House of Assembly Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia House of Assembly published Bills Hydroponics Industry Control Bill HYDROPONICS INDUSTRY CONTROL BILL Introduction and First Reading Introduction and First Reading The Hon. M.J. WRIGHT House of Assembly Lee Minister for Police Minister for Emergency Services Minister for Recreation The Hon. M.J. WRIGHT (Lee—Minister for Police, Minister for Emergency Services, Minister for Recreation, Sport and Racing) (12:02): Obtained leave and introduced a bill for an act to prevent criminal infiltration of the hydroponics industry; to prevent the misapplication of certain types of hydroponic equipment by monitoring its sale and supply; and for other purposes. Read a first time. Second Reading Second Reading The Hon. M.J. WRIGHT House of Assembly Lee Minister for Police Minister for Emergency Services Minister for Recreation The Hon. M.J. WRIGHT (Lee—Minister for Police, Minister for Emergency Services, Minister for Recreation, Sport and Racing) (12:02): I move: That this bill be now read a second time. I seek leave to have the explanation of the clauses inserted in Hansard without my reading it. Leave granted. In its election promises for the 2006 election, the Government dealt with hydroponics cannabis in its tough-on-drugs policy. In that policy it pledged to make it an offence to possess hydroponics equipment without lawful excuse and also to require hydroponics equipment retailers to maintain a record of sales of the equipment including promising legislation to require customers to provide identification when purchasing such equipment. In November 2004, in the first instance the Ministerial Council on Drug Strategy agreed to develop a National Cannabis Strategy. The Strategy was endorsed by the Ministerial Council on Drug Strategy in May 2006. The strategy made it a priority action to assess the feasibility of the regulation of the sale of hydroponics equipment, similar to regulation of the liquor and second-hand dealer industries whereby businesses selling hydroponics equipment need to register on a police-controlled database, business owners must be judged to be of good character and the identification details of purchasers need to be recorded. Cannabis is the most widely used illicit drug in Australia. In developing the National Cannabis Strategy 2006-09, the Ministerial Council on Drug Strategy identified that 5.5 million people over the age of 14 have tried cannabis at least once. It further recognised that personal use of cannabis is not quarantined from the larger criminal economy and through purchasing cannabis the user may, without knowing, be funding organised crime. The 2006-07 Australian Crime Commission Illicit Drug Data Report indicates that approximately 69 percent of all drug arrests in Australia relate to cannabis. Cannabis plays a significant role in the financial base of organised crime in this State and intelligence indicates that South Australian has the largest rate of production nationally with a number of cannabis networks trafficking hydroponically grown cannabis to the eastern states of Australia. Recent trends identified by SAPOL indicate an organised syndicate approach to the commercial production and trafficking of cannabis, with growers of a small number of plants being part of a larger network that cultivates and distributes cannabis. Not limited to OMCG's, organised crime is believed to be highly involved in the hydroponic cannabis industry, particularly through hydroponic equipment supply and the organisation of syndicate growers. SAPOL has identified that certain pieces of hydroponics equipment being sold by hydroponics dealers are being used for the cultivation of cannabis. Further to this SAPOL has found that some persons working within the hydroponics industry are associated with organised criminal networks formed to produce and distribute cannabis. Legislative reform is required to regulate the hydroponics industry including the sale of prescribed equipment listed in the Controlled Substances (General) Regulations 2000. The purpose of the Hydroponics Industry Control Bill 2009 is to prevent criminal infiltration of the hydroponics industry and the misapplication of certain types of hydroponics equipment by monitoring its sale and supply. The Bill is part of a series of measures implemented by the Government designed to reduce the impact of drugs on the South Australian community. The aim of the proposal is the regulation of certain aspects of the hydroponics industry and the disruption of the hydroponics cultivation of cannabis. This is consistent with Objective 2 of the State's Strategic Plan—Objective 2, Improving Wellbeing and the aim of the South Australian Drug Strategy 2005-2010, which is to 'improve the health and well being of all South Australians by preventing the use of illicit drugs and the misuse of licit drugs'. A key area of the Strategy is to reduce the supply of drugs through strategies that will reduce the availability and supply of illegal drugs. The Bill, an Australian first, will support Police to combat drug-related crime. The Bill consists of two components, the first being the requirement to have a licence to operate certain hydroponics