A Canadian company will be one of a handful of companies producing cannabis for Dutch coffee shops as part of a new program in the Netherlands. 

Village Farms International Inc., the parent company of BC cannabis producer Pure Sunfarms, recently announced that it had begun building its first indoor cannabis production facility in Drachten, Netherlands. Village Farms acquired Village Farms’ majority-owned (85%) subsidiary, Leli Holland in September 2021.

Village Farms intends to start production for the fourth quarter of 2024 and says Leli Holland plans to sell flower and hash products across consumer-preferred formats, including pre-rolls. 

“As a limited license market with a long-established consumer base and a cannabis-friendly regulatory environment, the Netherlands represents a very attractive near-term opportunity in our international cannabis strategy,” said Michael DeGiglio, President and Chief Executive Officer, Village Farms.

“We are thrilled to build on our rich history in the Netherlands to leverage our experience as a leading, profitable cannabis business in Canada for this first major European recreational market. Our two-phased approach to ramping up production enables us to enter the market in a timely and capital efficient manner in line with the roll out of the Dutch Program. We look forward to contributing.”

The Dutch government announced its plans for the project in 2022, which include exploring the possibility of a “closed cannabis chain” for cannabis coffee shops in several cities across the country.

In December 2023, the first cannabis under this program made its way to the first approved coffee shop. 

The goal of the closed-loop experiment is to explore the possibility of a quality-controlled cannabis production and distribution system in the country as an alternative to the current “tolerance policy” that has not-legal-but-tolerated “coffee shop” style points of sale and unregulated, illicit growers who supply them. 

“By regulating the sale of cannabis, we have a better insight into the origin of the products and the quality,” Dutch Health Minister Ernst Kuipers said recently. “In addition, we can better inform consumers about the effects and health risks of cannabis use.”

The Dutch cities of Breda and Tilburg are home to the first two shops to sell this cannabis.  The Leli Holland nursery is reported to be located an existing building in an industrial district in the city of Drachten.

The municipality of Smallingerland recently granted the company a permit to begin retrofitting the location. Drachten is a village within Smallingerland.

The policy that provides for these shops to exist was first introduced in the Netherlands in 1967, allowing adults to buy small amounts of cannabis in designated “coffee shops.” However, the issue of how to properly regulate the supply of these coffee shops has long-simmered in the country over concerns with public safety and law enforcement, especially with many of the commercial growers located in residential areas. 

In 2009, an advisory committee looking into the issue recommended a small-scale experiment to explore how to regulate coffee shops’ supply. In 2015, the Association of Dutch Municipalities added to the pressure on the government to regulate these supply chains. 

This led to the creation of the Coffee Shop Chain Act, which was successfully passed through parliament in 2020. Since then, the Dutch government has been preparing for the study based on the input of its expert committee. 

The committee—which consisted of experts in public health, addiction, law enforcement, local government, criminology, and law—held round table discussions with stakeholders like mayors, coffee shop owners, cannabis producers, regulators, scientists, cannabis users, and addiction experts. 

The committee recommends including numerous small and medium-sized cities across the country. Seventeen out of 23 municipalities who applied were eligible to participate. 

In addition to better monitoring of both the safety of the cannabis and its supply chains, the program will also seek to evaluate consumer purchasing habits. This includes data such as how many purchases occur within the currently “tolerated” system vs the entirely unregulated illicit market. 

Like Canada, the committee’s report also discusses the challenges of such an experiment and any possible future legalization, which contradicts existing international laws. This is one reason why the government is not seeking to import any cannabis for this trial.

Growers selected for the program must pass various microbial and pesticide testing standards and potentially adhere to Good Agricultural Practice (GAP) and Good Manufacturing Practices (GMP). The committee also recommends a “soft” approach to any recommendations for irradiation or remediation, given stakeholder feedback citing consumer distaste for such a designation. 

Product labels will be required to include warnings, related information, and a THC logo, and products must be sealed in a resealable, child-safe container. Selected growers will be required to be registered with the Chamber of Commerce.

Featured image of the location where the Leli Holland facility will be built. Image via Google Maps

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