Article 29

MANUFACTURE

Paragraph I

1. The Parties shall require that the manufacture of drugs be under licence except where such manufacture is carried out by a State enterprise or State enterprises.

Commentary

1. The meaning of the term "licence" as used in the Single Convention is not limited to a governmental permit designated "licence" or some similar name. 1 It refers to a written governmental authorization-whatever its name in the applicable municipal law-whose issuance is at least to some degree left to the discretion of the government department concerned, such discretion to be exercised for the purpose of carrying out the aims of the Convention. It is suggested that a permit which every person or national fulfilling the conditions required by law would automatically have a legal claim to would not be a "licence" within the meaning of article 29 and other provisions of the Single Convention, 2 although it may so be named in the national law or administrative practice in question.

2. Article 29 uses the term "licence" for two different kinds of government authorization: for the authorization to engage in the manufacture of drugs (paragraph 1), and for that to use a particular establishment or particular premises for this purpose (paragraph 2, subparagraph (b)).

3. Any State enterprise authorized to manufacture drugs is automatically "licensed" to do so as this term is used in the Single Convention, and therefore exempted from the formal requirement of a manufacturing licence.

4. The requirement of paragraph 1 that the manufacture of drugs should be carried out by a licensed enterprise or by a State enterprise applies not only to basic drugs and their salts, but in accordance with article 2, para graphs 3 and 4 also to preparations, including preparations in Schedule 111. It appears, however, to have been the understanding of the Plenipotentiary Conference that retail pharmacists and medical practitioners do not need a manufacturing licence under article 29, paragraph 1 for their compounding of preparations. 3 Such compounding may be considered to be a part of the process of sale, distribution, dispensation or administration of drugs and their preparations which retail pharmacists or medical practitioners are entitled to carry out. This view accords also with the common practice of Governments in executing the paragraph under consideration. 4

5. A manufacturing licence may be granted to an individual, to a partnership or to a corporate body. The licence must specifically allow the manufacture of narcotic drugs, and should indicate which drugs the licensee may make.

6. A general authorization to manufacture chemicals, or even one to manufacture all pharmaceuticals, would not be sufficient, but the licence issued under paragraph 1 need not be a separate document. A more general document authorizing other activities, e.g. the manufacture of chemicals or pharmaceuticals, but also specifically mentioning the narcotic drugs whose making is authorized, would fulfil the requirements of this paragraph. The authorization of the manufacture of particular drugs appears to be required in order to enable the Government to allocate to enterprises so authorized quotas from the amount of the drug in question which may be manufactured in the particular country or territory in the year concerned. 4

7. It is similarly submitted that not every State enterprise would be authorized under article 29, paragraph 1 to manufacture narcotic drugs, but only one to which the Government has assigned such manufacture, or which has a division which has been given that task by the Government. The assignment of the work to the State enterprise or its division should also refer to specific drugs in order to enable the Government, by allocation of quotas, to ensure that the amount of a particular drug which may be manufactured in its country or territory should not exceed the limit permitted by the Single Convention.

8. The competent Government department should also have wide discretion to revoke a manufacturing licence and to change its contents, in particular the conditions under which the manufacture of drugs is permitted. This discretionary power would, however, have to be limited to the extent necessary to facilitate the economical conduct of business by a law-abiding manufacturer. The administrative unit concerned should have a corresponding authority in respect of the manufacture of drugs by a State enterprise or division of a State enterprise.

9. By exercising its discretionary powers in issuing manufacturing licences or in arranging for manufacture by State enterprises or divisions of State enterprises, the Government is able:
(i) To ensure the high technical and moral standards of the management of drug factories required by article 34, paragraph (a);
(ii) To restrict, as required to facilitate control, the number of drug factories;
(iii) To obtain compliance with such conditions as are indicated in the licence, or in the Government's instructions to the State enterprise, regarding such matters as the quantities of the drugs concerned to be manufactured 4 and to be held in stock, 5 the kind of records to be maintained 6 and other details of business management; and finally also
(iv) To facilitate the administrative elimination of drug factories as may be advisable in the light of the requirements of effective drug control.