businesses and the second component relates to the sale of the prescribed equipment. Licensing The Bill provides for the introduction of two levels of regulation of people working in the industry. There will be a requirement for a person to be licensed to carry on the business of a hydroponics equipment dealer as a retailer. A hydroponics equipment dealer will relate to the sale of prescribed equipment. While the prescribed equipment will be declared in regulations it is expected to include the following: metal halide lights, high pressure sodium lights and mercury vapour lights of 400 watts or greater; ballast boxes; devices (including control gear, lamp mounts and reflectors) designed to amplify light or heat; carbon filters designed to filter air within a room, or from 1 area of a building to another or to outside; cannabis bud or head strippers; units designed to contain plants and rotate around a light source so that the plants grow hydroponically while being exposed to a consistent degree of light or heat or both. In December 2007, a Bill was passed in Parliament to amend the Controlled Substances Act to include the offence of possessing prescribed equipment without reasonable excuse. These new laws commenced in October 2008 in regard to the possession of items closely linked with illegal drug making and cultivation. A person, an organisation or business needs to provide a legitimate reason for having the prescribed items of equipment. The prescribed items of equipment are the same items of prescribed equipment in the Hydroponics Industry Control Bill 2009. The Minister has the ability to grant exemptions to the Act. This is particularly pertinent as some prescribed equipment have legitimate uses not related to the hydroponics industry, such as in the lighting industry. It will be in these cases that the Minister may consider granting exemptions. The second level of regulation applies to the employees. In this regard, an employee will be required to obtain an approval to work as a hydroponics industry employee. An employee may receive a temporary approval to work in the industry while waiting for his or her application to be processed. The Bill requires, before a licence or approval can be issued or renewed, both dealers and employees to undergo a fit and proper person test, similar to that used in other licensed industries. Furthermore the Bill requires that the Commissioner of Police must not issue or renew a licence or approval to an applicant that has been found guilty of a prescribed offence within the 5 years immediately preceding the application or who is a subject to a control order. Applicants will have to submit photographs and be subject to fingerprinting as part of the fit and proper person test. The fit and proper person test will have further regard to the reputation, honesty and integrity of the person and that of any associates. When working within the industry, licence holders, directors of licence holders that are bodies corporate and employees will be required to carry identification. This is designed to ensure that licensed or approved personnel can readily be identified. The Bill provides for the right of appeal by any applicant. If the applicant is dissatisfied with the decision of the Commissioner he/she may appeal to the Administrative and Disciplinary Division of the District Court within one month of the decision being made. Sale of prescribed equipment The Bill requires that a person must not sell prescribed equipment to another person unless the purchaser first produces identification that complies with the regulations. A significant part of the legislation is to obtain accurate records of persons in the community purchasing the prescribed equipment. This can only be achieved by ensuring that the purchasers provide identification at the time of sale. The licence holder will be required to maintain records for every transaction involving prescribed equipment, with the information being transferred to the Commissioner of Police by way of an online transaction monitoring system. The information will include, but is not limited to, the time, date and location of sale, details of the equipment, details of the person who facilitated the sale, and details of the purchaser including details of the identification produced. The Commissioner will require transaction information to be transferred within a time frame yet to be determined. The timeframe will ensure SAPOL receives the information in a timely manner to investigate any irregularities or associate the information with other SAPOL lines of enquiry. The Bill gives authorised officers authority to enter any premises, place or vehicle that they reasonably suspect is used for carrying on a business of selling prescribed equipment by retail and use such force as is reasonably necessary. Authorised officers may inspect records and may also be accompanied by such assistants as reasonably required. The police previously have had no authority to enter a hydroponics business and do such things. Conclusion The Hydroponics Industry Control Bill 2009 provides for the regulation of specialised hydroponics stores as opposed to businesses that either provide the equipment for other purposes