Europe goes green

Czech Republic wants to legalize, but not commercialize

January 17, 2024

Good morning. 

In today’s edition, we take a look at Europe’s coming green wave as well as some interesting, and much-needed tweaks, to New York’s market.

Also, if you have a minute, have a look at our ever-growing Cultivated ouTube channel.

A 6.5-minute read from JB and JR

💡What’s the big deal?

EUROPEAN WAVE
Czechia is weighing legalization

What happened: Czechia, more commonly known as the Czech Republic, is proposing to legalize cannabis — but without commercialization. 

The draft legislation would allow for legal cultivation, taxation, and would set up social cannabis clubs where people could consume. It does not, however, include any policies toward establishing a regulated market, at least not yet. That, proponents of legalization say, will come later. 

The Czech Pirates Party, which has been pushing the legislation, said this is a compromise and they’ll expect to negotiate over creating a commercial cannabis market later.

Cannabis possession was decriminalized in the country in 2010 but it remains illegal to purchase or consume cannabis in the country.

Why it matters: Czechia is one of a number European countries weighing legalization. 

Germany, perhaps the European Union’s most powerful economy, recently scaled back its legalization plan to allow personal possession and consumption, and would slowly phase in cannabis sales through a social club model rather than commercial sales. 

Switzerland and Spain employ the cannabis social club model. Malta became the first EU country to legalize cannabis in 2021.

What they’re saying: “I’m not giving up, there’s a chance,”Jindřich Vobořil, Czechia’s National Anti-Drug Coordinator, said when asked whether the country will establish a regulated cannabis market. 

🥊 Quick hits

NEW YORK, NEW YORK
Gov. Hochul wants to repeal potency tax

What happened: New York Gov. Kathy Hochul wants to repeal the state’s potency tax as legal retailers struggle to compete with the persistent, untaxed illicit market.

Hochul’s 2025 budget for the state would replace the potency tax with a 9% wholesale excise tax, Marijuana Moment reports. 

Why it matters: Cannabis tax rates in New York are around 38%. The change would push that down to around 22%.

The move is part of the state’s plan to help the legal market survive. Beyond lowering taxes, both Hochul and New York City Mayor Eric Adams have proposed ramping up enforcement against illicit cannabis shops.

The budget estimates the tax change would provide a “net positive impact” of $6.5 million to local jurisdictions.

Back up: Taxes are a critical way for policymakers to capture the benefits and reduce the downsides of policies like cannabis legalization. 

And much research has shown that the negative cognitive and psychological effects associated with cannabis use are correlated with potency, or the THC percentage, of legal cannabis products. 

Potency taxes are one tool regulators have used to push consumers to select ostensibly safer products. But many experts debate their efficacy for the key reason that many consumers simply want the most bang for their buck. They want the most THC per dollar, whether that comes from the regulated market, or not. 

Our take: Longtime Cultivated readers will know that we think all good cannabis policy is about tradeoffs. Incentivizing the use of less potent, and perhaps safer products, is a good goal and limited potency taxes can work in the right circumstances.

However, if you tax cannabis too much, you push people back into the illicit market. We encourage states to try and look at the research and strike the right balance for consumers.

🏃‍♂️People moves

Columbia Care/The Cannabist founder and CEO Nicholas Vita is moving into a board-only role, the company announced. He’ll be replaced by former President and COO David Hart. Jesse Channon, previously the company’s chief commercial office, has been appointed president.

👓 What we’re reading