10. The need for restricting the number of factories which manufacture basic drugs and their salts was emphasized by the League of Nations Advisory Committee on Traffic in Opium and Other Dangerous Drugs, as well as by the United Nations Commission on Narcotic Drugs. At its nineteenth session in 1934, the Advisory Committee decided "to urge the manufacturing countries not to issue new licences to manufacture drugs if the factories at present existing in their respective countries have a manufacturing capacity sufficient for the needs of their domestic and export markets". 8 The decision was approved by the Council of the League. 9

11. At its eleventh session in 1956, the Commission on Narcotic Drugs unanimously adopted a resolution inviting Governments of countries where opium alkaloids are manufactured "to limit to the strictly necessary minimum the number of the firms in the country permitted to extract morphine from opium and to manufacture its salts and derivatives". 10

12. A limitation of the number of licences to manufacture basic drugs is also suggested by the need to facilitate adjustments in the manufacturing quotas, which because of changing conditions may become repeatedly neces sary during a given year in order to prevent excess manufacture during that year, in compliance with the provisions of article 21, paragraphs 1 and 2. 11 13. For corresponding provisions of earlier narcotics treaties, see article 10, second paragraph, subparagraph (b) of the 1912 Convention and article 6, second paragraph, subparagraph (b) of the 1925 Convention.

1 See also article 10, second para., subpara. (b) of the 1912 Convention and article 6, second para., subpara. (b) of the 1925 Convention.

2 Article 23, para. 2, subpara. (b), article 30, para. 1 and article 31, para. 3, subpara. (a).

3 Records, vol. 1, p. 26.

4 The Secretariat of the United Nations is not aware of any other practice.

4a Article 21, paras. 1-3; see above, general comments on article 21.

5 Article 29, para. 3.

6 Article 34, para. (b).

7 Document E/CN.7/519 (1968), pp. 32-33 and 92-93.

8 League of Nations document C.530.M.241.1934.X1, OIC11581 (2) section VII (d), p. 10.

9 At its meeting of 24 January 1935 (third meeting of its eighty-fourth session); League of Nations Journal, 16th Year, No. 2, February 1935, p. 102.

10 Commission on Narcotic Drugs, report on the eleventh session; Official Records of the Economic and Social Council, Twenty-second Session, Supplement No. 8 (E/2891), annex 11, p. 44; see also paragraph 258 (p. 30). For a recent list of the factories of the world authorized to manufacture narcotic drugs, see document E/NF.1966 (1). According to the procedure in force at the time of this writing, changes in the list are communicated by the Governments concerned to the Secretary-General, who forwards this information periodically to other Governments. A complete list is to be issued by him every four years; see Commission on Narcotic Drugs, report on the twentysecond session, para. 372C, Official Records of the Economic and Social Council, Forty-fourth Session, Supplement No. 2 (E/4455).

11 Article 19, para. 3 and article 12, para. 5 and comments on these provisions; see also the general comments on article 21.

Paragraph 2, subparagraph (a)

2. The Parties shall:
(a) Control all persons and enterprises carrying on or engaged in the manufacture of drugs;

Commentary

1. This subparagraph incorporates a similar provision contained in the1912 1 and 1925 2 Conventions. Its very general meaning was recognized to be rather vague in its discussion at the Plenipotentiary Conference .3 The "persons" mentioned are all physical persons participating in the manufacturing process, not only the owners or managers of the film, but also office workers, technicians and manual labourers. The term "enterprises" covers all drug factories, whether owned by individuals, partnerships, corporate bodies or by the State, and the buildings and other premises (e.g. rented parts of buildings), including appurtenances and equipment used by the factories.

2. Subparagraph (a) establishes a general obligation of control, and thus binds Parties to do more than merely applying the licensing system or the requirement of State ownership to the manufacture of drugs under paragraph 1, and applying the licensing system of paragraph 2, subparagraph (b) to the establishments and premises in which the manufacture of drugs may take place.

