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Dutch authorities have ironed out issues involving the Netherlands’ cannabis experiment, government and industry officials told MJBizDaily.
The experiment, which underwent a startup phase in December ahead of the full launch later this year, aims to close the supply chain and bring it under the watchful eye of federal regulators for the first time.
For decades, the country’s cannabis stores – also called coffee shops – operated in a system where sales were legally tolerated while cultivation remained illegal, meaning stores had to procure illicit marijuana products to sell quasi-legally.
Officials said the startup phase, which involved two Dutch cities, helped to work out kinks including:
- Track-and-trace issues.
- Distribution limits.
One of the biggest issues hindering the nascent program had been a rule restricting coffee shops to an on-hand stock of no more than 500 grams (17.6 ounces) of regulated cannabis products at a time.
The limit caused stores to run out of product frequently, creating supply bottlenecks.
“To sum it up in a sentence: too little weed, problems with the track-and-trace system and a pretty much unworkable maximum of 500 grams stock,” Derrick Bergman, a cannabis industry expert and columnist for online cannabis lifestyle magazine CNNBS, told MJBizDaily.
“I was actually waiting in line at coffee shop Toermalijn in Tilburg, before my interview with their manager, when the last baggie of regulated weed was sold before my eyes,” Bergman said.
The Dutch government recently changed the 500-gram limit, announcing that mayors in towns participating in the experiment can now decide how much cannabis coffee shops are allowed to stock.
“All in all, a lot of growing pains, although none is so bad that it jeopardizes the experiment,” Bergman said.
Orville Bovenschen, managing director for Netherlands-based Leli Holland and chief operating officer of British Columbia’s Pure Sunfarms, called the experiment a “historic moment” for Dutch society and the industry.
Leli Holland, owned by Pure Sunfarms, is one of the cultivators chosen to supply coffee shops. The company expects to begin shipping cannabis products in early 2025.
“What we have right now (without the experiment) is not sustainable. It’s impossible to sell cannabis legally – and decriminalize it – but have it grown illegally,” he told MJBizDaily in a phone interview.
“For the first time, consumers can know they’re getting safe and tested cannabis. I think that’s a huge benefit.”
The experiment has two stages before it officially launches later this year.
The initial phase that started in December, called “aanloopfase” in Dutch, is designed to test the systems and processes involved in operating a closed cannabis supply chain.
The next stage, called the transitional phase, is set to begin in June; it will last roughly six weeks before the experiment officially begins.
Cannabis products allowed in the experiment include:
- Dried flower.
- Edibles.
- Hashish.
- Pre-rolled joints.
First month ‘went well’
A Health Ministry official told MJBizDaily the initial phase of the Dutch experiment has been aimed at “learning” so that the next phase can run smoothly.
“The first month of the startup phase went well,” the official said via email.
The spokesperson said there were a few “malfunctions” in the track-and-trace system during the first month but added, “We are not aware of any other issues.”
The spokesperson didn’t elaborate on the track-and-trace issues, how widespread they were, who was affected or for how long.
As of January, three cultivators were delivering cannabis products to coffee shops in two cities – Breda and Tilburg.
“The other growers are busy building their cultivation sites,” the Health Ministry official said.
“We do not communicate names or locations of selected cultivators.”
The official said the ministry doesn’t have sales data for stores participating in the first phase of the experiment.
Breda Mayor Paul Depla said the experiment started in the two cities to give the government an opportunity to learn before it’s expanded.
“That’s very useful because then we can see how track-and-trace and distribution (logistics) works and how consumers react to the new products,” he told MJBizDaily in a phone interview, acknowledging some early problems with the track-and-trace system and volume of supply.
For more than 40 years, Depla said, “the front door of the coffee shop was legal, but the back door was illegal.
“In that spirit, we’re trying to make a closed supply chain, from production to consumption, where there’s no room for illegal activities.”
The eight other cities set to take part in the experiment are:
- Almere.
- Arnhem.
- Groningen.
- Heerlen.
- Maastricht.
- Nijmegen.
- Voorne aan Zee (formerly named Hellevoetsluis).
- Zaanstad.
Private sector learning curve
Leli Holland’s Bovenschen said he’s not concerned about the early track-and-trace and supply issues, and the company is proceeding as planned.
“(The government) involved the growers and coffee shop owners from a very early stage to get their input. They went live (with the experiment) to look exactly at these problems at a smaller scale,” he said, referring to the pilot program’s initial stage.
Bovenschen said the Dutch cannabis experiment is doing several things right, namely:
- Not introducing excise tax on sales.
- Allowing clear packaging.
- Limiting the number of cultivators.
- Mandating only two labs for testing.
“I think those decisions are very smart, because some of the larger trends we’ve seen in Canada are not necessarily healthy for the industry in order to compete with the illicit market,” he said, referring to the heavy tax burden applied to the industry and strict packaging rules.
Regarding packaging, he said “see-through packaging is allowed, so the customer can actually see the flower that’s in the packaging, and that has a huge benefit for the producer as (well as) for the consumer.”
“In Canada,” Bovenschen added, “it’s still a missed opportunity; you’re looking at a pouch, but you don’t really know what’s inside.
“I think the Dutch model will be an example for other European countries. It’s a huge change for Dutch society.
“It’s such a historic moment in time – a moment we should celebrate.”
Deferred legalization?
Some Dutch experts have mixed feelings about the experiment, saying it effectively defers the possibility of meaningful legal reform until the pilot ends in 2028-29.
Joop Mestrom, co-owner of publishing company JoSa Media and founder of CNNBS, wants to see home cultivation permitted.
“There is not one word about this in the so-called ‘wietexperiment’ that will take our nation to 2028-29 before we can begin to discuss full legalization – including homegrown weed,” he told MJBizDaily, using the Dutch phrase for “cannabis experiment.”
Mestrom noted that the experiment is happening in only 10 cities, meaning Dutch consumers in other locations will continue buying illegal cannabis.
The same rule applies to Amsterdam, the country’s largest city, which was recently denied entry into the experiment.
“Homegrown cannabis is forbidden for everyone – inhabitants of the experiment-cities included,” he said. “So, mixed feelings here.”
Matt Lamers can be reached at matt.lamers@mjbizdaily.com.
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