Could Amsterdam's days as a Cannabis capital be numbered?

Posted January 2, 2023 on CBC News

Mayor attempts ban on cannabis sales to tourists as government moves to further regulate iconic coffeeshops.

On an average night in Amsterdam's De Wallen district, the streets are packed with tourists — often on their worst behaviour.

"We are being confronted with people vomiting, screaming, pissing, pooping," said Arjan Welles, until recently a resident of the district. "This part of the city has only one purpose — to please the tourists."

Travellers come to De Wallen — better known as the Red Light district — for many reasons: sex shows, bachelor parties, pub crawls. But one attraction has proved bigger than them all: the city's iconic coffeeshops, where legal cannabis has been sold to tourists for decades.

A recent survey found roughly half of the city's 20 million annual visitors say visiting a coffeeshop is a top reason for travelling to the city — powering an industry worth nearly €1 billion ($1.4 billion), according to one estimate.

For Welles, and his advocacy group Stop de Gekte (Stop the Madness), the coffeeshops are a problem, contributing to the district's free-for-all party atmosphere. But they don't want to see cannabis banned — instead, they want Amsterdam to enforce a law known as the i-criterium, which would restrict its sale to local residents only.

Despite a petition with hundreds of supporters, a long debate at council, and the full backing of the city's mayor and police chief, the initiative failed to pass again this fall due to concerns it could lead to an explosion in the black market.

And yet, there's reason to believe the city's era of drug tourism may be coming to an end.

Amid a broader trend toward legalization in Europe, the Netherlands is reevaluating its relationship with cannabis — and potentially upending the coffeeshop industry in the process.

The back-door problem

Since it was first popularized in the Netherlands by American GIs and jazz musicians, cannabis use has been legally tolerated in the country, to some degree, since the 1970s.

Initially, that tolerance led to a proliferation of coffeeshops — more than 500, at one time, in Amsterdam alone. In the anarchic heyday of the 1980s, Henry Dekker, today the owner of five coffeeshops, got his start.

"A wooden sheet and a few crates, that was the bar," he said. "Coffeeshops were really hideouts for unemployed people … to rest between fights with the police. So it was quite a rebellious environment."

By the 1990s, Dutch attitudes shifted in favour of increased policing, and the coffeeshop industry rapidly professionalized. Today, "the type of customer is more mainstream," Dekker said. "We see young and old from 18 to 88, men and women."

But there's a problem. Selling and consuming cannabis is legal in the Netherlands, but growing it, or possessing more than half a kilo, remains illegal. That makes supplying coffeeshops with their products a criminal enterprise — known in the Netherlands as the "back-door problem."

The Netherlands, in my opinion, is already left behind.- Onnick Jessayan, founder of Greenmeister

"It's always like this cat-and-mouse game," said Onnick Jessayan, a cannabis industry insider and founder of Greenmeister, an app which offers reviews of coffeeshops and cannabis strains. "Dutch cannabis dispensaries are still forced to buy from the black market."

According to one influential report from the City of Amsterdam, this legal gap has encouraged connections with organized crime, who find in coffeeshops a convenient way to convert black market cash to legal income. "There's no faster way to launder money than to have a coffeeshop," said Robbert Overmeer, an Amsterdam resident and advocate for the i-criterium.

Meanwhile, owners like Dekker, who are trying to operate a legal business, take on significant risk. In 2021, he faced criminal charges and lost 45 kilograms of stock for possessing more than the 500 gram legal limit, despite his stores legally selling "10 or 20 kilos a week."

Supplying his stores, he said, is like "a sort of James Bond operation we have to run every week," involving shady deals in apartment parking lots. Getting caught again could mean the forced closure of his stores — and 70 employees suddenly out of work.

The back-door problem is a barrier for investors, too. Dekker says more and more foreign companies want to buy into the market — but they "want to buy the premises, the name, without being involved,'" he said, "because the laws in the Netherlands are not up to their standards."

That's left some in the cannabis industry feeling pessimistic about its future in the Netherlands.

"The Netherlands, in my opinion, is already left behind," said Jessayan. At expos across Europe, he says, he encounters cannabis growers and marketers who are able to treat the product like "a craft, like … Swiss knives or chocolate."

"That's something the Netherlands could've owned, if they just embraced the cannabis culture," he said. "But they didn't. They always saw it as something illegal."

Legal cannabis — but when?

After decades of tolerance, the Dutch government may finally be ready to fully embrace cannabis — within the limits of a government program.

In 2019, the government laid out the groundwork for what it calls the "controlled cannabis supply chain experiment": a four-year pilot project involving ten government-licensed growers who will exclusively supply the coffeeshops of ten mid-sized municipalities.

Like in Canada, growers are subjected to rigorous quality tests and legal requirements while facing set-up costs that can run into the tens of millions. Unlike in Canada, they may only be permitted to operate for four years if the experiment is wound down as initially planned.

"It's another kind of step into the dark, a bit of a brave move," said Alistair Moore, whose consultancy, Hanway Associates, works with some of the licensed growers in the Netherlands. "There's a huge pressure on those ten licences."

The experiment got off to a rough start. Delays in selecting the growers, completing background checks and producing sufficient stock mean it's now not expected to begin before 2024.

Still, Moore and others see reason for optimism. Ralph Blaes, a founding member of Linsboer, a licensed grower based in Lelystad, said the delays are because the government wants "to maximize the chance of success."

Unlike Canada, Blaes said, the Dutch government is rolling out legalization slowly, in select markets, to encourage a diversity of suppliers with a guaranteed market for their products.

"They're not the fastest one, the Dutch government, but they do it really rock-solid," he said.

Others are more skeptical. Jessayan, with Greenmeister, worries about the limited availability of strains compared to the black market. Dekker, the coffeeshop owner, fears the small-scale growers who have taken risks to supply him will ultimately be "pushed out."

Besides, he argues, "it's better to do it at a small scale — where people play classical music for their plants, instead of filling it with fertilizers."

The final days of a drug capital?

The Netherlands is not alone in reimagining its relationship with cannabis. Germany, Czech Republic, Switzerland, and Luxembourg are all on the pathway to legalization or moving forward with their own pilot projects for legal supply. Malta fully legalized cannabis last year.

For cannabis industry insiders like Moore, it's a sign that "the consensus has changed in Europe — that this is not something we can police away, and this is not something that we can ignore."

Moore hopes the result is a more "mature" conversation, about how "legalization is not just for people who like cannabis and want it visible in society, but for the people who don't like it, too."

That includes people like Welles and the members of Stop de Gekte, who still hope Amsterdam will do all it can to make it "far less interesting to come to the Netherlands just for cannabis."

With bigger neighbours like Germany poised to legalize cannabis by 2024, it might not take an i-criterium to accomplish that. One way or another, Amsterdam's days as a drug capital may already be numbered.