3. Subparagraph (a) must of course be interpreted in a reasonable manner. It does not, for example, require physical search of each worker leaving a drug factory, nor the continuous presence of a Government inspector on the premises, but only such measures of control as may be necessary and are practical under the special circumstances of the Party concerned. Examples of such control measures would be the exclusion from participation in the manufacturing process of persons convicted or suspect of illicit traffic, and periodic or at least occasional Government inspections of the drug factory. It may be noted that despite the inclusion of the word "inspection" in the heading of article 34, the Single Convention nowhere explicitly requires such inspections. It may, however, be assumed that the general obligation to control under subparagraph (a) also includes the duty to carry out inspections. 4

4. More generally, it is submitted that subparagraph (a) does not require Parties to apply other control measures than those which they have carried out in the past in implementing the similar provisions of the 1912 and 1925 Con ventions, and which have been sufficient to prevent any significant diversion of drugs from legal manufacture into the illicit channels. If, however, this satisfactory situation should change in the future, subparagraph (a) would obligate a Party to adopt such additional measures as would be required in the light of its particular problems. 5

5. In view of article 2, paragraphs 3 and 4, subparagraph (a) applies also to the manufacture of preparations, including preparations in Schedule III.

1 Article 10, first para.

2 Article 6, first para. of the 1925 Convention.

3 Records, vol. 11, pp. 124-125. See also vol. I, p. 209.

4 The obligation to carry out inspections arises also from the introductory paragraph of article 4; see also comments on article 4.

5 See also document E/CN.7/519, pp. 33 and 93.

 Paragraph 2, subparagraph (b)

(b) Control under licence the establishments and premises in which such manufacture may take place; and

Commentary

1. Subparagraph (b) follows a similar provision in earlier narcotics treaties. 1 It applies not only to drugs listed in Schedule I or II of the Single Convention, but in view of article 2, paragraphs 3 and 4, also to their prepara tions, including preparations in Schedule III Establishments or premises in which a retail pharmacist or medical practitioner compounds preparations do not, however, require a licence pursuant to subparagraph (b), because such compounding is not manufacture in the sense of this subparagraph but rather a part of the process of sale, distribution, dispensation or administration which the retail pharmacist or medical practitioner is entitled to carry out. 2

2. A licence pursuant to subparagraph (b) (that is, a grant of authority by the competent Government department to use the establishment or premises in question for drug manufacture) is required in addition to the licence pres cribed by article 29, paragraph 1. A State enterprise is not exempted from the licensing requirement of subparagraph (b).

3. The term "establishment" as used in this subparagraph means place
of business with its fixtures and organized staff. a A drug manufacturer or State enterprise engaged in drug manufacture may have one or more places of business, that is, "establishments". A "licence" under subparagraph (b) is required for each "establishment", and for all "premises", i.e. all whole buildings or parts of buildings used for drug manufacture. Premises must be licensed even though they form part of a licensed establishment. The connecting word between the word "establishments" and "premises" is "and", and not "or".

4. The licence required by subparagraph (b) need not be a formal "licence" as understood in the particular national law or administration in question. 4 It means authorization granted in writing by the Government concerned to use the establishment or premises involved. One document may "license" the use of more than one establishment and of several premises. The document issued pursuant to article 29, paragraph 1, which contains the licence to manufacture drugs may also simultaneously grant the "licence" under paragraph 2, subparagraph (b) for the use of specified establishments and premises for such manufacture.

5. The purpose of the licensing under the subparagraph under consideration is to ensure that the establishments and premises concerned conform to the conditions required to facilitate control, particularly to prevent theft or other diversions of drugs. 5 The required safeguards, which must not be changed without authorization by the competent control authorities, should be indicated in the "licence".

6. It is suggested that, in order to facilitate control, the licensing system under subparagraph (b) should be employed to ensure that the manufacture of drugs, their salts and preparations is restricted to as small a number of establishments and premises as is practicable.

7. It was explained to the Plenipotentiary Conference that the word "may" meant in this context "is permitted to". 6

1 Article 10, second para., subpara. (a) of the 1912 Convention and article 6, second para, subpara. (a) of the 1925 Convention. The provision of the 1925 Convention replaces that of the 1912 Convention as between Parties to the former treaty; article 31 of the 1925 Convention.

2 Article 30, para. 11, subpara. (b), clause (ii); see also above, comments on article 29, para. 1.

3 See Webster's New International Dictionary of the English Language, Second Edition, p. 874, G. & C. Merriam Company, Springfield, Massachusetts, 1954.

