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Regulation Impact Statement: Attorney-General’s Department

July 2014

ProblemSubstances which mimic the effects of, or that are marketed as legal alternatives to, illicit drugs but whose chemical structures fall outside existing controls (also known as new psychoactive substances or ‘NPS’) have been a growing problem for Australian governments in recent years. NPS are frequently marketed as ‘legal highs’ and are purchased in Australia either over the internet or from retailers such as sex shops and tobacconists. There have been a number of reports both in Australia and overseas directly linking the consumption of these substances to deaths and serious injury.

NPS have received significant media attention in Australia in recent years following a number of tragic deaths of people who had recently consumed these substances. For example, in October 2012, a NSW man died and his girlfriend was hospitalised after they consumed ‘bath salts’. In December 2012 and July 2013, two NSW teenagers died following their consumption of NBOMe, a substance with hallucinogenic effects similar to LSD.

While there have been greater efforts to collect and analyse data on NPS in recent years, it is difficult to assess the full extent of the problem. The very nature of these substances means there is limited information available about them, their prevalence, use and health effects. The term ‘NPS’ covers a broad range of new and emerging synthetic drugs, the structure, effects and health consequences of which are constantly evolving. Further, data collection and analysis has historically focused on more established drugs, both licit and illicit. Because NPS are a relatively recent phenomenon, and because they exist on the fringes of legality, there is no quantitative data on their precise health costs and long-term side effects.

However, there is evidence that these substances are potentially very dangerous. They are untested chemical compounds which masquerade as illicit drugs (such as cannabinoids, ecstasy or LSD), but that are presented as being legal analogues of those drugs. In many cases these substances are variations of failed pharmaceuticals or research chemicals which were designed to be pharmacologically potent and to affect the same areas of the brain as known illicit drugs, but which have had no successful safety assessment or human trials.1

The marketing of NPS as ‘legal highs’ is particularly concerning. When manufacturers and retailers assert that they are ‘legal’ it may suggest to potential users that the substances have been tested and authorised for sale. It can create the impression that NPS are safe or somehow less harmful than the illicit drugs whose effects they are supposed to replicate.

This is not the case. These substances are typically untested, there is often great variation in the concentration of active ingredients between different products and their short and long term health

1 United Nations Global SMART Programme, “The challenge of new psychoactive substances” 3-18, UK Advisory Council on Drugs, Novel psychoactive substances report (2011) 49-61.

Regulation Impact Statement: Banning the importation of substances which mimic the effects of illicit drugs

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http://www.unodc.org/documents/scientific/NPS_Report.pdf

https://www.gov.uk/government/publications/novel-psychoactive-substances-report-2011

effects are often unresearched and unknown.2 Further, labelling NPS as ‘legal’ is not always correct, as the substances may be listed specifically as illicit drugs, or caught as analogues of other listed illicit drugs. For example, the product involved in one high profile case had been presented by the product’s retailer, its distributor and the legal advisor to the distributor as being ‘legal’, when it in fact contained Alpha-PVP, an analogue of methcathinone, a listed illicit drug.3

The market for NPSWhile there is limited data about the Australian NPS market, current indications are that it does not compare with the scale of established illicit drug markets.4 The supply of NPS is primarily conducted underground and over the internet, with substances mislabelled as ‘bath salts’ or ‘not for human consumption’ in an attempt to hide their true nature and use.

However, based on international data (particularly the experiences of Ireland and New Zealand), this market has a clear potential for growth if it is left unchecked. Findings from the 2013 Report of the Ecstasy and Related Drugs Reporting System (a national monitoring system for ecstasy and related drugs in regular drug users) note that NPS continues to grow as a class of drug, with 44% of the sample reporting using at least one NPS, compared to 40% in 2012.

There is significant global concern about the health risks of NPS use. The United Nations Office on Drugs and Crime (UNODC) 2013 World Drug Report notes that, worldwide, the number of NPS reported by Member States rose from 166 at the end of 2009 to 251 by mid-2012. This exceeds the total number of 234 illicit drugs currently controlled by the international drug conventions.

A 2013 UK Parliamentary report noted that between 2005 and 2012, some 236 new psychoactive substances were formally identified and logged on the European Monitoring Centre for Drugs and Drug Addiction's (EMCDDA) early warning system. 5 In 2012, for the fourth consecutive year, a record number of 73 new substances were detected in Europe, up from 49 substances in 2011, 41 substances in 2010 and 24 in 2009. 6 In terms of popularity, the UNODC’s 2013 World Drug Report highlighted that in 2011, a European survey of more than 12,000 young people (aged 15-24), estimated that 5% of young Europeans had used 'legal highs' at some time (with about half of the countries falling in the range 3-5%).7

The supply of NPS has the potential to be big business. The Australian Crime Commission (ACC) has noted that NPS:

are sold in Australia at low prices per dose, [and] have the potential to generate criminal profits in excess of those obtained from trafficking more established illicit drugs, such as

2 Australian Crime Commission, Illicit Drug Data Report 2012-13 p 154.3 NSW State Coroner, Finding after an inquest into the death of Glenn Punch, 29 October 2013. Alpha-PVP has also been specifically listed as an illicit drug under the Commonwealth Criminal Code.4 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 158.5 House of Commons Home Affairs Committee, Drugs: new psychoactive substances and prescription drugs, Twelfth Report of Session 2013–146 http://www.emcdda.europa.eu/attachements.cfm/att_190854_EN_TDAC12001ENC_.pdf, 897UNODC World Drug Report <http://www.unodc.org/unodc/secured/wdr/wdr2013/World_Drug_Report_2013.pdf> 91,92.


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http://www.publications.parliament.uk/pa/cm201314/cmselect/cmhaff/819/81902.htm

http://www.coroners.lawlink.nsw.gov.au/agdbasev7wr/_assets/coroners/m401601l7/glenn%20punch%20finding%2029%20oct%202013.pdf

heroin and cocaine, although at present the [NPS] market does not compare in size with more traditional illicit drug markets.8

Similarly, there have been reports that retailers have known about possible dangers involved with specific NPS, but continued to sell those substances because ‘the profit margins were too high’.9

The active ingredients in NPS are exclusively imported into Australia from overseas manufacturers, though they may be packaged or prepared for sale within Australia. Compared to 2006, the Australian Customs and Border Protection Service (ACBPS), the Australian Federal Police (AFP) and ACC have all reported a significant increase in detections and seizures of these substances at the border in 2012-13, though the precise number and weight of NPS detections and seizures varies from year to year. 10 This trend mirrors the experience in other countries.11

However, as noted above, statistics for NPS likely underrepresent the scale of the problem as the forensic testing of these substances is more limited than for mainstream illicit drugs and because law enforcement agencies collect only limited data on substances (or their analogues) that are not listed as illicit.

This is demonstrated in the statistics on seizures of NPS. The Illicit Drug Data Report 2012-13 (IDDR) notes that there were about 60 seizures of novel psychoactive substances and drug analogues in 2012-13.12 These seizures primarily related to listed illicit drugs (such as novel cathinone-type substances, synthetic cannabinoids and novel piperazine-type substances) and their analogues, rather than to NPS that are uncontrolled. However, preliminary data from the ACBPS suggests that, in a similar period, it would have stopped for further analysis about 1,000 imports on suspicion that they involved the importation of NPS. The ACBPS could not ultimately seize these substances because subsequent testing showed they were not a listed illicit drug. While some of these substances may not have been NPS, the discrepancy between this figure and the figure in the IDDR highlights the difficulty involved in gathering data on substances that are largely unregulated.

Despite there being limited quantitative data on the NPS market in Australia, the evidence is clear that use is growing, and that this is consistent with international trends.

