Govt Unveils Major Hemp Regulation Reform to Cut Red Tape and Boost Industry

Speaking on the reforms, Seymour said New Zealand’s hemp sector has long faced unnecessary barriers that stifled investment, innovation, and competitiveness.

Regulation Minister David Seymour has announced a sweeping overhaul of New Zealand’s industrial hemp regulations, signalling what he calls the end of decades of “heavy-handed, outdated rules” that treated low-risk hemp cultivation as though it were high-risk drug activity.

Speaking on the reforms, Seymour said New Zealand’s hemp sector has long faced unnecessary barriers that stifled investment, innovation, and competitiveness. “New Zealand’s hemp industry has been treated like a criminal for too long,” he said. “These changes replace an absurdly restrictive regime with a practical, proportionate approach that reflects the low-risk nature of industrial hemp.”

A New Regulatory Framework

Cabinet has approved a package of reforms that will scrap the requirement for hemp growers to obtain a licence, replacing it with a streamlined system designed to reduce compliance costs and encourage business expansion. The reforms are expected to generate $7.5 million in net present value (NPV) over 10 years, with long-term benefits projected to reach $41 million over 20 years as the sector grows.

“This is a win for innovation and investment,” Seymour said. “Red tape for the sake of it costs growers money. Removing it gives certainty to farmers, manufacturers, and investors who see real potential in New Zealand’s hemp industry.”

The announcement is part of a broader government initiative to improve regulatory quality. Seymour noted that peer-reviewed analysis shows the Ministry for Regulation’s work over its first 18 months is projected to deliver between $223 million and $337 million in net public benefit—a return he says dwarfs its operational spending.

Why Change Was Needed

Industrial hemp contains very low levels of THC—the psychoactive component of cannabis—and is used for food, oils, fibre, animal bedding, health supplements, and sustainable bioproducts. Despite this, it has faced nearly two decades of strict controls inherited from policies designed for high-THC cannabis.

Seymour described this as “absurd,” arguing that outdated rules prevented growers from competing globally in a fast-expanding industry. He also reiterated his long-standing view that regulatory decisions should undergo more robust scrutiny, which is why he is advancing the Regulatory Standards Act to require clearer evidence, transparency, and accountability in the law-making process.

Key Changes Under the New System

Under the new regulatory settings:

• No licence will be required to grow or handle industrial hemp.

• A firm THC threshold of below 1% will define legal hemp, aligning with international norms.

• Hemp biomass, including flowers and leaves, may be supplied to licensed medicinal cannabis producers under strict conditions.

• Growers must notify Police and MPI before planting to ensure enforcement agencies can distinguish legal crops from illicit cannabis operations.

• Hemp products will remain restricted to fibre, seed, and oil, except where supply is authorised for medicinal cannabis manufacturing.

• All existing food safety and medicinal cannabis regulations will continue to apply.

• Safeguards will be built into the new framework to prevent misuse and maintain public confidence.

The Ministry of Health, working with the Parliamentary Counsel Office, will now begin drafting the detailed regulatory provisions needed to implement the reforms.

A Step Toward Smarter, Fairer Regulation

Seymour framed the reforms as part of a broader drive to eliminate poor-quality regulation and increase public oversight.

“In a high-cost economy, regulation is not neutral—it’s a tax on growth,” he said. “Bad regulations have real consequences for real people. With the Regulatory Standards Act, New Zealanders will have visibility into how political decisions are made and whose advice shapes them. If people don’t like what they see, they can hold decision-makers accountable at the ballot box.”

He said the hemp reforms are a clear example of how outdated rules can suppress industry potential, and how smarter regulation can unlock economic opportunities while protecting public safety.