4 See also above, comments on article 29, para. 1.

5 Document E/CN.7/519, pp. 33 and 93.

6 Records, vol. II, p. 281, foot-note 9.

Paragraph 2, subparagraph (c)

2. (c) Require that licensed manufacturers of drugs obtain periodical permits specifying the kinds and amounts of drugs which they shall be entitled to manufacture. A periodical permit, however, need not be required for preparations.

Commentary

1. A Party which obtains all or part of its requirements by the manufacture of basic drugs must be able to allocate to its individual manufacturers, whether private or State enterprises, quotas from the total amounts of drugs to be obtained by manufacture in order to be in a position not to exceed the quantities which in the year in question it may obtain by manufacture and import under the rules of the Single Convention. If a Party has "territories" within the meaning of article 1, paragraph 1, subparagraph (y), it must make separate allocations for each of those territories which manufactures basic drugs, since the limits of narcotics supplies must be computed separately for each of such territories. 1

2. A non-Party manufacturing basic drugs must also make such quota arrangements if it wishes to carry out the provisions of the Single Convention regarding the limitation of narcotic supplies, and thus to avoid the disadvan tages which it may incur in the event of its failure to abide by these provisions and which may include an inability to import needed drugs from Parties to the Single Convention. 2

3. The 1931 Convention, in respect of manufactured narcotic drugs, 3 contained rules 4 similar to those of the Single Convention which limit the narcotics supplies of each country and territory. The implementation of these provisions of the 1931 Convention also required the allocation of manufacturing quotas in a country or territory which obtains all or a part of its drug supplies by its own manufacture. Nevertheless, neither the 1931 Convention nor any other narcotics treaty preceding the Single Convention contained a provision corresponding to the subparagraph under consideration, which obligates Parties to require their drug manufacturers to obtain the periodical permits in question.

4. Experience showed, however, that under the narcotics regime preceding the Single Convention, Governments of drug manufacturing countries or territories occasionally did not allocate quotas to their drug manufacturers, but by an incorrect use of the institution of supplementary estimates 5 adjusted their supply limits to the quantities which they actually made, and thus failed to carry out the treaty provisions as they were intended. When they did not or could not furnish in time the required supplementary estimates, their failure to allocate manufacturing quotas quite often resulted in excessive manufacture, in obvious violation of the treaty provisions involved.

5. Those drug manufacturing countries and territories whose legislation under the earlier international narcotics regime did not provide for periodical permits such as those required by the subparagraph under consideration, and which consequently were not able to make the necessary allocations of manufacturing quotas, must now implement this subparagraph, and they thereby obtain the means for the required regulation of drug manufacture by allocating quotas.

6. The quantities of drug which have to be manufactured in a given year may, however, change in the light of changing conditions. Moreover, an enterprise may not manufacture the full amount of its quota. The allocations to the various manufacturers may thus have to be modified during the year. It is for this reason that subparagraph (c) does not provide for annual, but for "periodical" permits. It is suggested that it would in many cases be advisable to require them on a quarterly basis; but Governments may in the light of their particular circumstances provide for more or less frequent periodical permits. They may even require only annual permits if the conditions that they have to take into account in establishing the amounts to be manufactured are simple enough to make this determination possible with accuracy once a year, or if their legislation provides for the possibility of modifying such annual authorizations at any time when needed. To require the periodical permits less frequently than annually would, however, not be in accordance with the obligation of Parties under subparagraph (c).

7. It has been stated above that some enterprises may not manufacture the full quotas allotted to them. Governments must, however, know the exact quantities actually manufactured in order to carry out their obligations under article 21, paragraphs 1 to 3, and in order to determine the amounts and other specifications provided in the periodical permits to be granted to drug manufacturers, and to be able, if necessary, to modify the amounts in any permits which they have issued on an annual basis. It is suggested that Governments should for this purpose keep a running account, not only of the quantities of drugs which have in fact been imported and exported, but also of those which have actually been manufactured. 6 In any event, they cannot carry out their obligations, and in particular they also cannot implement the subparagraph under consideration, without periodically obtaining from drug manufacturers information on the quantities of drugs which they have made. While unlike the 1931 Convention 7 the Single Convention does not expressly obligate Governments to require such periodical reports from drug manufacturers, it may be assumed that such an obligation is implied under the terms of the 1961 treaty.

