NSW Hemp Leaders Highlight Regulatory Overlap at Senate Inquiry

Senate Inquiry Hears Industry Testimony on Regulatory Fragmentation

NSW hemp producers and processors told senators that Australia's patchwork regulatory framework imposes duplicative licensing costs and unpredictable enforcement. The inquiry, part of a broader review of agricultural hemp policy, heard from multiple industry representatives on May 27.

Witnesses described scenarios where hemp crops compliant under NSW Agriculture rules face federal TGA scrutiny if processed products cross state lines. One grower cited a shipment detained at the Queensland border. NSW's 1.0% total THC threshold exceeded Queensland's 0.3% delta-9 THC standard.

Conflicting THC Thresholds Create Interstate Trade Barriers

Australia's states apply different THC measurement standards — some using total THC, others delta-9 THC only — creating legal uncertainty for hemp farmers shipping across borders. NSW permits up to 1.0% total THC in field crops, while Queensland and Victoria enforce a 0.3% delta-9 limit aligned with U.S. federal standards.

Industry representatives said the lack of a uniform national standard forces producers to test every batch multiple times using different methodologies. Testing costs range from AUD $150 to $400 per sample depending on the cannabinoid panel required.

The delta-9-versus-total-THC distinction matters because THCA, the non-intoxicating precursor to delta-9 THC, converts to delta-9 when heated. A hemp flower testing at 0.25% delta-9 THC and 0.8% THCA would pass NSW's total-THC test (1.05% after conversion) but fail under a strict delta-9 standard.

Federal TGA Authority Overlaps with State Agriculture Licensing

Hemp producers must navigate dual licensing regimes: state agriculture permits for cultivation and federal TGA oversight for any product marketed with therapeutic claims. Witnesses said this split jurisdiction creates gray zones where neither agency provides clear guidance.

One processor described applying for a NSW hemp food license, a federal TGA low-THC exemption, and a separate export permit from the Department of Agriculture, Fisheries and Forestry. Three overlapping approvals for the same CBD oil product. Total application fees exceeded AUD $8,000 with a combined processing time of nine months.

Enforcement Inconsistency Across State Lines

Industry leaders cited cases where identical hemp products face different enforcement actions depending on the state of sale. A CBD topical legal in NSW was seized by South Australian health inspectors under an unapproved-therapeutic-goods provision, despite carrying no medical claims on its label.

Enforcement varies not just by state but by individual inspector interpretation, the inquiry heard. One company received conflicting guidance from two TGA officers on whether a hemp seed protein powder required a therapeutic goods license.

Industry Calls for National Harmonization Framework

Witnesses urged the Senate to adopt a uniform national THC standard and clarify jurisdictional boundaries between state and federal regulators. Proposed reforms include:

• A single Australia-wide THC threshold (either 0.3% delta-9 or 1.0% total THC) for all hemp crops and products
• Mutual recognition of state hemp licenses for interstate commerce
• Clear TGA exemption thresholds for low-THC hemp extracts sold as foods or cosmetics
• Centralized testing protocols to eliminate conflicting lab results

Industry groups estimate that regulatory harmonization could reduce compliance costs by 40% and unlock AUD $200 million in interstate trade currently constrained by legal uncertainty.

Economic Impact of Regulatory Fragmentation

Hemp sector representatives told senators that regulatory overlap depresses investment and limits export competitiveness. Australia's hemp industry generated approximately AUD $50 million in revenue in 2025, but growth has stalled as investors cite regulatory risk.

One NSW processor said his company declined a AUD $2 million expansion because the regulatory pathway for a new hemp-derived ingredient remained unclear after 18 months of agency consultations. Another witness noted that Canadian and European hemp producers operate under clearer national frameworks, giving them a competitive edge in Asian export markets.

What Happens Next

The Senate inquiry will compile testimony and issue recommendations by August 2026, but legislative action depends on federal-state coordination through the Council of Australian Governments. Previous attempts at hemp harmonization stalled in 2023 when states disagreed on THC thresholds.

For full background on this story, see the CannIntel topic hub on Australia Hemp Regulation.

We'll be watching whether the inquiry's final report includes binding recommendations or non-binding guidance. Binding recommendations would require state legislatures to amend agriculture acts, a process that typically takes 12-24 months. Non-binding guidance has historically produced limited state-level action.