Current illicit drug regulationCurrent Commonwealth criminal laws, set out in part 9.1 of the Criminal Code and the Customs (Prohibited Imports) Regulations 1956 (Prohibited Imports Regulations), ban substances by chemical structure, with analogue clauses to capture structurally similar substances. Newly identified NPS are progressively added to these lists as evidence about their harms becomes available. In considering whether to list a substance by regulation under the Criminal Code, the Minister for Justice must be satisfied that the substance is likely to be taken without appropriate medical supervision, and:8 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 158.9 R Olding, ‘Lawyer kept 'bath salts' ingredient secret as Glenn Punch was dying’, Sydney Morning Herald, 10 October 2013, viewed 5 May 2014, <http://www.smh.com.au/nsw/lawyer-kept-bath-salts-ingredient-secret-as-glenn-punch-was-dying-20131010-2vam0.html>.10 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 159.11 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 157.12 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 159.


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taking the substance would create a risk of death or serious harm taking the substance would have a physical or mental effect substantially similar to that

caused by taking a listed illicit drug the substance has the capacity to cause physiological dependence the substance is banned as an illicit drug in an Australian State or Territory, or in a foreign

country, or the substance poses a substantial risk to the health or safety of the public.

To assist in the timely listing of new and emerging illicit drugs, in 2012, the Commonwealth improved the mechanism to make emergency determinations by expanding the listing period and refining the criteria that must be satisfied before a determination can be made.13 Under sections 301.13-301.15 of the Criminal Code, the Minister for Justice may list previously undetected and harmful NPS (including their precursors) by chemical structure in the Criminal Code for up to 18 months under an emergency determination, to allow time to assess whether they should be listed indefinitely. In considering whether to make an emergency determination about a substance, the Minister for Justice must be satisfied that there is an imminent and substantial risk that the substance will be taken without appropriate medical supervision, and:

taking the substance may create a risk of death or serious harm taking the substance may have a physical or mental effect substantially similar to that

caused by taking a listed illicit drug a public official has found the substance in the course of his or her duties, and there is

limited or no known lawful use for the substance in Australia, or the substance may pose a substantial risk to the health or safety of the public.

Criminal laws based on the chemical structure of a substance are important in controlling illicit drugs whose harms are known. This approach is ill-suited to dealing with the increasing rate of introduction of new, untested and potentially harmful substances, each with a different chemical structure. There is evidence that, as one substance is banned, suppliers will quickly import new substances with slightly different chemical structures that have been designed to evade criminal controls.14 In circumstances where there are an almost limitless number of potential NPS,15 controls based solely on the structure of illicit drugs will permanently lag behind the market. AGD’s experience has been that, even with the available fast-track emergency determination process outlined above, illicit drug laws are unable to keep pace with the rate of introduction of previously unknown NPS. While controls continue to be based on chemical structure, potentially dangerous substances will continue to be imported and sold while authorities undertake lengthy processes to identify them, assess their harms and list them by their structure.

ACBPS officers currently detain unregulated NPS when they are detected at the border on the basis that they suspect those substances are illicit drugs. If the detained substances are not illicit drugs,

13 Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012.14 United Nations Office of Drugs and Crime, World Drug Report 2013, p 59.15 United Nations Office of Drugs and Crime Global SMART Programme, The challenge of new psychoactive substances, 2013, pp 1-2.


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officers cannot formally seize them and must allow their importation, even if the ACBPS suspects the substance is being imported solely for consumption as an alternative to a listed illicit drug.

Objectives

The broad objective of the policy is to reduce the impact of NPS on public health and make existing criminal laws more effective in responding to this emerging issue. Governments need time to assess the health effects, harms and risks of NPS detected in Australia before they can apply specific criminal offences or other controls to individual substances. The health risk that NPS pose can be significant. As NPS are often unregulated and unassessed, there is little knowledge and information about their effects, which can pose problems for assessment and successful treatment of harms resulting from their use.

There is also limited data available about the scale of their importation, manufacture, supply and use. However, a number of the policy options explored below will assist in developing an evidence base about the problem posed by NPS. This data will be used to guide further policy development in the future.

Despite the limitations on available data, AGD considers that a successful policy to reduce the impact of NPS on public health should involve the following outcomes:

a reduction in the number of reports of persons presenting to emergency departments following the consumption of unknown or unidentified drugs, and

a reduction in the number of premises selling NPS, whether as ‘legal highs’ or otherwise.

The Commonwealth does not have the ability to directly affect these outcomes. The Commonwealth’s primary legislative responsibility with respect to NPS is at the border, and laws relating to the manufacture, supply and advertisement of NPS are primarily the responsibility of States and Territories. Accordingly, and without greater information about NPS generally, it is not possible to set out more definite and measureable outcomes for the policy.

In addition, Commonwealth action is only one aspect of the national response to NPS. The Commonwealth’s policy must complement the work of the Intergovernmental Committee on Drugs (IGCD) to develop a coordinated national response to NPS, which includes law enforcement, health and education initiatives. Further, Commonwealth action should complement State and Territory efforts to control the manufacture, supply and advertisement of NPS. New South Wales, Queensland and South Australia have already implemented laws that ban substances based on their psychoactive effect, rather than their chemical structure.

Options

AGD has identified four key options for tackling the public health and criminal law issues that NPS pose. At the outset, AGD notes that this Regulation Impact Statement (RIS) is not seeking to revisit or justify existing Commonwealth criminal controls on illicit substances.


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1. Implement a ban on the importation of substances which mimic the effects of illicit drugs and that are otherwise unregulatedStopping NPS at the border is fundamental to halting their supply in Australia. There is no known domestic production of the active ingredients in NPS; they are imported into Australia from overseas.

Banning the importation of otherwise unregulated psychoactive substances will assist in preventing manufacturers from evading existing border controls by tweaking the chemical structure of illicit drugs. The measure will operate as a safety net to ensure that potentially harmful substances which mimic the effects of, or are intended as an alternative to, illicit drugs—but are otherwise unregulated—can be seized. A person who imports a psychoactive substance in contravention of the ban will commit a criminal offence and be liable to prosecution.

AGD acknowledges that there are many substances that would be psychoactive when ingested by humans, but which have a legitimate use, such as medicines or foods. Therefore, the import ban will specifically exclude substances that have a legitimate use, such as food, tobacco, alcohol, therapeutic goods, industrial chemicals, agricultural chemicals and veterinary chemicals. These will continue to be dealt with under existing regimes, such as the Therapeutic Goods Act 1989 (TG Act) and the Industrial Chemicals (Notification and Assessment) Act 1989 (ICNA Act). The measure will include a power to exclude other legitimate uses by regulation, and to issue permits to allow imports for limited purposes (such as for law enforcement to develop appropriate forensic reference standards).

If an importer seeks to import a psychoactive substance with a legitimate use, then he or she will continue to be required to seek the relevant authorisations and comply with the relevant standards under the appropriate regulatory scheme. This proposal will not affect the existing requirements to which importers are subject under the TG Act, ICNA Act, Food Standards Australia New Zealand Act 1991 (FSANZ Act), Imported Food Control Act 1992 (Imported Food Act) and the Agricultural and Veterinary Chemicals Code 1994 (AgVet Code), which may include assessment, registration or listing of the substance. 16

This option would not create a new mechanism to regulate psychoactive substances. If a substance has a legitimate use, then the person seeking to import it will continue to be responsible for ensuring that the importation complies with the appropriate regulatory scheme, including ensuring it has been assessed, registered and approved by the relevant body.

The ban will also not cover illicit drugs. These will continue to be dealt with under the serious drug offences in the Criminal Code or the Prohibited Imports Regulations. In effect, this option will control the importation of substances that will, in AGD’s experience, eventually be banned under the existing illicit drugs control schemes.