or primarily for other functions. The licensing component will impact mainly on businesses where there are persons with certain criminal records or associate with certain types of persons. In these cases, persons will be unlikely to obtain a hydroponics dealers licence or receive an approval to work in the industry. The licensing component will have little impact on business owners with no criminal record or criminal associations. The requirement to keep and transfer to police records of all transactions of prescribed equipment will assist the police to investigate the mass manufacture and distribution of hydroponically cultivated cannabis in South Australia. I commend the Bill to Members. Explanation of Clauses Explanation of Clauses Part 1—Preliminary 1—Short title 2—Commencement These clauses are formal. 3—Interpretation This clause defines terms used in the measure. In particular it defines what prescribed equipment is, and provides that the 'Commissioner' referred to in the measure is the Commissioner of Police. 4—Carrying on business of selling prescribed equipment by retail This clause provides that a person will be taken to be carrying on the business of selling prescribed equipment by retail if the person— (a)	sells prescribed equipment by retail on not less than 6 days in any calendar year; or (b)	sells prescribed equipment by retail with a total wholesale value exceeding an amount prescribed by the regulations for the purposes of this paragraph; or (c)	sells prescribed equipment in the circumstances prescribed by the regulations for the purposes of this paragraph. By carrying on the business of selling prescribed equipment by retail, the person's activities are brought under the operation of the measure. Similarly, proposed subsection (2) provides that, if a defendant in proceedings was a licence holder and had possession of prescribed equipment, then he or she will (unless he or she proves otherwise) be taken to have the prescribed equipment for the purposes of sale in the course of his or her business of selling prescribed equipment by retail, and thus any transactions involving the equipment become subject to the measure. 5—Commissioner subject to control and direction of Minister This clause provides that the Commissioner is, for the purposes of this Act, subject to the control and direction of the Minister (however a direction under the measure is not a direction for the purposes of section 8 of the Police Act 1998, which requires directions to be published in the Gazette and reported to Parliament). 6—Delegation This clause provides that the Commissioner may delegate a power or function under the measure to a police officer of the rank of inspector or higher, other than the power to classify information as criminal intelligence, which may only be delegated to a Deputy or Assistant Commissioner. This provision is a restriction on the general power of delegation found under section 19 of the Police Act 1998. 7—Criminal intelligence This clause provides for how information that has been classified as criminal intelligence by the Commissioner of Police may be used or disclosed etc in respect of the measure. 8—Non-derogation This clause provides that the provisions of this measure are in addition to, and do not derogate from, the provisions of any other Act. 9—Exemptions This clause provides that the Minister may exempt a specified person or class of persons, or specified prescribed equipment, from the operation of the measure, or specified provisions of it. However, the Minister must consult with the Commissioner before doing so. Part 2—Licences and approvals Division 1—Hydroponic equipment dealer's licence 10—Requirement for licence This clause makes it an offence for a person to carry on the business of selling prescribed equipment by retail (or hold themself out as doing so) without a hydroponic dealer's licence. The maximum penalty for a contravention of the proposed section is a fine of $20,000. 11—Hydroponic equipment dealer's licence This clause sets out how a person can obtain a hydroponic dealer's licence. The clause requires the Commissioner to be satisfied that the applicant, or each director of the applicant, is a fit and proper person to hold such a licence. The clause also sets out circumstances in which the Commissioner must refuse a license application. A licence may be conditional: a licence holder who contravenes or fails to comply with a condition of his or her licence is guilty of an offence, the maximum penalty for which is a fine of $20,000. The clause also makes procedural provisions related to a licence and any application. 12—Commissioner may require fingerprints This clause permits the Commissioner to require an applicant, and each director of an applicant in the case of a body corporate, to have his or her fingerprints taken to aid the Commissioner in determining the licence application. The clause provides that the Commissioner need not consider an application until the applicant has met the requirement and the results of checking the fingerprints against the relevant databases have been provided. 