Want to start a business in CBD oil in the Netherlands?
During the past decade, alternatives to modern medicine have become exponentially popular. CBD oil especially has made quite the impact on society, as a very large amount of different illnesses and symptoms can apparently be alleviated or even cured with CBD oil. Of course this has also had an impact on the commercial market, as a large assortment of companies has been established that promote and sell CBD oil.
If you are interested in opening a business in the Netherlands to distribute and sell CBD oil, however, there are plenty of things you need to know. It is of the utmost importance that your company follows all applicable laws, rules and regulations. Otherwise, you risk a potential chance to be prosecuted for violating criminal law. In this article we have summed up all these regulations, in order for you to be able to make a well-informed decision.
The gray area of the Dutch law system
Certain sectors such as the sale of cannabis and related products fall into a certain gray area of the law. Some activities are not exactly legal, though allowed by Dutch law. In order to not make any mistakes, it is necessary to know which activities are allowed and which are not. First of all, almost everything related to the production of cannabis to extract CBD is not allowed in the Netherlands. The foregoing follows from the notice of the legal department of the Ministry of Health, Welfare and Sport.
What is allowed?
1. Medicinal use subject to exemption
- International: the Single Convention on Narcotic Drugs and the Convention on Psychotropic Substances;
- National: the Dutch Opium Act, the Opium Act Decree, the Opium Act Implementation Regulation and the Opium Tax Exemption Policies.
Under the Single Convention on Narcotic Drugs, the Office for Medicinal Cannabis (BMC) has the legal exclusive right to import and export cannabis (extracts) and cannabis resin. The Treaty requires this monopoly in order to prevent cannabis from ending up in illegality. If a company, including a customer of said company, wants to import or export these products, this must be done through the BMC and can only do so if the company has an Opium exemption. BMC will then take care of the necessary Dutch documents and transport for a fee.
An Opium exemption?
An Opium exemption is intended for companies or organizations, who wish to carry out activities using the means referred to in the Opium Act. Under certain conditions, this prohibition shall not apply to pharmacists, general practitioners with a joint pharmacy and veterinarians. In addition, the law does not apply to government-designated institutions and persons or institutions that stock such medicinal products for the exercise of medicine, dentistry or for their own medical use under Article 5 of the Opium Act.
What is the purpose?
Potential companies and their customers wishing to import and/or export cannabis for medicinal use should have one or more of the following purposes, in order to obtain an exemption. In accordance with Article 8(1)(a) to (c) and (2) of the Opium Act, the BMC grants an exemption for the following purposes:
- Public health
- Animal health (subdivided into exemptions for police dogs and other such exemptions)
- Scientific or analytical-chemical research
- Instructive purposes
- Trade-related purposes with Our Minister.
The costs for applying for an Opium exemption
An application fee of €1,000.00 is payable for the processing of an application for an Opium exemption. This application fee is also payable for the application for an extension of an Opium exemption if, in the event of a granting, the application would result in a five-year period of granting being exceeded. Simply put; every five years the application fee must be paid once. In all cases, the following applies: there is no right to a refund of the application fee if the customer withdraws an application, if the customer decides not to process the application or if the application is rejected in whole or in part.
In addition to the application fee, an annual fee of € 700.00 is due. The obligation to pay the annual allowance for a new calendar year is always on the 1st of January of that year. If the customer no longer wants to make use of the exemption, the customer must have notified the BMC in writing before 1 January of the new calendar year. If this notification is omitted or occurs after 31 December of the previous year, the annual fee for the new calendar year needs to be paid.
Import of medicinal cannabis by Dutch companies
Importing cannabis (extracts) also requires an import permit. The customer receives this by filling an application form for an import permit. Upon receipt of the application form, the BMC draws up a contract in duplicate and an invoice for the delivery of the cannabis. The BMC then applies for an import permit. As soon as the import permit is received, the BMC sends it to the foreign company. With the import permit, the company owner can apply for an export permit from the government agency abroad. Once the export license has been issued and the signed contract has been returned, the cannabis (extracts) can be shipped via the BMC. The costs include the costs for applying for the import permit, the costs for the agreement and of course the costs for the transport.
Export of medicinal cannabis by Dutch companies
Exporting cannabis (extracts) requires the following actions and documents:
- 2 original import permits from the foreign company to which the cannabis (extracts) are supplied.
- An application form for an export license.
- Upon receipt of the application form for an export license and the original import permits, the BMC draws up a contract in duplicate and an invoice for the delivery of the cannabis. The BMC then applies for an export license. Once the signed contract has been returned, the BMC can export the cannabis (extracts).
- The costs include the costs for the application for the export license, the costs for the agreement and for transport.
2. Hemp fiber
When deciding on exemption applications for cannabis pursuant to Article 8(2) of the Opium Act, BMC will apply the following criteria:
Article 8i paragraph 1 of the Opium Act applies in that case: only if the BMC concludes a contract for the cultivation and supply of cannabis will an exemption be granted. Therefore, no exemptions will be granted for the cultivation of cannabis by growers who are going to supply directly to the market. The prohibitions laid down in Article 3(B) of the Opium Act shall not apply to hemp which is apparently intended for:
- the extraction of hemp fiber, or
- the propagation of seed for the production of hemp fiber,
provided that the exception to the prohibition on the cultivation of hemp applies only to the extent that cultivation takes place in open ground and in the open air. These two goals are exhaustive. Hemp is naturally rich in CBD and contains relatively little THC. Therefore, it is legal in many EU countries, provided that the THC content remains below 0.2%.
3. Pure substance CBD, without the presence of any form of Tetrahydrocannabinol (THC)
This follows from the e-mail from the Legal Affairs Department of the Ministry of Health, Welfare and Sports and Human Services: "The pure substance CBD is not banned in the Netherlands. The Opium Act prohibits the psychoactive component of the cannabis plant from THC. The sale of products without any form of THC is therefore not prohibited under the Opium Act."
So what is actually banned in the Netherlands? The production of cannabis to extract CBD. It is prohibited to do the following things with/to a substance referred to in List I and List II of this Law or designated pursuant to Article 3a(5):
- To bring it within or outside the territory of the Netherlands;
- To prepare, process, process, sell, deliver, provide or transport to grow;
- To have present/own;
- To be manufactured.
The gray area in numbers
Within the EU, only hemp with a maximum percentage of 0.2% of the psychoactive substance THC may be grown. A number of species are authorized by the European Commission (EC). An overview of this can be found here. In theory, selling products without any form of THC should be possible without any problems.
Want to know more about the possibilities?
The CBD business is booming, but you need to know when, how and why you would like to enter this market. If you feel you have enough time to figure out all the rules and regulations and are passionate about the project, you can always contact us for in-depth information about the specifics. Intercompany Solutions is an established partner for foreign companies and investors who want to start a Dutch business. We can help you during every step along the way.