To be effective at the border, the ban will be supported by changes to allow ACBPS officers to use their existing search and seizure powers in relation to psychoactive substances. The measure is designed to fit within the existing framework for searching for and seizing suspicious substances. An 16 Note: the phrase ‘legitimate use’ is used in this paper to refer to a use authorised under one of these schemes.


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officer will only use these new powers once he or she has determined that the substance is not listed as an illicit drug and does not have a legitimate use.

This will be a small but important change. As set out above, ACBPS officers already stop many NPS at the border on suspicion that they are illicit drugs or analogues. This option will give those officers the certainty to stop and seize psychoactive substances destined for use as alternatives to illicit drugs, without affecting legitimate importations.

There will also be appropriate review mechanisms to ensure that substances with a legitimate use are not incorrectly seized under the measure. This mechanism will allow an importer who believes his or her goods have been incorrectly seized to make representations and provide evidence to the ACBPS about either the fact that the substance does not have a psychoactive effect, or that it has a legitimate use. It will also allow an importer to go to Court to show that the substance can be imported.

As outlined above, this option would complement State and Territory efforts to control the manufacture, supply and advertisement of NPS, and other elements of a national response developed by the IGCD. A national response aimed at reducing the supply of NPS is crucial in reducing the impact of these substances on public health.

This option would not replace existing strategies to reduce the health effects of NPS, including structure-based controls and education and other initiatives under the National Drug Strategy 2010-2015. Rather, it would be used as a complementary mechanism, aimed at reducing the supply into Australia of unknown, unassessed and potentially dangerous chemical substances. The impacts of this option, and comments from submissions, are explored in more detail below.

2. Explore a pre-market assessment scheme for psychoactive substancesNew Zealand has established a pre-market assessment scheme for psychoactive substances under the Psychoactive Substances Act 2013. This scheme allows psychoactive substances that have been assessed as ’low risk’ to be legally sold in New Zealand. The New Zealand Government recently withdrew all interim approvals for psychoactive products following consistent reports of ‘severe adverse reactions’ to those products.17 No psychoactive product can be sold in New Zealand until it has been assessed as posing a ‘low risk’ to humans.

A pre-market assessment scheme would ban the importation, manufacture, supply and advertisement of all substances with a psychoactive effect and that were otherwise unregulated, unless authorised by a Government regulatory agency. Such an authorisation would only be granted if the agency had assessed the substance to be a low-risk to human health, including examining its specific pharmacological, psychoactive and toxicological effects, its potential to cause death, serious injury or dependence, and the likelihood of its misuse. The onus would be on the person applying for the licence to demonstrate to the agency that the substance was not harmful.

17 NZ Ministry of Health, Psychoactive Substances Regulation, Wellington, 2014, viewed 26 April 2014, <http://www.health.govt.nz/our-work/regulation-health-and-disability-system/psychoactive-substances-regulation>.


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Three submissions received during consultation on this RIS advocated in favour of this option. Their views are canvassed in greater detail in the ‘Consultation’ section, below.

AGD does not consider further exploration of a pre-market assessment scheme to be a viable way of dealing with NPS, even though it may assist in reducing some of the harm associated with NPS use.

Exploration of these issues, obtaining national agreement on them, and setting up and implementing a new regulatory regime for psychoactive substances would be an extremely lengthy process. During this time, the status quo would continue. Untested and unsafe products will continue to be presented as legal alternatives to illicit drugs and they will continue to cause harm to individuals and the community.

Industry self-regulationOne version of a pre-market assessment scheme, as the Eros Association proposed in its submission, could include industry self-regulation.18 The Eros Association noted that its members had begun to implement such a system through the use of codes of ethics and conduct, and holographic stickers to denote legitimate products.19 The submission provided limited information on the uptake of this system, including by both members and non-members of the Association.

Industry self-regulation is not an appropriate option for a pre-market assessment scheme. It does not require the kind of proactive, systematic and rigorous testing about the health effects of NPS, particularly over the longer term, that the Australian public expects for the sale of other chemical products (including therapeutic goods). Industry self-regulation would be reactive, require participants to voluntarily remove products from sale and would not properly address the health risks associated with NPS. It would not adequately guarantee product safety, but would continue to provide a potentially misleading impression of oversight and safety.

ConclusionAs outlined above, there is limited data about the NPS market in Australia. Without this data, it is not possible to assess with certainty whether further exploration of a pre-market assessment system would confer greater benefits than the costs it imposed. However, the recent moves in New Zealand to remove all interim approvals for psychoactive substances following continuing reports of harm suggest that Australia should pursue this option with caution. This is supported by the limited evidence available about the NPS market in Australia. The evidence suggests that, while there is clear potential for growth, the problem of NPS use is not yet on a scale to rival use of more established illicit drugs. Limited demand for NPS suggests that a pre-market assessment scheme may not be an appropriate mechanism to reduce the health effects of NPS in Australia as their use is currently, and would remain, an underground activity undertaken by a small minority of individuals.

Further, exploration of a pre-market assessment scheme would be contrary to the Government’s approach to NPS, which is to list substances as border controlled drugs in the Criminal Code as evidence about their use and harms has become available. It would also be contrary to recent

18 Eros Association, Breaking Bad: a reply to the Regulation Impact Statement on banning the importation of substances which mimic the effects of illicit drugs, 2014, p. 8.19 Eros Association submission, p. 8.


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moves in a number of jurisdictions, such as New South Wales, Queensland and South Australia, to comprehensively ban substances that seek to mimic the effects of illicit drugs.

In these circumstances, AGD considers that exploring a pre-market assessment scheme is not a viable option.

3. Education campaignEducation is of crucial importance in tackling the public health challenges posed by NPS. It will assist in reducing demand for NPS.

An education campaign, without an accompanying ban or regulatory regime, about the health risks involved in consuming NPS may assist in reducing demand for them. There would be no regulatory impact involved in pursuing this option alone.

The National Drugs Campaign (NDC) is the Commonwealth Government’s primary education campaign on drugs. It adopts a primary prevention approach to dealing with the use of drugs in the Australian community. The objective of the NDC is to reduce the uptake of drugs by raising awareness of the harms associated with drug use and encouraging and supporting decisions not to use. The next phase of the NDC will feature messaging that stresses the unknown content, unpredictability and harmful effects of a range of illicit drugs, including NPS.

Public education messaging, such as the messaging delivered by the NDC, will need to ensure that it does not inadvertently promote interest in the use of NPS as an alternative to established illicit drugs. This is especially the case in relation to emerging NPS because there continues to be a misconception that NPS are safe because they are presented as being legal. Indeed, there is evidence that, once the harms of a previously used NPS have been established, users will seek an alternative NPS.20

However, on its own, an education campaign would neither be effective to control the use of NPS, nor to effectively reduce the associated risks to public health in Australia. Alone, an education campaign would allow people to continue to legally import and promote as legal substances that could lead to serious injury or death. An effective response to NPS requires measures that both decrease demand and limit supply.

While quantitative data about the potential impacts of an education campaign is not available, qualitative data about the use of such campaigns as the sole mechanism to reduce drug consumption suggests that the overall net benefit of this option is likely to be low, unless it is also accompanied by effective mechanisms to limit the supply of NPS. Education is an important part of any response to illicit drug use, but it is not, and cannot be, a standalone response. The Australian Drug Law Reform Foundation (ADLRF) supported this conclusion, noting that ‘education campaigns may be a helpful adjunct to an effective policy’.21

20 Research conducted for the development of the NDC has consistently highlighted that a lack of knowledge about the content and source of illicit drugs is a key concern amongst young people. Further, research conducted among people who take illicit drugs has shown that they are concerned about the range of substances found in drugs, and this can influence their decisions about consumption.21 Australian Drug Law Reform Foundation (ADLRF), Submission in response to a discussion paper: Regulation Impact Statement: Banning the importation of substances which mimic the effects of illicit drugs, 2014, p. 5.


