From containment to nurturing: How Outcome-Based Cooperative Regulation can support future growth of the UK’s legal cannabinoid sector
An Executive Summary of The Hodges Review
The Hodges Review report examines how best to support the safe and responsible growth - economic and social - of a sizable and dynamic legal cannabis sector that is already present in the UK. It considers a novel regulatory approach to the UK’s legal cannabis sector, informed by original market and policy research, consultation with stakeholders, and new data around public attitudes.
We describe a vision for a legal cannabis sector that moves beyond a policy of control and containment, so that the UK can maximise the potential it has to advance scientific discovery and innovation, improve well-being, create jobs and investment in local economies, and enhance the health outcomes of potentially millions of people.
The report summarises the respective sectors as they stand today, exploring the policy gaps and incoherences, and diagnosing some flaws in the current regulatory model. The goal throughout was to ensure that the laws around cannabis can be justified in terms of risk and protection of the public from harm, but do not depress economic growth and scientific and technological innovation.
The report views the cannabinoid sector through the lens of Outcome-Based Cooperative Regulation, a regulatory philosophy pioneered by Prof Chris Hodges which centres on an ethical and trust-based regulatory schema. He argues that for regulations to be effective, they need to be based in trust and collaboration. This provides a valuable framework for thinking about how the legal cannabinoid sector can develop in the UK, as it necessarily involves industry-wide communication and engagement.
Hodges’ philosophy suggests that the legal cannabinoid industry should coalesce around the following goals:
Demonstrate that the sector is trustworthy, legitimate and responsible
Improve the evidence base and generate new insights in the UK
Improve health outcomes for patients and maximise access to these benefits
Fully explore and exploit the value of the cannabis plant
Set a world standard for regulatory and scientific best practice and innovation with a level playing field for producers
Our conclusion from this research is not that the UK’s legal cannabis sector is over-regulated, or merely suffering from outdated rules, or simply needs red tape and unwarranted regulations to be stripped back. The regulations encompassing the cannabis sector are wide-ranging and complicated, but right now are also uncalibrated to the risks associated with each product.
In some areas, such as hemp farming, not only are there insufficient incentives, but existing regulations are too restrictive, disproportionate to the risks involved and antithetical to the growth of a UK-industry and the economic opportunity hemp cultivation could offer to rural economies, not to mention the benefits to the environment.
In other areas, such as consumer cannabinoids and CBD, we have seen the result of too little regulation that caused the emergence of a large grey market that now needs tighter rules in order to safeguard the consumer and build up and sustain public trust, backed up by targeted but sustained enforcement for those who do not comply.
And in the arena of medicinal cannabis, the picture is far more complex, with regulations too onerous and restrictive in some areas, and too lax or entirely absent in others.
If adopted, the right regulatory framework outlined in this report will achieve three important objectives:
Competitive advantage for the UK post-Brexit, helping the country to leverage its historic and economic strengths in a rapidly growing and unprecedented global industry;
Regulatory best practice giving early mover advantage, helping to pioneer new approaches to regulating a novel industry that other jurisdictions on a similar path can choose to emulate;
Scientific advances and innovations, with pioneering new treatments, manufacturing methods, and end user product innovations, helping the UK to reinforce its reputation as the home of world-leading inventions and discoveries that improve our environment, our health and our quality of life.
What is not sustainable is for the government to continue to take an uncoordinated, disinterested or laissez faire attitude to the sector as a whole, as it has done since the cannabis sector’s inception. The seeds are there for rapid growth but it cannot happen without a clear strategy built upon coordinated government stewardship and the ambition to not just tolerate, but actively nurture the sector to expand and mature, so it attracts more investment, jobs and innovations, and secures political support and public recognition.
The analysis in this report and the principles we have outlined lead us to recommend a series of policy changes to help bring about the positive and shared goals that we articulate. The recommendations are directed both at regulators and industry, with the understanding that both parties have an obligation to cooperate to steward this new industry and support it to develop in an innovative but also safe and responsible way.
Some of the following 20 recommendations have been called for before by The Centre for Medicinal Cannabis in 2019 and 2021, and at other times by the Conservative Drug Policy Reform Group and by numerous reports by All Party Parliamentary Groups, and other industry bodies. Some recommendations are entirely new, and flow from the findings of our research, where it was clear to us that reforms are needed to support trust and cooperation. Other recommendations reflect those made in one or more Government reports, which have yet to be acted upon.
Legislative or Structural Reforms
The following policy recommendations require changes to law or regulations and/or involve devoting taxpayer funding towards new initiatives that need parliamentary approval.
1. Provide long-awaited legal clarity in respect of trace amounts of controlled cannabinoids in retail products and revise the 2001 MDR to set the permitted ‘zero THC’ level. This will give industry the confidence to invest in a high quality supply chain with robust analytics to support proof of compliance, and clear up any remaining confusion among retailers and ultimately consumers.
2. Establish a single ‘steward’ authority to govern and guide the entire sector, at arms length from ministers. This new agency would require legislation to setup but it would inherit clear responsibilities and could become the home for developing a specialist agency with expert staff recruited from a range of sectors.
3. Create a UK Centre of Excellence to advance the evidence base for cannabinoids and their applications. Drawing on the strength of the UK’s higher education sector, this institute could be established with the support of a major university…
4. Roll-out a national trial for GP prescribing of CBPMs based on an opt-in model for doctors’ consent and systematic data collection to inform future guidelines. Another dimension could be that such prescriptions, when issued in the private or public system, would need to involve patient enrollment in a national registry to help gather real world evidence.
5. Update hemp farming rules to permit licensed growers to extract the controlled parts of the cannabis plant on site under the right conditions. Farmers would need to partner with an approved transport provider or third party distributor to move controlled substances to market and maintain more detailed records of their seasonal yields.
