Netherlands legislative overview

Introduction

The Netherlands has been known for its distinctively tolerant policy on drugs. Although many may (or may not) think that carrying drugs, selling drugs or even growing drugs is considered to be legal within the Netherlands, the Dutch Opium Act (Opiumwet) proves otherwise. All of the foregoing is prohibited save that in specific circumstances the use and sale of cannabis is tolerated. Yet, this might be about to change in the foreseeable future. As recently as November 2019, the Senate approved a piece of legislation allowing ten selected municipalities (one of which is Maastricht) to participate in an experiment enabling a limited number of entrepreneurs to legally grow and sell cannabis. This article aims to break down the Dutch policy on cannabis and to look ahead to future developments.

Cannabis, hemp, weed or marijuana?

Before going into detail, the question may arise as to what exactly falls within the scope of the term ‘cannabis’. The Dutch legislator uses the terms ‘cannabis,’ ‘weed,’ ‘marijuana’ and ‘hemp’ interchangeably, as they all refer to the same plant: the cannabis sativa.

This does not mean, however, that all are the same. Weed (or marijuana) contains a high level of THC content. This is the principal psychoactive constituent of cannabis, which makes weed both desired and forbidden. Hemp, on the other hand, is a term used to classify varieties of cannabis that contain close to no THC at all. Hemp serves industrial purposes, such as the making of rope, animal food or medicines (as a result of a high level of CBD content). This type of cannabis is referred to by Dutch law with the term ‘fiber hemp’ and does not fall within the scope of the Opium Act nor does it fall within the scope of this article, in which the term ‘cannabis’ is used to refer to the high level THC weed (or marijuana).

Toleration Policy and recreational use

Pursuant to the Opium Act, it is illegal to grow, cultivate, sell, deliver, carry, and to transport drugs in or outside the Netherlands. Barring strict exemptions available to pharmacies, doctors and veterinarians, a violation could be followed by imprisonment or a fine. In this respect, a distinction has been made between ‘hard drugs’ and ‘soft drugs,’ the latter ought to be less harmful to public health. Heroin, cocaine and ecstasy are labeled hard drugs, cannabis a soft drug.

Not only does this distinction affect the severity of potential punishment, it is also relevant to the enforcement of the prohibitions of the Opium Act – which is less stringent on soft drugs. Moreover, with regard to recreational use of cannabis a ‘toleration policy’ is applied: no legal proceedings will be instituted against a person who carries up to 5 grams of cannabis for private use nor will legal proceedings commence against coffee shops that sell cannabis, provided certain criteria are met. This policy of toleration arose in the 1970s. At the time, no distinction was made between hard drugs and soft drugs. Following a significant increase in heroin addictions and in drug transactions, often in public, the renewed Opium Act 1976 introduced this distinction that is still being applied to this day. Bear in mind that it remains illegal to hold or sell cannabis but the law is simply not enforced if the criteria of the Toleration Policy are met.

To meet the criteria for the sale of cannabis, coffee shops may not advertise drugs other than by making brief statements, coffee shops are not allowed to sell hard drugs and a single transaction may not pass the threshold of 5 grams of cannabis. Also, no cannabis may be sold to minors and the coffee shops’ activities may not cause any nuisance. Lastly, as of January 1, 2013, only residents of the Netherlands, being those living and registered in a Dutch municipality, are permitted to visit coffee shops and purchase cannabis.

In addition, municipalities are able to develop further restrictions. An example is that the cities of Rotterdam and Amsterdam, which do not allow a coffee shop to be located within a distance of 250 meters from a secondary school. With regard to Amsterdam, this restriction is part of a deal with the Ministry of Justice that grants Amsterdam an exemption to the criterion that only residents of the Netherlands are allowed to enter a coffee shop. Local politicians feared public nuisance if tourists were to be prohibited from visiting coffee shops. As a result, tourists are still permitted to visit a coffee shop in Amsterdam. 

In principle, when all criteria laid down in the Toleration Policy are met, the Opium Act will not be enforced. A local dialogue between the mayor, a public prosecutor and the chief of the police is qualified to compose an Enforcement Arrangement on the basis of which administrative and criminal proceedings are aligned. In case the criteria are no longer satisfied, the mayor can close the coffee shop, while the public prosecutor can start legal proceedings against the persons responsible. The Enforcement Arrangement, however, also prioritizes the various offenses under the Opium Act. As a result, although not all criteria of the Toleration Policy are met, a coffee shop may still stay open in a municipality that does not actively enforce the relevant parts of the Opium Law towards these coffee shops. For example, Amsterdam used to give little priority to enforcing the Opium Law in respect to coffee shops. Having said that, the newly appointed Mayor Halsema intends to change this practice into a stricter one.