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4. Continue to progressively ban dangerous substances based on their chemical structure This is the status quo. Under this option, people will be able to continue importing untested and potentially harmful substances into Australia for use as alternatives to illicit drugs.

As set out above, structure-based controls are insufficient to tackle the challenges posed by NPS. While the emergency determination mechanism under the Criminal Code enables the Minister to ban substances for up to 18 months on the basis of their chemical structure, this approach is ill-suited to dealing with both the increasing number of NPS (each with a different chemical structure) and the rate at which they are being imported into Australia. Under this approach, Government controls will always be behind the market, allowing potentially dangerous substances to be legally imported and sold while authorities identify them, assess their harms and list them by their chemical structure.

AGD considers that this option alone is not feasible. A number of submissions agreed with this position.22 It does not address a significant and known vulnerability at the border and allows people to legally import substances that could lead to serious injury or death. AGD considers that there is no benefit, and likely a detriment, in continuing solely with the status quo.

Impacts of an import ban

The proposal to ban the importation of NPS is expected to have a positive impact on public health, but a minor regulatory impact. However, in the absence of comprehensive data about the scale of NPS use and the health problems it poses, it is not possible to quantify or definitively state the impact on public health.

The proposal would apply criminal penalties to the importation of substances intended to be used in the same manner as illicit drugs. Some States, such as New South Wales, Queensland and South Australia, have already moved to control and criminalise these substances by introducing bans that are not based on chemical structure.

The measure will fix a loophole that allows importers to import NPS with a chemical structure intended to evade existing illicit drug import offences. It will supplement the existing import bans on some NPS in the Criminal Code and Prohibited Imports Regulations by preventing the importation of psychoactive substances which have no legitimate use or which are otherwise unregulated.

The measure will not affect the importation of substances with a legitimate use but which may also have a psychoactive effect. This includes therapeutic goods, food, alcohol, tobacco and industrial, agricultural and veterinary chemicals. Existing border controls and regulatory processes will continue to govern the importation of these substances. For example, if a person wishes to import a therapeutic good that also has a psychoactive effect, he or she will need to obtain the relevant authorisations and approvals to import the substance from the Therapeutic Goods Administration.

Based on experience, many of the substances that will be captured by the new import offence will eventually be banned under the Criminal Code and Prohibited Imports Regulations. In this sense,

22 ADLRF submission, p. 5; Eros submission, p. 11.


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the proposal brings forward the time at which these substances are prevented from entering the country. This will prevent their large-scale public distribution and potentially dangerous effects on individuals’ health while the Government assesses whether or not importing them should be subject to more significant penalties.

The primary impact of the measure will be to prevent businesses and individuals from obtaining NPS for retail sale as ‘legal highs’ or for personal use. This is anticipated to result in a range of public health benefits flowing from reduced consumption of untested and unknown NPS.

The measure may also result in increased costs for legitimate importers in that it may prompt importers to comply with the requirements of existing regimes regulating the importation of goods and substances. However, as importers should have been complying with those regimes in the first place, any additional costs will only arise out of improved compliance with existing regulation.

These issues are explored in more detail below.

Health benefitsImplementing the proposed import ban on NPS will likely have public health and safety benefits. As there is no evidence to suggest that the active ingredients in NPS are manufactured in Australia, the ban will be likely to curtail their supply within Australia.

Health risks of NPSAs noted above, there is limited definitive and quantitative evidence about the health risks associated with the use of NPS in Australia due to their relatively recent introduction into the Australian market and ever changing content and composition. Despite this, there is evidence to suggest that users of NPS risk being exposed to significant physical, mental and social harms. This data comes from a range of sources, including user reports and clinical observations.

While the health-related problems associated with the use of NPS vary, commonly documented effects include:

cardiovascular problems severe psychological disorders increased risk of cancer agitation severe psychosis rapid heart rate (tachycardia), and hypertension.

Some of these health issues associated with NPS are similar to those associated with the drugs they are intended to mimic. In other cases, they are different.

There is also evidence that the toxicity of many NPS may be greater than illicit substances. Users of NPS may reach toxicity levels very quickly, and these substances may pose a higher risk of overdose than the illicit drugs whose effects they are intended to mimic. Further, while the side effects of established illicit drugs are well documented, data on human toxicity related to the use of NPS remains limited. The significant variation in chemical content and concentration in NPS products can


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make determining toxicity levels and understanding side effects difficult. This variation can pose enormous challenges for health professionals, particularly in emergency departments, who must diagnose and treat the often severe side effects associated with overdoses and the use of NPS.

In its submission, the ADLRF argued that there was insufficient evidence that NPS represent a significant problem.23 AGD acknowledges that there is limited information about the health risks of NPS. However, this must be considered in light of recent reports about deaths and serious harm following NPS consumption, evidence from New Zealand about ongoing harm from the consumption of psychoactive products, and the potential for unknown, untested but potent substances to be supplied for human consumption. In these circumstances, AGD considers that limited data is not an argument in and of itself against a precautionary approach to banning NPS.

Preventing individuals and businesses from obtaining NPS for retail sale or personal consumptionNPS are currently being openly sold and marketed as ‘legal highs’ by, for example, internet retailers, tobacconists and adult shops. As noted above, the sale of NPS can generate significant profits for retailers and wholesalers. The body representing a number of NPS retailers has estimated that, nationally, the NPS market is worth $600 million,24 though this figure does not appear to align with the relatively small number of goods the ACBPS stops on suspicion of being NPS. As there are no known domestic manufacturers of the active ingredients for NPS, the import ban will prevent these businesses from legally acquiring these products for sale, and prevent them from profiting from their sale. It will also prevent businesses which import, distribute or wholesale NPS from accessing those substances and profiting from them.

Similarly, the import ban will prevent individuals from legally purchasing NPS over the internet from overseas and importing them into Australia for personal consumption or resale. This will result in a loss of consumer surplus for these individuals. However, as set out below, this may be mitigated if people are displaced into using other drugs, licit or illicit.

Legality of NPSThe legality of products containing NPS is often questionable. Accurate information about their ingredients is often difficult to obtain, and those ingredients may already be controlled or banned under existing Commonwealth, State and Territory legislation.

Further, the legality of sale of NPS varies across jurisdictions. New South Wales, Queensland and South Australia have criminalised the manufacture, supply and advertisement of substances that have been designed, or are intended, to mimic illicit drugs.

Therefore, introducing an import ban on NPS will ensure that those substances are illegal. Importers of NPS will no longer be uncertain about whether their goods will be stopped, seized and destroyed at the border.25 As noted above, in addition to the comprehensive bans on NPS in New South Wales, Queensland and South Australia, various NPS are already listed as illicit drugs (or captured by

23 ADLRF submission, p. 2.24 Eros Association submission, p. 5.25 Uncertainty about the ability to import NPS was highlighted as a concern in the letter from an NPS distributor attached to the Eros Association submission (see p. 21).


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analogue clauses) in all jurisdictions and, based on experience, many will be listed by chemical structure in the future as information about the risks they pose and their health effects becomes available. This further limits the actual regulatory impact of the measure: NPS are either already banned or likely to be banned in the near future.

Possible displacement effectsBy improving ACBPS officers’ powers to seize NPS at the border, the import ban will reduce the availability of these substances for human consumption.

