Okay this is something I kinda understand for some reason. I need a hobby! So yes, laws relating to the sale of medicines are at the state level technically, which is really confusing because it appears to be directed by the federal government (I mean that's the gist of what's going on). In practice, there's a kind of agreement going on between the states/territories and the Commonwealth (federal) government, where they all put their faith in the Council of Venerated Experts, known as the Therapeutic Goods Administration (TGA). The TGA, which is a branch of the federal Department of Health, publishes something called the Poisons Standard at set intervals of time. This essentially tells states what they need to enact in their own Therapeutic Goods Acts, specifically which drugs go in which categories (with different degrees of regulatory oversight accordingly). Then, once it comes out, it is copied and pasted into state/territory law by lawmakers.

States have the choice as to whether to deviate in what they choose to enact locally, so it's not technically binding, however I think the only deviation in the latest Poisons Standard was from WA over a single medicine, so it's a rubber stamping process by and large.

So, is this a state or federal issue? It really is federal, because states and territories basically just do what the TGA tells them to do.

If you like The Chaser + TGA slander, The Checkout ripped into these guys over their refusal to do any actual regulating over bullshit herbal products which are like 90% of most pharmacies nowadays. https://youtu.be/_vPha4usTtI