8. The word "kinds" refers to the identity of the drugs involved. The periodical permit must identify by name or chemical formula the drugs whose manufacture is authorized.

9. The permit is granted to the drug enterprise as a whole, which is not prevented by the Single Convention s from using its discretion to divide its quota among its separate establishments. e

10. Subparagraph (c) applies only to "licensed manufacturers", and therefore not to State enterprises. This follows from paragraph 1, whose text requires the exclusion of such enterprises from the term "licensed manufac turers". It is, however, suggested that Parties which have a socialist system of drug manufacture must, in order to be able to carry out their treaty obligations, allot to their individual state enterprises quotas from the total quantities of drugs which they may manufacture under the terms of the Single Convention in a given year, and must modify these quotas during the year if required to do so by changing conditions. Such allotments and modifications are in fact nearly the same thing as the periodical permits provided in subparagraph (c), and in any case fulfil the same control function.

11. The subparagraph does not apply to "preparations" because the provisions of the Single Convention governing the quantities of narcotics which may be obtained by manufacture or import or both refer only to basic drugs, whether in their original form, in the form of their salts, or compounded in preparations. There is no provision for limiting the quantities of preparations which may be manufactured. 10 Preparations had to be expressly excluded from subparagraph (c) because otherwise under article 2, paragraphs 3 and 4, that provision would apply to preparations.

12. The "permits" referred to in subparagraph (c) must be distinguished from the licences mentioned in paragraph 1 and paragraph 2, subparagraph (b). 13. See also the general comments on article 21. Reference is also made to the Report of the Commission on Narcotic Drugs on its eighth session, paragraph 154.11

1 Article 21, paras. 1-3.

2 Article 14, article 21 and article 31, para. 1, subpara. (b).

3 But not in respect of extracts and tinctures of cannabis.

4 Article 6, para. 1 and article 12, para. 2; see also article 1, para. 4 of the 1948 Protocol.

5 Article 3 and article 5, para. 5 of the 1931 Convention.

6 See above, general comments on article 21.

7 Article 17, first para., subpara. (a), which inter alia requires manufacturers to furnish such data.

8 National law may of course provide that the permit issued to the enterprise should also indicate what amounts it should allot to its individual establishments. The Plenipotentiary Conference deleted a provision of the Third Draft which would have required that the permit should specify the amounts of drugs which the drug manufacturer may make in each of his establishments; see Records, vol. 11, pp. 14 and 126.

9 For the term "establishment", see above, comments on article 29, para. 2, subpara. (b).

10 Records, vol. 1, p. 27 and vol. 11, pp. 124-125.

11 Commission on Narcotic Drugs, report on the eighth session. Official Records of the Economic and Social Council, Sixteenth Session, Supplement No. 4 (E/2423).

Paragraph 3

3. The Parties shall prevent the accumulation, in the possession of drug manufacturers, of quantities of drugs and poppy straw in excess of those required for the normal conduct of business, having regard to the prevailing market conditions.

Commentary

1. Paragraph 3 corresponds to article 16, paragraph 2 of the 1931 Convention. However, it uses the phrase "drugs and poppy straw" for the material whose excessive accumulation in the possession of drug manufacturers
it requires Parties to prevent, while the 1931 Convention employs the term "raw materials". No fully synthetic process of manufacturing narcotic drugs had yet been developed in 1931, and the "raw materials" which were then used were (apart from poppy straw which played only a very minor role) all substances which are now "drugs" within the meaning of the Single Convention. Since the late nineteen hundred and thirties, however, narcotic drugs are in an increasing measure made by fully synthetic processes from "raw materials" which are commonly used in chemical industry, e.g. coal tar products, which are freely available in trade and which do not present dangers to health whose prevention would be within the range of the aims of international narcotics control. To prevent an excessive accumulation of such generally available substances in the possession of drug manufacturers would not make sense from the viewpoint of the purposes of the Single Convention. The new treaty therefore substituted the more specific phrase "drugs and poppy straw" for the more general term "raw material" used by the 1931 Convention. 1