The absence of data around NPS use and the drug habits of users makes it difficult to predict how reduced availability of NPS may affect current users. It may cause current users to shift their NPS consumption to other, more established illicit drugs.26 Other users may shift their consumption to licit drugs, such as alcohol, or cease consuming drugs for non-therapeutic purposes altogether.

Submissions from the ADLRF and the Eros Association both highlighted the potential displacement effects of an import ban. They noted that such a ban had the potential to create a black market for NPS and stimulate domestic production. The ADLRF noted that ‘if strong demand persists in the absence of a legal supply, illegal sources of supply generally emerge’.27 Similarly, the Eros Association asserted that an import ban would ‘simply kick-start the large-scale production of these drugs in Australia’.28 These submissions argued that a pre-market assessment scheme would reduce the black market for drugs, citing significant reductions in the retail sale of psychoactive products in New Zealand following the introduction of its scheme.29

AGD notes that the possibility of a black market for NPS exists irrespective of whether Australia implements a ban on NPS or a pre-market assessment scheme. In particular, a pre-market assessment scheme would likely involve considerable establishment and ongoing costs as well as high costs associated with testing to establish the low risk of a product.30 These costs would ultimately be reflected in the price of psychoactive products, which may create a black market in illegitimate psychoactive products.

While the New Zealand pre-market assessment scheme has undoubtedly been successful in reducing the availability of psychoactive substances, this must be considered in the context of the recent withdrawal from sale of all psychoactive substances in New Zealand on health grounds.31

26 Recent studies have shown that many users of more established illicit drugs also use NPS. For example, the Ecstasy and Related Drugs Reporting System found that, in 2013, 37% of participating users had used an NPS in the last six months: National Drug and Alcohol Research Centre, Australian Drug Trends 2013: Findings from the ecstasy and related drugs reporting system, 2013, accessed 5 May 2014, <http://ndarc.med.unsw.edu.au/resource/key-findings-2013-edrs-drug-trends-conference-handout>.27 ADLRF submission, p. 3.28 Eros Association submission, p. 2.29 ADLRF, p. 4.30 The New Zealand Government has estimated that testing could cost between NZ$1 million and NZ$2 million per product (see NZ Ministry of Health, Regulatory Impact Statement: New regulatory regime for psychoactive substances, p. 11, viewed 26 May 2014, <http://www.health.govt.nz/system/files/documents/pages/ris-new-regimepsychoactive-substances.pdf>.31 NZ Ministry of Health, above, note 13.


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Further, similar reductions of the physical sale of NPS followed the introduction of a comprehensive ban on psychoactive substances in Ireland in August 2010. Between May and October 2010, the number of ‘head shops’ selling NPS went from 113 to none, with only ten head shops remaining open.32 The use of NPS also appears to have decreased following the introduction of the Criminal Justice (Psychoactive Substances) Act 2010, evidenced by a reduction in the number of adverse events between 2010 and 2011.33

If 100% of NPS users were displaced into using other, more established illicit drugs, there would be no net positive benefit from the ban on NPS. Established illicit drugs have been banned because they have been assessed as carrying the potential for serious harm to the user and to society. However, 100% displacement to other illicit drugs is unlikely. It is understood that some people use NPS due to their purported legality and ease of purchase or, for example, to evade workplace drug tests. Given their reasons for using NPS, it is reasonable to assume that these people would not move onto using more established illicit drugs.

In addition, health workers, particularly in emergency departments, have significant experience in dealing with these better researched drugs, their hallmarks and side effects. Reducing the range of substances that confront front-line health workers would assist in avoiding circumstances, like those involved in reported cases, where hospital staff are hampered in their ability to treat adverse reactions to NPS by a lack of available knowledge about the active ingredients of particular illicit drugs or appropriate responses to them.34

Further, as set out above, increased seizures of NPS at the border will improve law enforcement knowledge of the substances available on the NPS and illicit drug market. This additional knowledge will assist in improving health outcomes for persons who suffer adverse effects as a result of taking NPS. It will likely reduce the number of NPS that law enforcement and health officials first encounter as a result of overdoses and other adverse health effects.

Compliance costsAGD expects that this measure will have a minimal impact on compliance costs.

At the outset, AGD notes that regulating the importation of chemical substances is quite complex. There are few, if any, substances the importation of which is not governed by a series of standards, such as those under the FSANZ Act, or subject to authorisation or listing, such as under the TG Act. This proposal will not change the requirements of those regulatory regimes, or make the process of importing chemicals more complex for legitimate businesses. It will also not affect the importation

32 Irish Health Research Board, Press release: New report reveals the latest drug trends across Europe, 15 November 2011, accessed 27 May 2014 <http://www.hrb.ie/home/media/press-release/?tx_ttnews%5Bpointer%5D=1&tx_ttnews%5Btt_news%5D=425&tx_ttnews%5BbackPid%5D=566&cHash=cfe996a3e9295c7e7efcc5075567a806>..33 Irish Health Research Board, Press release: New report reveals the latest drug trends across Europe, 28 May 2013, accessed 27 May 2014 <http://www.hrb.ie/home/media/press-release/?tx_ttnews%5Btt_news%5D=445&tx_ttnews%5BbackPid%5D=566&cHash=0e918ab287092b7649a3bae7080fff27>.34 R Olding, ‘Lawyer kept 'bath salts' ingredient secret as Glenn Punch was dying’, Sydney Morning Herald, 10 October 2013, viewed 5 May 2014, <http://www.smh.com.au/nsw/lawyer-kept-bath-salts-ingredient-secret-as-glenn-punch-was-dying-20131010-2vam0.html>.


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of substances that are specifically exempt from the requirements of those regulatory regimes (see below).

Currently, the ACBPS detains at the border substances it suspects may be illicit drugs while it assesses whether or not they should be seized. In making this assessment, the ACBPS will test the substance and correspond with both the importer and relevant regulatory authorities. Goods may be detained for a period of time while the ACBPS makes this assessment.

There are four possible outcomes from this process:

1. The ACBPS establishes that the substance is an illicit drug (whether under the Criminal Code or Prohibited Imports Regulations) based on its chemical structure. The ACBPS refers the substance to the AFP for further investigation and, potentially, prosecution.

2. The ACBPS establishes that the substance has a legitimate use because it falls within the regulatory scope of an existing regime (such as under the TG Act, FSANZ Act, ICNA Act or the AgVet Code). The ACBPS refers the substance to the relevant regulatory body to establish whether the importer has the appropriate authorisations or permissions to import it. If the importer has the appropriate authorisations or permissions to import the substance (or if authorisation or permission is not necessary), the ACBPS will allow its importation.

3. The ACBPS establishes that the substance has a legitimate use because it falls within the regulatory scope of an existing regime. If the relevant regulatory body confirms that the importer does not have the appropriate authorisations or permissions to import the substance, the regulatory body may direct the ACBPS to seize the goods on its behalf.

4. The ACBPS cannot establish that the substance is an illicit drug or that it is subject to an existing regulatory scheme. In this case, the ACBPS must release the substance.

The proposed measure would only affect the fourth category of goods. Under the proposed measure, if the ACBPS cannot establish that the substance is an illicit drug or is subject to an existing regulatory scheme, it will be able to seize the substance if it reasonably believes the substance is psychoactive. Once the ACBPS has seized the goods, the importer will have an opportunity to dispute the seizure.

The ACBPS will not detain additional substances for further investigation under the proposed measure. Rather, officers will only be able to use the new powers to formally seize substances they already detain on suspicion that they are illicit drugs.

Preliminary data from the ACBPS indicates that the measure is likely to affect about 1,000 importations each year, whether in cargo, in the post or on a person. This is an extremely small number in the context of the tens of millions of inspections that the ACBPS undertakes each year. For example, in 2012/13, the ACBPS inspected over 100,000 units of sea cargo, 1.5 million units of air cargo, 15.5 million letters, 30 million parcels, 31.5 million air passengers, 715,000 cruise ship passengers and 550,000 crew members of commercial ships.


