December 22, 2011

Cannabis in Amsterdam: A Look at the Economic Impact of a Persecuted Market

Amsterdam has been deemed famous for their approach to Drug Policy. Since the 70’s the Dutch government has adopted policies surrounding cannabis showing tolerance for personal use and allowing the sale of small amounts in a controlled and regulated environment. For this reason, a healthy tourism market developed accommodating millions of travelers from all over the World. Americans know Amsterdam to be a hub of Cannabis culture, the place to get seeds and an example of how allowing Cannabis use in society does not lead to crime or inspire the use of harder more illicit drugs. But how has this impacted the region economically?

Local sources estimate the total gross revenue of the Cannabis Industry as exceeding 1.6 billion Euros each year paying out an estimated 400 million or more in tax revenue to the government. It has been documented an employee of a coffee shop could at one point receive a home loan based on job security once provided by healthy Cannabis markets. As coffee shops close and jobs are lost, these same employees are losing their homes to foreclosure. This report seeks to examine the economic impact retracting decade old tolerance policies has on a region allowed to enjoy Cannabis as a sustainable livelihood strategy for so long.

The First Coffee Shop in Amsterdam is still open today.
In 1975, The Bulldog opened up in a building formally used as a brothel in the Red Light District. The business thrived and grew in spite of the fact the Dutch government did not fully adopt and define their soft drugs low tolerance policies until 1976 and coffee shops were technically deemed illegal until 1985. In the early years, Henk de Vries, the shop’s owner, and his friends were arrested by Dutch Police hundreds of times and yet the shop remained opened and business thrived. Today, the business incorporates multiple hotels and coffee shops, cannabis seeds, bicycles and promotional items into its portfolio.

Coffee shops were never and still are not considered legal by the Dutch authorities. The policies allowing for businesses such as The Bulldog to operate are defined in regulations meant to funnel enforcement efforts to eradicating harder drugs while appropriating tax dollars to the prosecution of those engaging in illegal activities involving these same hard drugs. Individual sales in coffee shops are limited to 5 grams per customer and businesses are not permitted to stock more than 500 grams at any given time. Additional restrictions limit sales to anyone over 18 and prohibit advertising.

Growers here employ the same strategies seen in the US, small grow houses sparsely distanced in any one region or City. It is illegal to grow and transport cannabis in Holland. Once the Cannabis reaches the coffee shop, it is legal to sell the cannabis as long as the transaction does not exceed the 5 gram limit. Growers remain elusive and those maintaining a house of cannabis slated for distribution in the coffee houses or moving it from a grow house to a coffee shop takes the highest risk of prosecution.

Until 2003, there were no medical programs in place for the use of Cannabis, so Doctors were not involved in the process at all. Today, residents of Amsterdam can receive a prescription for Cannabis and receive this medicine from a pharmacist. Most of these patients make arrangements to grow their own medicine, but everyone in Holland, regardless of patient status is limited to growing only 5 plants at a time. 

At the height of the Cannabis Industry, Amsterdam housed 228 coffee shops engaging in sales of small amounts of cannabis. 43 were closed in 2008 due to the implementation of more stringent zoning laws disallowing a coffee shop to be within 1,000 feet of a school or bus stop. Dutch authorities claimed they were not changing their tolerance policies with regards to soft drugs, but would be attempting to scale down the amount of foreigners entering the City to enjoy cannabis for leisure without fear of prosecution, a reality unavailable to them in their own countries.

After the first wave of coffee shop closures subsided, more than 350 jobs had been lost in Amsterdam alone. Reports from the Association of Licensed Maastricht Coffee Shops (VOCM) indicate over 300 million Euros have been lost in revenue since the ban on sale to foreigners was enacted earlier this year. These numbers come from verifiable sources, but considering the lost revenue on the grower’s side, they seem to be only a portion of the real big picture. There is no way to verify the economic impact on the trimmers, gardeners and middle men involved in cultivating what was sold in the coffee shops.

Programs for registering travelers visiting coffee shops are being debated heatedly in political realms. Local activists criticize these proposals for their inability to curb illicit black market drug activity citing people will simply purchase from street drug pushers or pay local residents to obtain Cannabis from a shop for them. Those involved in cultivation receive no protections from these policies. Growing would still be an offense punishable with fines and time served.

Another policy change designed to limit foreign travel to Amsterdam affects the growers directly and seems unenforceable when cultivation is completely illegal. Dutch authorities are proposing to limit the amount of THC in the Cannabis sold in coffee shops to 15%. This downgrades the quality of the cannabis sold, making Amsterdam an undesirable location for obtaining high end marijuana.

The entire World is watching Holland to see how these changes in policy play out. Some activists believe losing this battle would give credence to the argument used by conservatives that tolerance does not work. Others see these attempts to curb Cannabis tourism as a complete waste of time as regulations are realistically unenforceable. The government imposes the highest retail income tax on coffee shops of any country and enjoys more than 400 million Euros annually from tax revenue generated by coffee shops. Coffee shop owners estimate 75% of their business comes from tourism, the rest serving local communities. Most of their income would be lost with this ban and they see it as taking the revenue from legitimate well established business and handing it back over to the black market. 
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Coffee Shops are not the only canna-businesses based in Amsterdam. Seed companies like Sensi Seeds, Green House Seeds and Bulldog Seeds, a side endeavor from The Bulldog Coffee House are still thriving. World renowned geneticists based in Holland are able to study and create seeds, sold on the internet and some of the largest seed banks call Amsterdam their home.  These businesses are not being threatened and are continuing to grow at a steady rate each year.

So where does it go from here? For tourists, the countdown to cut-off has begun as the official ban goes into effect in January of 2013 making 2012 the last year to plan a trip to experience the City's offerings. Activists are planning protest rallies on the coveted April 20th holiday and business owners are making hard decisions being forced to diversify their services or be pushed out of business altogether. Even though the true economic impacts appear immeasurable by scientific and statistical standards, the reality of the loss felt by businesses and individuals is most certainly experienced on very profound and personal levels.  
Activist Peter Lunk is inviting residents and tourists to participate in a 420 Amsterdam Smoke Out and Protest. Groups in the area hope everyone will show up to protest the discriminating WIETPAS rules allowing only Dutch citizens to enter the City to buy Cannabis at local coffee shops.
420 Protest information can be found on the event's Facebook page or visit the Official Information Page.

Article Source Links: 
Radio Netherlands Worldwide Radio coverage of economic losses since the initial ban enacted.
Radio Netherlands Worldwide FAQ page with information on Holland's soft drugs vs hard drugs tolerance policy.
Steve Elliot from Toke of the Town article featuring local activist Peter Lunk.