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The Dutch cannabis market: toleration, government experiment, and getting licensed

Contrary to popular belief, cannabis is not legal in The Netherlands but is merely decriminalized with lots of restrictions on its usage, growing, and distribution. So, while it is legal to smoke it in designated areas, growing more than five plants is prosecutable. This has basically forced coffee shops to buy unlawfully grown cannabis putting the power in the hands of criminal cartels. It has also led to illegal growing operations that take a lot of police work to counteract. This means that cannabis arrives untaxed and illegally at the back door of the coffee shop and becomes legal and income taxable by being consumed there.  

In 2020, the government accepted applications from companies wishing to cultivate recreational cannabis as part of a pilot scheme. The “Closed Coffeeshop Chain experiment” is being conducted to see how growers can legally supply quality-controlled cannabis to coffeeshops, throughout ten selected municipalities. The cannabis used in this experiment should be cultivated and controlled in a licit-regulated market instead of in an illicit market controlled/prohibited by criminal law. The aim of the experiment is to ascertain whether or not it is possible to regulate a quality-controlled supply of cannabis to coffee shops and to study the effects of a regulated supply chain on crime, safety, public nuisance, and public health.  

The Minister for Medical Care and Sport and the Minister of Justice and Security are responsible for ensuring that the experiment is implemented and for drafting relevant new legislation. The experiment is expected to last at least four years, with the possibility of a year and a half extension. By the end of the July deadline, 149 businesses had applied. By December 2020, the government selected ten cannabis growers to take part in its experiment with regulated cannabis cultivation. The ten growers then had to pass an integrity investigation. The 10 growers were selected from the passed applications based on a random lottery draw. The others were placed on a waiting list. Should any of the first 10 fail the integrity investigation, the next person on the list will be investigated. 

The Council of State, the government’s highest advisory body, warns that, as it stands, the pilot will not be broadly based enough to allow any hard and fast policy conclusions to be drawn from its findings. 

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