13—Suspension or revocation of licence This clause provides that the Commissioner may, by notice in writing given to a licence holder, suspend or revoke the person's licence on the grounds set out in the clause. They include a contravention of the Act by the person, that he or she is not a fit and proper person to hold a licence or that the suspension or revocation is in the public interest. 14—Change of information relating to licence This clause requires a licence holder to notify the Commissioner, in writing, of any change in the information supplied to the Commissioner in the person's licence application. The maximum penalty for a contravention of the proposed section is a fine of $2,500. Division 2—Approval of hydroponics industry employees 15—Requirement for approval This clause makes it an offence for a person to carry out certain duties (to be prescribed by the regulations) in relation to the sale of prescribed equipment by retail unless he or she is approved as a hydroponics industry employee. The maximum penalty for a contravention of the proposed section is a fine of $20,000. However, this prohibition does not apply to a licence holder, or a director of a licence holder who is a body corporate that was identified in the application for the licence. Subclause (3) further provides that, if a person does contravene proposed subsection (1), then any employer of the person in respect of the sale of prescribed equipment, and the relevant licence holder, are each guilty of an offence carrying the same maximum penalty of $20,000. However, it is a defence to a charge if the employer or licence holder proves that he or she believed on reasonable grounds that the person was in fact approved as a hydroponics industry employee at the relevant time. 16—Temporary approval on application This clause enables a person who has lodged an application for approval as a hydroponics industry employee to carry out prescribed duties without it being a contravention of proposed section 17. However, this temporary approval does not apply in the case of a person previously refused approval, or has had his or her approval revoked, nor to a person who must be refused approval under section 17(4) (other than a refusal on public interest grounds). 17—Commissioner may approve hydroponics industry employees This clause sets out how a person can obtain approval as a hydroponics industry employee. The clause requires the Commissioner to be satisfied that the applicant is a fit and proper person to be approved. The clause also sets out circumstances in which the Commissioner must refuse a license application, essentially the same grounds as for refusal of a licence. Approval may be conditional, and a person who contravenes or fails to comply with a condition of his or her approval is guilty of an offence, the maximum penalty for which is a fine of $20,000. The clause also makes procedural provisions related to an approval and any application. 18—Commissioner may require fingerprints This clause permits the Commissioner to require an applicant to have his or her fingerprints taken to aid the Commissioner in determining an application for approval. The clause provides that the Commissioner need not consider an application until the applicant has met the requirement and the results of checking the fingerprints against the relevant databases have been provided. 19—Revocation of approval This clause provides that the Commissioner may, by notice in writing given to an approved person, revoke the person's approval on the grounds set out in the clause. They include a contravention of the Act by the person, that he or she is not a fit and proper person to be approved or that the revocation is in the public interest. Division 3—Appeal 20—Appeal This clause provides that a person may appeal to the District Court if he or she is dissatisfied with a decision of the Commissioner, and sets out related procedural matters. Part 3—Sales of prescribed equipment Division 1—Identification 21—Purchaser must produce identification This clause requires a purchaser to produce identification that complies with any requirements set out in the regulations before he or she can be sold prescribed equipment. A person who sells prescribed equipment to a purchaser who has not produced identification is guilty of an offence, the maximum penalty for which is a fine of $20,000. 22—Identification cards This clause requires the Commissioner to provide identification cards to licence holders, directors of licence holders and approved persons. These cards must be carried by the person to whom it was issued in the circumstances set out in the proposed section, and the person must produce the card forthwith if requested to do so by an authorised officer. Contravention of either of these requirements is an offence, carrying a maximum fine of $2,500. Division 2—Record keeping 23—Records of prescribed transactions This clause requires a licence holder to keep certain information in relation to certain defined transactions involving prescribed equipment. The regulations will set out what the information is, and how it must be kept. Failure to keep the required information is an offence, carrying a maximum fine of $20,000. The information must also be transferred to the Commissioner; proposed subsection (4) provides that the regulations may require that such transfer be effected electronically. 