15 Mar The Economic Benefits of the Dutch Coffee-shops

Since 1976, when the Netherlands decided to adopt a model of regulated cannabis distribution – the “Coffee-Shop Model” – there has been a constant debate among the Dutch, whether they are experts or regular citizens. This debate, of course, is about this experiment of international interest. Contrary to the presumption that cannabis is a gateway drug and is connected to the abuse of drugs like heroin and cocaine, the Dutch took a more practical approach to the problem and so decided to separate cannabis from the black market of illegal and more dangerous drugs.

The policy that Holland follows is based on non-enforcement of violations concerning the possession or sale of small quantities of cannabis. This so called “policy of tolerance” was initiated as a political response to the problem of heroin addiction the country was suffering from.

Part of this policy of tolerance is that, although legally speaking the sale of cannabis remains illegal, the Public Prosecution Service does not prosecute coffee-shops. Therefore there is a paradox in the way that the coffee-shops operate: they can buy and sell what are considered soft drugs (cannabis products), but their suppliers are forbidden to grow, import, or sell cannabis.

So what is the revenue of these coffee-shops? For years, it was unclear what percentage of the gross domestic product (GDP) came from coffee-shops. As the Dutch Tax Office does not distinguish between coffee-shops and other similar establishments in this general category (restaurants, pubs etc), it is difficult to know the sales figures for the cannabis related industries alone.

But a recent report shed some light on this question, and for the first time we have an idea on how much money is spent on cannabis related products in the Dutch coffee-shops.

According to the study, it seems that each year an approximate amount of 1 billion euros is spent in the coffee-shops.

Intraval, an agency that carries out research on social issues, conducted and published a study on the coffee-shop economy in 2013. This is just one of the many studies Intraval has performed in regard to cannabis and its impact on Dutch society.

As part of the survey, Intraval’s team of specialists (lawyers, sociologists, social geographers and others) counted the number of visitors of over thirty coffee shops. The researchers also interviewed more than seven hundred customers. One of the questions, of course, was how much money they had spent on cannabis.

Then the Dutch newspaper Trouw asked Intraval to estimate, based on their research data, the total revenue from sales of cannabis based products of about six hundred coffee shops in the Netherlands. According to this approximate calculation, the total amount of money received lies between 875 million and 1.25 billion euros. Given there are around 600 coffee shop establishments in the country, this means that an average turnover per shop should be between 1.4 and 2 million euros. More stories on the economic benefits can be found on Trouw, such as the 26 million euros of revenue for one municipality.

Dutch coffee shop

However, Intraval’s study did not examine other aspects of the cannabis related market – brick and mortar shops as well as online vendors sell many other types of cannabis related products – vaporizers or CBD oil, for instance, are a part of the overall cannabis related market. Therefore 1 billion euros of revenue are merely a portion of the total economic benefits (jobs, taxes, etc) that a properly regulated cannabis related industry brings to the Netherlands. Obviously there is a lot that could be learned from the experience of the Dutch in regulating soft drugs such as cannabis, versus the nothing but expenses model of prohibition.

But unfortunately, in the last few years, the political climate in the Netherlands has started to move towards more conservative and prohibitionist approaches. Currently, the biggest party in the Dutch government (VVD) disapproves of cannabis on moral grounds, and the Prime Minister has declared himself as an enemy of cannabis. As a result, the once considered liberal profile of the Netherlands seems to have lost its shine even as the rest of the world, given recent developments, has obviously learned from the Netherlands’ example that cannabis can be regulated in a beneficial manner for society.

Undercover is a video from the Cannabis News Network that describes the latest situation in Holland arising from the new policies emphasizing prohibition.

Fred Hackman
Sponsored by Zamnesia