A lot of patients don’t have the luxury of time to wait. It’s not a one size fits all product.” The great-grandmother has been using medicinal cannabis to manage pain for years, and helps other patients access it. While she sees a place for the pharmaceutical companies that have launched off the back of legislative changes, she’s quick to point out it was decades of campaigning, mostly by the likes of green fairies that have got the country to this point.

“We didn’t do all that work for a pharmaceutical model. We’ve been operating in the shadow of what looks like this pharmaceutical industry that’s standing up on our good work.” She sees more work to be done in terms of an amnesty for small-time growers who provide the sick with cheap or free grow. Waikato man Jason Tong was in March charged with supplying and possession to supply cannabis. This week he said he was supplying for free, having become involved in the scene after his son was diagnosed with cancer.

“I’m being prosecuted for helping other people and in other parts of the world I would be getting offered a job,” he says. “The biggest problem we green fairies are facing is we’re making the government look stupid, supplying a product (it) should be supplying for a fraction (of the cost).”

Meanwhile, Whakatane grandmother Frances Nahi (Ngāti Whātua) dreams of the day she has an orchard, employees, and a thriving business supplying medicinal cannabis. “I would probably do that in honour of my granddaughter.”

When her eldest mokopuna was diagnosed with leukemia aged just four, Nahi went on the hunt for natural relief. She purchased a $600 bottle of CBD oil but it went unused – she didn’t trust it.

She created infusions and balms to help with pain relief, and saw her grandchild’s appetite return (she died in February this year, aged six). While she believed cost was a driving factor for people seeking underground treatments, for her the ability to create something homemade, and natural, was important. When police took her product she told them, “You can take these today, but tomorrow I’ll have more.” She doesn’t like the term ‘black market’, “because the purpose isn’t to harm people, it’s to help people.”

“This is kind of a clash of cultures here,” says Sally King. “What we’re talking about here is manufacturers racing to meet the evidence-based science, versus a plant that for many years has been a remedy… and they feel that the requirements of that manufacturing environment are more than is necessary. I don’t know that many GPs would say that.”

Dr Mark Hotu says he would always recommend a product that’s as safe and of high quality as possible. Prescribing products that have been through the testing wringer means he can prescribe or dose, tailoring to patients’ needs.

What is the way forward? Industry and patients say if Pharmac and ACC agreed to subsidise products, this could provide huge financial relief. Rua BioScience chief executive Rob Mitchell says the Medicinal Cannabis Agency could do with some more resources to speed up the product application process while NZ Medical Cannabis Council chair and industry entrepreneur, Manu Caddie, says even when a small number of local companies gain approval, for products to really be affordable “we need WINZ and ACC to agree that any patient with a legitimate prescription should be funded”.

A further opportunity could be taking low-dose CBD out of the medicines regime, Caddie says – something echoed by other experts. “That change would overnight create much more affordable products.” Caddie says green fairies are doing good work, and thinks the law should protect them.

Finally, Pearl Schomburg thinks better education of prescribing GPs could help stop people seeking support from green fairies. “Some are very rude to patients, some come away with that marked on their record, and are made to feel like drug seeking persons.”

A Ministry of Health spokesperson said for companies new to medicine manufacturing, obtaining GMP, “can take a little time to implement, however, Medsafe recognises this and may conduct further audits of the manufacturer, under a single licence application, based on the manufacturer indicating it will make appropriate changes. It is worthwhile noting that both industry and prescribers supported the requirement for GMP… This ensures that (products) are consistently produced to a known quality standard and the ingredient levels are stable over the stated shelf life of the product.”

The Ministry said having only been in operation for a year “it is too early to evaluate whether the scheme is working well. A number of companies are importing or planning to import products but it will take some time before locally produced cannabis products become available.”

Additional reporting: Kirsty Lawrence