24—Staffing records This clause requires a licence holder to keep certain information (to be set out in the regulations) in relation to the licence holder's staff. The maximum penalty for a contravention of the proposed section is a fine of $2,500. Part 4—Enforcement 25—Authorised officers This clause enables the Minister to authorise a person to be an authorised officer for the purposes of the measure. 26—Powers of entry and inspection This clause sets out the powers of authorised officers in respect of entering premises, places or vehicles and sets out the powers that may be exercised in relation to the premises etc. The clause makes procedural provisions in relation to obtaining a warrant (required when exercising the power of entry conferred by the proposed section in relation to residential premises), and establishes an offence of hindering an authorised officer or refusing or failing to comply with a requirement under the proposed section. 27—Commissioner may require information from wholesalers This clause enables the Commissioner to require a wholesaler of prescribed equipment to provide the Commissioner with specified information regarding the wholesale of the equipment to a retailer. The maximum penalty for a contravention of the proposed section without reasonable excuse is a fine of $5,000. Part 5—Miscellaneous 28—False or misleading information This clause provides that it is an offence for a person to make a statement that is false or misleading in a material particular in information provided, or records kept, under this measure. The maximum penalty for a contravention of the proposed section is a fine of $20,000. 29—Statutory declaration This clause enables the Commissioner to require that information required to be provided to him or her be verified by statutory declaration. 30—Liability for act or default of officer, employee or agent This clause provides a standard provision imposing vicarious liability for the acts of officers, employees or agents on a person carrying on a business. 31—Offences by bodies corporate This clause provides that, if a body corporate is guilty of an offence against this measure, each director of the body corporate is, subject to the general defence under this Part, guilty of an offence and liable to the same penalty as may be imposed for the principal offence. 32—Self-incrimination This clause provides that if a person is required to provide information or to produce a document, record or equipment under this measure and the information, document, record or equipment would tend to incriminate the person or make the person liable to a penalty, the person must nevertheless provide the information or produce the document, record or equipment. However, the information, document, record or equipment so provided or produced is not admissible in evidence against the person in proceedings for an offence, other than an offence against proposed Part 3 of this measure, or an offence against this measure or any other Act relating to the provision of false or misleading information. 33—General defence This clause provides that it is a defence to a charge of an offence against this measure if the defendant proves that the offence was not committed intentionally and did not result from any failure on the part of the defendant to take reasonable care to avoid the commission of the offence. 34—Annual report This clause requires the Commissioner to submit an annual report to the Minister, and a copy of the report to be laid before Parliament. 35—Service of documents This clause sets out how documents under the measure may be served on a person. 36—Evidentiary provision This clause provides that certain allegations in the complaint for an offence against this measure will be taken to be proved, in the absence of proof to the contrary. 37—Review of operation of Act This clause requires the Minister to conduct a review of the measure, as soon as practicable after the third anniversary of the measure commencing. The Minister must prepare a report on the review, and cause a copy of the report of the review to be laid before Parliament. 38—Regulations This clause allows regulations to be made under the measure. Schedule 1—Transitional provisions 1—Existing hydroponics businesses This Schedule makes transitional provisions, enabling a person who was carrying on the business of selling hydroponic equipment by retail before the measure commenced to— (a)	carry on the business of selling prescribed equipment by retail; and (b)	hold himself or herself out as carrying on such a business; and (c)	carry out prescribed duties (within the meaning of proposed section 15), in relation to the sale of prescribed equipment by retail, provided that they are not a person who must be refused a licence under proposed section 14(4)(a), (b) or (d). The effect of this provision is to enable them to continue to run their business until they are able to make the relevant applications under the measure, and have them determined. However, the person may only operate under this clause until their application for a licence is determined, or for 3 months, whichever occurs first. Debate adjourned on motion of Mr Venning.