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Enforcement costs to business and individualsThe measure will involve some enforcement costs to business and individuals. These will arise once the ACBPS seizes the substance on suspicion that it is psychoactive.

However, the measure will not itself directly impose additional regulatory costs on importers. Rather, it will require importers who dispute the seizure of their goods to provide evidence about those goods (such as their intended purpose). Where that evidence shows a legitimate purpose, the substance will be dealt with in accordance with the applicable regime.

As noted above, the ACBPS will not detain additional shipments under the measure. Therefore the measure will not impose additional costs on importers whose goods the ACBPS has detained on suspicion of being an illicit drug, at least until the ACBPS makes the decision to formally seize the substance.

There is only a small possibility that ACBPS officers will seize substances with a legitimate use, if at all, as the ACBPS will liaise with importers to determine the intended use of a substance following its detention. In the event that the ACBPS does seize such a substance, the measure will include appropriate oversight mechanisms to allow an importer to dispute the seizure of goods. Importers engaging with these mechanisms will incur some regulatory costs. However, these costs will be attributable to existing regulatory schemes, as explained in more detail below.

The costs involved will include:

the time a business takes to write letters or fill out forms disputing the seizure gathering evidence and preparing reasons to establish that a substance has a legitimate use

and should be dealt with under the appropriate scheme the time a business takes to gather that evidence and prepare those reasons for submission

to the ACBPS, and the delay flowing from the ACBPS’s seizure of the goods.

Disputes over the seizure of a substance will generally only involve questions of whether or not the substance had a legitimate use. That is, importers will use the review process to provide evidence to demonstrate that the substance should have been dealt with under some other regulatory scheme (which may or may not allow it to be imported). Any importer who demonstrates this may be in breach of the regulatory requirements of that other scheme (which may, for example, impose a requirement to label the goods in a particular way, or to have them registered).

The relevant information and evidence to be provided to the ACBPS to dispute the seizure would be routinely held by businesses, not-for-profit entities and individuals. Evidence of business operations, sale or end use could be used to satisfy the ACBPS that the substance was being imported for a legitimate purpose (that is, under an existing regulatory scheme).

The measure will therefore improve compliance with existing regulatory regimes. It will prompt importers to comply with schemes with which they should already have been complying. This may require some importers to incur costs in registering to import their goods under those regimes, and in having their goods tested and assessed to ensure that they comply with relevant standards.


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However, the measure will not require importers to incur costs additional to those they should have incurred in complying with those existing schemes. The costs involved in improved compliance are therefore business-as-usual costs.

If an importer successfully disputes the seizure of the substance, then the substance will be referred to the appropriate regulatory body for consideration. It may or may not be able to be imported, depending on whether it has actually been imported in accordance with the relevant scheme. For example, it may be that the importer demonstrates the substance is an industrial chemical as a result of the review, based on evidence not available at the time of the seizure. The importer would then have to comply with the relevant requirements under the ICNA Act in order to be able to import the substance. This includes registration as an introducer with the National Industrial Chemicals Notification and Assessment Scheme and listing of the substance on the Australian Inventory of Chemical substances.

If the importer unsuccessfully disputes the seizure, then it will incur no further regulatory costs. The importation is deemed to be unlawful and the substance will be destroyed.

Similarly, there will be no regulatory cost for the importer if the ACBPS seizes a substance and the importer does not dispute the seizure. The importation is unlawful and the substance will be destroyed.

The proposed measure will include the ability to exclude additional substances with a legitimate use by regulation. AGD does not anticipate that the process for creating such regulations will have regulatory impacts upon businesses or individuals. This is because of the breadth of coverage of the TG Act, FSANZ Act, Imported Food Act, ICNA Act, Agricultural and Veterinary Chemicals (Administration) Act 1992 and AgVet Code, and the provisions under those Acts that allow for the importation of substances for medical, research and other purposes. Taken together, AGD does not anticipate that there will be circumstances where legitimate industry will require access to substances that are not initially covered under one of those Acts and which would otherwise fall within the terms of the proposed measure. The regulation making power is intended to more simply accommodate unanticipated changes to the regulation of the importation of chemical substances (for example, if Government decides to impose a specific regulatory scheme on a subset of foods or therapeutic goods, or if it changes the regulatory scope of the National Industrial Chemicals Notification and Assessment Scheme).

Importation of food for personal consumptionUnder the Imported Food Act, the Department of Agriculture does not examine small importations of food for personal consumption for compliance with food standards. Under this exemption, a person can import up to 10kg of food for personal consumption.

An import ban would not affect the ability of a person to import food for personal consumption, exempt from examination by the Department of Agriculture.

However, it is important to note that such food is still subject to other screening processes, including by ACBPS and the Australian Quarantine and Inspection Service (AQIS). ACBPS may examine the food to ensure that it does not contain illicit drugs or other prohibited items. As explained above,


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currently, where ACBPS suspects that goods, including foods, contain an illicit drug, it will detain them and investigate further. This process is separate from the examination by the Department of Agriculture for compliance with relevant standards, and may occur even if the food is exempt from such an examination. If the food contains an illicit drug, the ACBPS will seize it. If it does not, and it meets the requirements for the personal use exemption in the Imported Food Act, then it will be passed to AQIS, to ensure that it complies with relevant quarantine requirements.

As outlined above, under the proposed import ban, an ACBPS officer will be able to formally seize a substance that he or she would have released under the current arrangements, where he or she has a reasonable suspicion that the substance is psychoactive and that it does not have a legitimate use. A person whose goods have been detained may therefore need to provide additional information to demonstrate to ACBPS that the goods are a food and that they are being imported for personal consumption so that they can be released. This information could include an explanation of the purpose for the importation (eg. where the food cannot be obtained in Australia), the reasons why he or she requires the food for personal consumption (eg. if he or she has particular dietary requirements) or other information about the food itself (for example, its ingredients or history of consumption). This is information that the person would be required to provide under current arrangements, whether to demonstrate that the food was exempt from Department of Agriculture examination (for example, because it is imported for personal consumption) or to comply with quarantine requirements.

Consultation outcomesConsultation did not reveal any additional compliance costs. The Plastics and Chemical Industries Association (PACIA) noted the regulatory burden its members faced in importing chemicals and highlighted the importance of ensuring that the importation of chemicals with a legitimate use is not unduly delayed. It noted that the consultation RIS ‘recognises the costs and burdens to industry of regulation and appears to provide an option that would minimise this, yet obtain the control required.’35

Criminal justice impactsUnder the ban, it would be a criminal offence for a person to import a psychoactive substance that was otherwise unregulated. As with all criminal offences, the ban would have criminal justice impacts on individuals and businesses, border protection and law enforcement agencies and prosecution services and corrective services operators.

If a person or business does attempt to contravene the law, the ban may have significant impacts upon them. The person or business would be charged with an offence and prosecuted. They may incur legal fees in defending those charges. If they were found guilty of having committed the offence, the person or business may be given a fine, or the person sent to prison for a period of time.

Prosecution of a person will result in an increased workload for border protection and law enforcement agencies, who will investigate the alleged offence, and prosecutions services. Similarly,

35 Plastics and Chemical Industries Association (PACIA), Submission on New Psychoactive Substances Consultation Draft Regulation Statement, 2014.


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if a person is convicted of an offence and sent to prison, this will result in increased costs for corrective services operators.

These impacts should not be overstated. The primary purpose of the measure is precautionary, to stop as many NPS from entering the country as possible. However, criminal offences are necessary to give effect to the ban, and the Commonwealth will investigate and, where appropriate, prosecute individuals and companies importing substances in contravention of the ban.