6. Modernise the Proceeds of Crime Act provisions to create an explicit exemption for private enterprise by entities operating in legal jurisdictions. Modelled on the changes already incorporated into law in Jersey, the UK government should update POCA to permit investment by entities involved in cannabinoid commerce, insofar as those entities are engaged in lawful activity in a jurisdiction where a regulated regime exists. This would remove the chilling effect associated with concern over exposure to unlawful recreational cannabis and give new confidence to investors to consider UK ventures. With this change, institutional investors can be expected to look again at opportunities to invest in the legal cannabinoid market, supporting new start-ups and established companies to expand.
7. Permit licensed suppliers to export CBPMs in bulk outside the UK where their customer is a licensed party in the overseas jurisdiction. This would help UK-based CBPM companies with new customer acquisition in foreign markets and supply chain efficiencies such that medicinal patients in the UK could benefit from reduced costs for their treatment.
8. Consult with patient groups and police forces to introduce Home Office guidance for frontline officers to check and verify patients who have a valid, current CBPM prescription, potentially linked to a national patient registry when this is introduced.
9. Take forward commitments for a national patient registry and begin coordinated data collection efforts for real world evidence emerging from CBPM use among British patients accessing treatment privately (and in time, on the NHS). As recognised by the DHSC review in 2019: “NHS England and NHS Improvement, DHSC and Devolved Administrations should work with industry and academia to scope the development of a national UK patient registry to collect a uniform data set, across all indications, for patients prescribed a cannabis-based product for medicinal use in the United Kingdom.”
Market & Industry Reforms
These reforms do not necessarily require amendments to law and can be adopted more quickly by regulators and the existing players in the market:
10. Create and mandate a consistent set of manufacturing and labelling standards for CBPMs that provides more information to patients and links to a batch-specific Certificate of Analysis (CoA). Modelled on the Rule 93 Guidance imposed by the TGA in Australia, these production standards and testing and labelling requirements would create the ‘floor’ that is currently missing from CBPMs, other than their need to adhere to generic GMP rules. This would require CBPM suppliers to adopt best practice around product safety with, for example, child-proof containers and standardised warning messages.
11. Require end-product testing for all CBPM and consumer cannabinoid products (imported or locally produced) using independent ISO accredited laboratories in the UK would also stimulate expansion in ancillary services like laboratories for ensuring the industry standards are adhered to. In time the sector should adopt an industry-wide set of benchmarks for cannabinoid testing quality, potentially utilising the protocols adopted by those laboratories operating in other legal jurisdictions.
12. Permit licensed CBPM suppliers to utilise mainstream trackable, signed-for delivery options to reduce the cost to patients of private CBPM prescriptions. With auditable records of licensed pharmacists and new rules requiring child-safe packaging, it is not necessary to require expensive controlled drug couriers for delivering CBPMs to patients.
13. Create a single formulary of available CBPMs which provide doctors with an up-to-date list of medicinal cannabis products available in the UK market. This would enable patients to request certain types of product and for prescribers to have a wider view of what types of quality assured products are currently available.
14. Provide clarity on the legal status of CBD vaping products and issue guidance on the permitted ingredients in a vaporizer used for cannabinoids, either as a consumer CBD or CBPM delivery device. Consider additional research on the long-term health impact of vaping e-liquids.
15. Establish an expert committee to review the approach of the VMD to explore options for a more proportionate approach to CBD use by veterinarians. A rethink on the approach announced in 2019 would reflect how pet owners and farmers are already using CBD unofficially, and would bring consistency with the pragmatic approach of the FSA.
16. Examine and integrate policy on hemp cultivation activity into broader Net Zero efforts. DEFRA should commission an assessment of the contribution hemp cultivation could make to the UK’s Net Zero goals and begin a policy development process to devise incentives within the new post-Brexit agricultural subsidy regime that rewards farmers for carbon sequestration and soil remediation using hemp cultivated domestically, with the possibility of such licensed activity generating tradable carbon credits for off-setting.
17. Develop and roll-out more comprehensive surveillance of the UK border to detect illicit imports and non-compliant CBD products entering the UK by sea or air freight. UK Border Force should resource a suite of methods to discourage the importation of illicit cannabinoid material and deter the grey market from seeking to exploit the UK’s consumer market.
18. Clarify with guidance that any product derived from synthetic cannabinoid synthesis is by definition novel, and must follow the conventional risk-based route for approval as a medical treatment or as an ingredient in food.
19. Proactive and proportionate enforcement from regulators to pursue breaches of food law. The FSA, working with Trading Standards, needs to develop a strategy for enforcing the Novel Food regime based on a proportionate approach that involves a range of graduation sanctions, beginning with the type of activity that their equivalent body has adopted in Ireland, by using published warning letters to notify consumers and retailers of a product’s status.
20. Collaborate on an education initiative to improve general understanding among distinct professional and public audiences. Institutional partners in respective sectors could partner with industry bodies to support education and training of lawyers, accountants, doctors, pharmacists and farmers. In addition, public-facing resources could be developed for ordinary citizens to support them to learn about cannabinoids and use their knowledge to make informed choices.
Taken together, the reform recommendations are the tactical steps that the UK needs to take in order to realise the strategy that we recommend. They vary in complexity and controversy, but all of them are possible to implement if the political and industry will is there, and many are inspired by or based upon international precedent or changes adopted in comparable jurisdictions who have wrestled with the same challenges. And while they support each other in helping move the legal cannabis sector forward, some recommendations are clearly more important than others in terms of removing constraints, addressing outstanding barriers, and properly calibrating regulation so that it is tighter in some areas and more proportionate in others.