2. Paragraph 3 thus covers all substances controlled by article 16, paragraph 2 of the 1931 Convention, and has an even wider scope than the earlier provision. It applies also to drugs 2 which are not intended for transformation into other drugs, and are therefore not "raw materials". Article 16, paragraph 2 of the 1931 Convention, on the other hand, did not require Parties to prevent an excessive 3 accumulation in the possession of drug manufacturers f all drugs which that treaty controlled, but only of those of them which were also "raw materials", i.e. destined for the manufacture of other drugs. The amounts "required for the normal conduct of business" which should not be exceeded will vary in accordance with the different conditions under which the business is carried on. They will be different in the case of different drugs, and may also vary in different countries or territories and at different times in the same country or territory. "The prevailing market conditions" are specifically mentioned as being relevant in this context; but the consideration of other factors is not excluded, A state of international relations which may lead to difficulties in obtaining new supplies of, for example, opium may also be a pertinent factor. 4 An expectation of rising prices, particularly in periods of inflation, may also be taken into account.

3. It is suggested that, under normal conditions, the maximum amounts in the possession of drug manufacturers should not exceed their requirements for six months, and under exceptional conditions, those for one year; but unlike article 16, paragraph 2 of the 1931 Convention, the Single Convention does not prescribe such a time limit. It leaves it to the judgement of the Parties to determine in the light of their special circumstances whether they should impose on their manufacturers such a general limit, and if so what that limit should be.

4. The 1931 Convention 5 obligated Parties to require drug manufacturers to submit to the competent authorities quarterly reports on the amounts of raw materials and drugs received and disposed of by them during the quarter, and on those remaining in their stock at the end of the quarter. Although the Single Convention does not contain a corresponding provision, Parties may find it advisable to require periodical reports of this kind at least as regards drugs, in order to be able to implement article 29, paragraph 3. These reports need not necessarily be quarterly, but the annual information which Governments must in any event obtain from manufacturers and wholesalers in respect of stocks of drugs held by them in order to be able to furnish to the Board their stock statistics pursuant to article 20, paragraph 1, subparagraph (f), might often not be sufficient for the purpose of implementing article 29, paragraph 3.

5. In view of article 2, paragraphs 3 and 4, article 29, paragraph 3 must be assumed to apply also to preparations. There is no express provision excluding preparations in Schedule III from this application. In view of the fact, however, that such preparations are excluded, except for data on the quantities of drugs required for their manufacture, 6 from the statistical provisions forming the basis of the quantitative controls of the Single Convention, it is submitted that the authors of the Single Convention did not intend to apply article 29, paragraph 3 to preparations of this kind, and that the lack of an explicit provision excluding them is due to an oversight. See also comments on article 2, paragraph 4 and on article 34, paragraph (b).

6. The paragraph under consideration also applies to State enterprises
engaged in the manufacture of drugs. 7 The Spanish text of paragraph 3 uses
the word "poder" for "possession" in the English and French versions. The word ` poder" has in this context the same meaning as "possession" in the two other language texts.

7. See also article 30, paragraph 2, subparagraph (a). s

1 See also above, comments on article 25.

2 Within the meaning of article 1, para. 1, subpara.

3 The Parties to the 1931 Convention are, however, bound to "exercise a strict supervision over ... the amounts of raw material and manufactured drugs in the
 possession of each manufacturer for the purpose of the manufacture or conversion of any of the drugs or otherwise" (article 16, para. 1, subpara. (a)); an obligation to impose some limitations on manufacturers' drug stocks follows also from the estimate system introduced by that Convention and taken over by the Single Convention.

4 See also above, comments on article 19, para. 1, subpara. (c).

5 Article 17, first para.

6 Article 2, para. 4.

7 But never to "special stocks" manufactured by a State enterprise and held by that enterprise on behalf of the Government "for special Government purposes and to meet exceptional circumstances"; see article 1, para. 1, subpara. (w) and above comments on subparas. (w) and (x) of this paragraph; see also the express inclusion of State enterprises in article 30, para. 2, subpara. (a).

8 The implementation of article 5, para. 1, subparas. (a) and (b) of the 1953 Protocol would also require Parties to limit the opium stocks held by their drug manufacturers.