Some factors will reduce the criminal justice impacts of the ban. First, as noted above, AGD does not expect that the ban will affect a large number of substances or importations. Further, AGD expects that the number of attempted imports of these substances will reduce. The ban will be a definitive statement that NPS are not legal. Importers will no longer be able to attempt to avoid illicit drug controls by tweaking the structure of NPS and there may be a reduction in the number of attempts to import these substances. Reduced importations of NPS will correspondingly reduce the number of potential investigations, charges, prosecutions and convictions for contraventions of the offence.

AGD also anticipates that the ban will have only a limited impact on the workload of border protection agencies. The ACBPS already detains NPS at the border on suspicion of being illicit drugs. The ban will clarify its power to seize these substances.

In these circumstances, the criminal justice impacts of the ban on individuals, businesses and governments will be minor.

Ability to circumvent the banAGD considers that it is possible that importers would attempt to circumvent an import ban on NPS by, for example, hiding NPS in legitimate goods. Successfully circumventing the ban would reduce its practical effect.

In the absence of comprehensive and reliable data about demand for, and use of, NPS, it is not possible to make an assessment of the number of people who may continue to desire NPS even after they have been banned. It is therefore not possible to estimate the number of people who will attempt to import NPS by hiding these substances in legitimate goods. However, based on experience with respect to other illicit drugs, it must be assumed that at least some people will attempt to circumvent the ban.

For a number of reasons, the impact of attempts to circumvent the ban are likely to be very low. First, the ACBPS and the AFP have significant experience in finding goods that hide illicit commodities, including illicit drugs. These officers will use similar skills, expertise and information to stop and seize suspicious substances, even where they may appear to be a legitimate good. Secondly, as outlined previously, AGD expects that clarifying that NPS are illegal is likely to reduce demand for them. Reduced demand will similarly reduce the number of people who will attempt to circumvent the ban.

Finally, AGD notes that complementary State and Territory measures will be important in ensuring that, even if a person does successfully import an NPS, it cannot legally be sold, supplied or


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advertised. This will improve the effectiveness of the ban: NPS that are hidden in a product with a legitimate use cannot later be legally converted and sold as an alternative to an illicit drug.

Effect of the ban

Overall, the lack of definite and reliable evidence about the use of NPS and their health effects means that it is not possible to assess the overall net benefit of an import ban by weighing its costs and benefits. However, AGD considers that it is likely to result in some supply- and demand-side impacts by curtailing the distribution of NPS and by clearly reinforcing public awareness of the potential health risks associated with their use. These impacts will likely assist in reducing availability and consumption of NPS and reducing the number of people who die or are seriously injured as a result of consuming them.

It also seems clear that there will be some costs associated with an import ban. These include impacts upon:

individuals who use or supply NPS businesses which profit from the distribution, wholesale or retail sale of NPS individuals and businesses which may now need to demonstrate the legitimate purpose of a

substance they wish to import, and border protection and law enforcement agencies, prosecution services and corrective

services operators which may have small increases in workloads.

To the extent it is possible to weigh these costs and benefits, AGD notes that limited information to quantify the health and other impacts of the ban is not, in itself, a complete argument against imposing it. As outlined above, this limited data must be considered in light of:

recent reports about deaths and serious harm following NPS consumption evidence from New Zealand about ongoing harm from the consumption of psychoactive

products the potential for unknown, untested but toxic substances to be supplied for human

consumption, and AGD’s experience that NPS are typically listed as illicit drugs once information about their

harms and effects becomes available.

While it is not possible to state that an import ban has a net benefit, AGD considers that it is unacceptable for businesses and individuals to continue to profit from the sale of substances that, while largely unknown, have been frequently linked with death and serious injury. The evolving nature of the NPS market, and the fact that the ACC has assessed it as having the potential for growth,36 suggests that a precautionary approach may be justified and would assist in preventing the further growth of the market. In this context, AGD considers that an import ban is likely to have a benefit, though it is not possible to quantify this.

36 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 157, 158.


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Regulatory Burden and Cost Offset (RBCO) Estimate

Any regulatory costs that the ban on the importation of NPS will impose on businesses, not-for-profit entities or individuals are excluded from the RBCO calculation. Consultation did not reveal any additional regulatory costs that should be included in the RBCO calculation.

As noted above, the measure will not increase the number of goods or substances that the ACBPS detains at the border on suspicion of being an illicit drug. It will only allow the ACBPS to seize those substances that it reasonably suspects are psychoactive. The measure will not, therefore, increase the regulatory burden on businesses, not-for-profit entities or individuals who import goods in compliance with existing regulatory regimes.

The regulatory costs involved in disputing a seizure will fall outside the RBCO. To be successful in disputing the seizure, the importer will have to show that the substance in fact had a legitimate use and was regulated under another scheme. In this case, the regulatory costs involved will be the business-as-usual costs involved in complying with that scheme. These are excluded from calculation.

If the importer is unsuccessful in disputing the seizure, the regulatory costs involved will be costs of non-compliance with the ban on the importation of psychoactive substances. These are also excluded from calculation.

Importers will not be required to fill out any documentation in order to comply with the import ban. However, they may be required to fill out forms in order to comply with existing regulatory regimes. Again, these costs are excluded from calculation.


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Regulatory Burden and Cost Offset (RBCO) Estimate Table

Average Annual Compliance Costs (from Business as usual)

Costs ($m) Business Community Organisations

Individuals Total Cost

Total by Sector $0 $0 $0 $0

Cost offset ($m) Business Community Organisations

Individuals Total by Source

Agency $0 $0 $0 $0

Within portfolio $0 $0 $0 $0

Outside portfolio $0 $0 $0 $0

Total by Sector $0 $0 $0 $0

Proposal is cost neutral? yes no

Proposal is deregulatory yes no

Balance of cost offsets $0

Consultation

AGD has consulted extensively throughout government in developing the measure, including with Health and the ACBPS. It has also consulted with regulatory agencies whose regimes may be affected by the proposed import ban.

AGD issued a version of this RIS for public consultation on 6 May 2014. AGD sent the RIS to specific stakeholders and placed the RIS on its website. Comments were open until 16 May 2014, though AGD considered comments received until 22 May 2014.

AGD received six submissions in response to the RIS. Three submissions broadly supported the introduction of an import ban.37 The other three submissions broadly supported the investigation of a pre-market assessment scheme.38 AGD thanks the individuals and organisations who made submissions on the RIS for their detailed and considered comments.

PACIA noted the importance of ensuring that the import ban would not unduly delay the importation of substances with a legitimate use.39 The Pharmacy Guild of Australia also noted that cannabinoids for use in medical research and treatment should be excluded from the ban.40

37 Those from PACIA, the Pharmacy Guild of Australia and the Happy Herb Company.38 Those from ADLRF, the Eros Association and Name Withheld.39 PACIA submission.40 Pharmacy Guild of Australia, New Psychoactive Substances: Consultation Draft Regulation Impact Statement – Guild Response, 2014.


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As set out above, AGD will ensure that the ban does not affect substances which are currently able to be imported in accordance with existing regulatory schemes. It will also not prevent new substances, or substances with new uses, from being assessed and imported in accordance with those schemes.

Submissions in favour of a pre-market assessment scheme focussed on the perceived failure of policies that prohibited drugs at Commonwealth, State, Territory and international levels.41 They criticised the proposed import ban on the basis that it continued these policies and was unlikely to succeed in reducing the health impact of NPS.42 In essence, they argued that the proposed ban would drive NPS use underground.

