Between pharma, agriculture and narcotics: The rise of medical Cannabis in a controversial emerging regulatory environment

By Niels Lutzhoeft, Christoph Hendel, Ferdinand Weis

12-2018

Since liberalisation at the beginning of 2017, industrial and medical Cannabis have experienced a boom in Germany, triggering a genuine need for domestic growing and importation, as well as extraction for use as food supplements or vaping products. The number of patients receiving cannabis on prescription since then has risen from about 1,000 to 15.000. Companies from Canada, the Netherlands and Germany are currently participating in the current tender procedure for domestic growing medicinal Cannabis in a secure indoor planation in Germany.

To the surprise of international clients, medicinal Cannabis is subject to both pharma and narcotics legislation with an accordingly high threshold to ensure the compliance with “Good Manufacturing Practice” (GMP) and security requirements under narcotics legislation. In fact, the Federal Institute of Drugs and Medical Devices (BfArM) as regulator requires manufacturers to set up production sites as high-security facilities. In a somewhat debatable stance, BfArM applies its safety guideline designed for the storage of narcotics to the entire growing and further processing operations within the production plant.

Before completion of the tendering process, and the kick-off of domestic growing, the supply of patients in Germany will be fully covered by importation. International manufacturers and domestic importers, wholesalers and pharmacists are yet struck by legal uncertainty as to the applicable requirements for importation from non-EEA countries. A key issue is whether Cannabis flowers actually qualify as medicinal products, as starting materials or – somewhere between both – as active pharmaceutical ingredients. This seemingly subtle distinction entails a number of follow-up questions for all stakeholders in the marketing chain. The national regulator has indeed considered processed Cannabis flowers as a non-finished – since generally not readily-packaged – drug. Such a qualification requires importers to ensure GMP compliance, to be established through conformity certificate under Sec. 72a Medical Products Act. This certificate is issued either by the exporting country or by German authorities following on-site GMP inspections abroad – a crucial issue for many manufacturers producing overseas, as Cannabis enjoys a more light-touch regulation between pharma and agriculture.

However, the national regulator is not the ultimate arbiter. Legislation is rather enforced by local authorities, subject to court review. Some manufacturers have indeed challenged the national regulator’s view, suggesting that Cannabis flowers are mere starting materials. This would practically facilitate importation, yet shift the regulatory burden on pharmacists delivering the final product to the patients as a so-called magistral preparation. They would have to ensure the product complies with manufacturing requirements under German pharma legislation which may require comprehensive testing. However, courts have not ruled on the specific scope of obligations lying with pharmacists here – a situation some perceive as a de-facto invitation to use magistral preparations to circumvent – or even escape – the rigorous pharma regime.

Scarce case law suggests that qualification of processed Cannabis flowers as starting materials is rather unlikely – in particular after typical manufacturing steps such as trimming, drying, testing, and packaging. Settled case law requires starting materials to involve substantial manufacturing steps before turning into a drug. Pharmacists, however, would only package and label the drug before final delivery to the patient.