Legally permitted use of cannabis

While recreational use of cannabis is formally illegal, this is different for medicinal use. As of 2003, the Dutch Office of Medicinal Cannabis is the competent authority to grant exemptions to the Opium Act. These exemptions relate to public or animal health, scientific research or trading purposes (e.g. to Italy, Germany and Finland). It enables a professional party to legally grow and sell cannabis for medicinal purposes, albeit under strict regulations. In short, the producer of medicinal cannabis is obliged to sell its harvest to the Office of Medicinal Cannabis, which in turn is obliged to accept the producer’s offer. The Office of Medicinal Cannabis subsequently delivers the drugs to a distributor, who sells the drugs to, for example, a pharmacy. 

Currently, medicinal cannabis does not in itself cure diseases but it can reduce the symptoms they cause. Medicinal cannabis may also reduce the dosage and side effects of other medicines. A notable limitation in the use of medicinal cannabis is the requirement of a physician’s prescription in order to make use of it.

Experiment Controlled Cannabis Supply Chain

Although the sale of cannabis is tolerated in accordance with the Toleration Policy, the cultivation and supply to coffee shops remains illegal. In the past, efforts to legalize the cultivation of cannabis for recreational use in the Netherlands, as opposed to medicinal use, had borne little fruit. A recent development may however change this (albeit not everyone seems convinced it will). On November 12, 2019, the Senate passed the Controlled Cannabis Supply Chain Experiment Act (the Act) by a convincing majority. Although a number of details will only become clear later this year, this Act creates a legal basis for an experiment with the objective to assess whether and to what extent it is possible to ‘decriminalize’ the supply of cannabis to coffee shops. The Act exempts up to ten entrepreneurs, in ten selected municipalities, from the prohibitions pursuant to the Opium Act, thus legally allowing coffee shops in the relevant municipality to buy their cannabis.

Those entrepreneurs interested in participating must, as part of their application, provide information on a variety of matters, for instance the testing process and the risks associated with it, the applicant’s experience and knowledge, a financial plan, measures (to be) taken to comply with quality requirements, and how the cannabis is to be distributed to the coffee shops. The application will be declined if it is unclear whether the applicant can cultivate cannabis under strict government restriction, or when a steady supply of quality cannabis cannot be guaranteed. Also, the cannabis has to be cultivated within the Netherlands (although not necessarily in one of the selected municipalities).

The duration of the experiment is at least four years, with a maximum of five and a half years. In case the experiment will not be renewed or replaced with definitive legislation, a transitional period of six months ought to be sufficient to return to the situation that existed prior to the experiment. The experiment is expected to start mid-2021.

None of the larger municipalities have, however, opted to participate in the experiment, stating that with the current requirements they do not believe the experiment will work. One of the main objections to the experiment is that all coffee shops in the participating municipality will have to acquire their cannabis from the selected suppliers. Coffee shops fear quality issues when being forced to purchase from a limited number of suppliers, whilst municipalities indicate this will be impossible to enforce.

Business appetite

In spite of municipalities and coffee shops having been reluctant to take part in the experiment, businesses have shown significantly more interest. Being involved in a ‘new’ business (in the sense that it is no longer illegal) offers lots of opportunities, especially competitive advantages when being involved in an early stage. The downside of being such an early adapter is the possible resistance one might experience when setting up the business. 

One recent example concerns Project C. A lawyer, general practitioner and a former local politician started a business that would take part in the experiment, aiming for a net profit of €15 million. However, the company was refused a bank account multiple times as a result of economical, strategic and risk assessments. Project C decided to initiate legal proceedings against the relevant bank. It was held that the freedom of contract is not absolute for commercial banks, since having a bank account is, without a doubt, a necessity in order to do business in modern-day society and the bank was required to open the bank account for Project C.

Looking ahead

Only the future will tell whether the Controlled Cannabis Supply Chain experiment will ultimately replace the current Toleration Policy, thus not only permitting the sale of cannabis to customers but also the cultivation and sale to the coffee shops. Currently, with all major municipalities refraining from participating, this does not seem very likely under the current terms. The experiment does however pose new business opportunities for those who cultivate cannabis. At the same time, they are facing the risk of the experiment not being continued.