As set out above, AGD acknowledges that there is some potential for an import ban to displace users into purchasing psychoactive substances (whether NPS or more established illicit drugs) on the black market. However, the import ban will also carry a number of disincentives for people to purchase NPS in the first place. It will ensure that these substances cannot be presented as legal, with the implication that they have been assessed as low risk. The ban will also improve ACBPS officers’ ability to seize these substances at the border and prevent their entry into the country. Further, the prospect of prosecution and criminal penalties will discourage casual users from attempting to purchase and import NPS.

These submitters also noted that the risk of harm involved in a range of legal activities, including drinking alcohol, smoking tobacco and racing cars, was well known but that they were permitted, with certain restrictions.43 They noted that the harms of NPS were not well known, and that the RIS did not contain significant information about them.44 Consequently, these submissions argued that there was insufficient evidence to justify imposing an import ban on NPS, and their sale, manufacture and importation should be regulated. 45

As set out above, AGD acknowledges that data on the scale of the NPS problem is limited. In part, this is because of the very nature of NPS: by definition they are new and uncontrolled. That there is limited data is not of itself a reason to pursue one approach or another, particularly where there have been a number of reports of deaths and significant harm following NPS use. In this regard, AGD notes that the RIS considers the impact of a number of policies on reducing the potential harms from a diverse and rapidly expanding range of substances that are imported for human consumption and which are often unknown, untested and pharmacologically potent. The RIS does not seek to revisit and justify the current approach to illicit drugs.

Conclusion

While NPS are not currently as great a societal or public health problem as other illicit drugs, the problems posed by the importation, sale and distribution of unknown chemical compounds which

41 ADLRF submission, p. 2; Eros Association, p. 1; Name Withheld, Comment on Regulation Impact Statement: banning the importation of substances which mimic the effects of illicit drugs, 2014.42 ADLRF submission, pp. 2-5; p. 9.43 ADLRF submission, p. 3; Eros Association submission, p. 12; Name Withheld submission.44 ADLRF submission, p. 2; Eros Association submission, p. 12.45 ADLRF submission, pp. 2-5; Eros Association submission, pp. 12-13.


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masquerade as illicit drugs are not insignificant. There is clear potential for the NPS market to grow,46 which would only exacerbate existing public health issues.

AGD considers that there are good reasons for the Government to take precautionary action to tackle NPS and prevent the market from growing, as governments have done in a number of other countries. While AGD acknowledges the lack of comprehensive data about the potential effects and benefits of an import ban on psychoactive substances without a legitimate use, it considers that such a ban is likely to be effective in reducing the public health impacts of NPS.

However, principle 1 of the Australian Government’s Guide to Regulation (Guide) requires policy makers to recommend the option with the greatest demonstrated net benefit.

AGD anticipates that introducing legislation banning the importation of otherwise unregulated psychoactive substances will have a direct impact on the ability of retailers to source and supply NPS. AGD notes that this import ban is not intended to replace existing mechanisms to progressively ban dangerous substances under the Criminal Code. It will supplement those mechanisms by allowing authorities time to assess the risk posed by new substances as they appear, without those substances being readily available for purchase and consumption. However, in the absence of comprehensive data about the likely health benefits, potential displacement effects and impacts on businesses, community organisations and users, AGD is unable to demonstrate, to the level required by the Guide, that this option has a net benefit. Similarly, it cannot demonstrate the overall net benefit of exploring a pre-market assessment scheme. While a pre-market assessment scheme may ultimately reduce some of the harm associated with NPS use, it is contrary to the Government’s approach to NPS. The process for exploring the scheme further, setting it up and implementing a new regulatory regime would also be extremely lengthy. During this time, the status quo would continue. Untested and unsafe products will continue to be presented as legal alternatives to illicit drugs and they will continue to cause harm to individuals and the community. AGD therefore remains of the view that exploring such a scheme would not be a viable option.

Further, options of an education campaign about the dangers of NPS or continuing the current practice of banning substances based on their chemical structure are unlikely to be, on their own, sufficiently effective in reducing the health impacts of NPS.

In these circumstances, AGD is unable to demonstrate, to the standard required by the Guide, that any of the options explored above has the greatest net benefit. In such a situation, the Guide requires that no recommendation be made for regulatory change.

Notwithstanding that no recommendation for regulatory change can be made in accordance with the Guide, the Government may still choose to intervene to reduce NPS use by imposing a ban on their importation.

An import ban on psychoactive substances without a legitimate use is likely to be a small but important step in reducing the number of people who are harmed, directly or indirectly, from using unsafe, untested and dangerous substances which masquerade as legal or legitimate alternatives to listed illicit drugs. As the active ingredients for the substances are imported into Australia from 46 Australian Crime Commission, Illicit Drug Data Report 2012-13, p 157, 158.


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manufacturers overseas, an import ban is a vital part of preventing their sale and distribution, allowing ACBPS officers to seize them at the border and to prosecute offenders where appropriate.

Banning the importation of psychoactive substances without a legitimate use will also send a message about the dangers associated with their use. That these compounds are currently being sold, over the internet and from domestic businesses, as ‘legal’ alternatives to listed illicit drugs suggests that they are somehow safe, even where their potential harms are completely unknown, or where the media has reported the death or serious injury associated with taking them. This representation has the potential to cause, and has in fact caused, great harm to members of the public who purchase NPS in the belief that ‘legality’ implies the substance has been tested and assessed as safe and appropriate for sale.

While there is limited data to quantify the precise health benefits that would flow from an import ban, AGD considers that the probable benefits flowing from reduced supply and consumption of NPS would be likely to outweigh the commercial interests of businesses which sell these substances. As noted above, NPS currently exist at the fringes of legality. Their consumption has been linked to deaths and serious injury. They mimic the effects of illicit drugs but have been designed to get around existing controls on those drugs. Several NPS, such as 4-methylmethcathinone, benzylpiperazine and a range of synthetic cannabinoids, have been prohibited under the Criminal Code and SUSMP as evidence about the harms and dangers associated with their use became available.

The ban will also enhance the Commonwealth’s ability to list new, harmful substances as they emerge. It will clarify ACBPS officers’ ability to seize substances they suspect are illicit drugs, improving law enforcement and health agencies’ understanding of the NPS market, their ability to assess the harms associated with the use of specific substances and the Commonwealth’s ability to institute appropriate controls on those substances. Improved information about NPS will also assist in the review of the outcomes and effectiveness of the measure. AGD and the ACBPS propose to conduct this review after two years of the operation of the import ban. Further detail is set out below in the implementation section of the RIS.

While banning the importation of NPS into Australia is one part of reducing the health effects associated with their use, it is not a complete answer to the challenges posed by NPS. It is unlikely that a ban would be fully effective in reducing supply unless it is accompanied by complementary measures from States and Territories to ban the manufacture, supply and advertisement of NPS. New South Wales, Queensland and South Australia have all recently implemented such bans. It will also require concerted and coordinated effort from health and law enforcement agencies across the Commonwealth and States and Territories to implement effective measures to reduce both supply and demand for these substances.

Implementation, decision making and review

Should Government choose to continue the status quo there would be no implementation requirements.


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Should Government consider it be appropriate to intervene to reduce NPS use and implement the measure to ban the importation of NPS, this would require legislative and administrative change.

The ACBPS would be required to implement appropriate administrative procedures to ensure that the import ban functions as intended. It will liaise with its partners at the border, including the AFP and regulatory agencies, to develop and implement guidelines and training about the import ban. These guidelines and training will ensure that officers only seize appropriate substances and do not disrupt legitimate trade flows.

If the ban is implemented, AGD and ACBPS would review its operation after two years. This review would consider the effectiveness of the ban and its impact on the importation of substances for legitimate purposes, including whether the ban is appropriately targeted and the adequacy of the exemption categories and review mechanisms.


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