The Potential for the Italian Cannabis Market

Richard Mason // 19 July 2018

Prior to the criminalisation of cannabis, the crop represented a significant facet of the Italian economy. In fact, in the 1940s, Italy was said to be the second largest producer of industrial hemp, second only to the Soviet Union. Today, however, Italy’s vague laws surrounding cannabis have prevented this potentially huge market from flourishing.

Currently, shops in Italy are legally permitted to sell a form of cannabis, which contains less than 0.2% of the psychoactive compound THC (conventional marijuana may contain as much as 15 to 25%) and is often made from the plant’s flowers. This ‘cannabis light’ has become rather popular in Italy since the introduction of new regulations in 2016, which failed to account for the buds of the plant. Thus, a new market emerged around this regulatory loophole.

Despite this seemingly positive outlook for Italian cannabis relaxation, hope for the revival of the industry is marred by the unclear regulatory framework in the country. Although cannabis light is now sold by around 400 vendors across the country, the jars in which it is sold are emblazoned with warning not to smoke, eat, or otherwise consume their contents.

This poses a real issue for Italian entrepreneurs; how can one confidently invest time, energy, and money into cannabis when the legality is so vague? As the quality of the product is difficult to test (since actually consuming the plant would be illegal), it cannot be guaranteed nor expected that any legal cannabis would be superior to that which is already purchased on the black market.

The nub of this issue is simply that the neither here-nor-there nature of Italy’s cannabis laws has undermined a great deal of the progress signalled by the relaxed regulation. This is problematic not just for Italian entrepreneurs and businessmen, but could potentially be depriving the European market of some much-needed rejuvenation. Considering the size of the Italian market back in the forties, more transparent legislation and greater movement towards liberalisation could bring considerable economic benefit and growth.

One may predict such an optimistic forecast based on the experiences of other European countries; the Netherlands, for instance. Tolerance towards cannabis here has resulted in €400 million in tax revenue for the Dutch state, while overall consumption in the Netherlands has not increased any faster than in the rest of Europe. Moreover, the impact of drug tourism to the Netherlands cannot be underestimated; 25-30% of tourists visiting Amsterdam will wind up in a cannabis coffee shop.

A greater degree of clarity and transparency surrounding Italy’s cannabis laws could see similar benefits in the mediterranean nation, and perhaps to a far greater extent. Currently, cannabis consumption in Italy exceeds that of the Netherlands by a considerable margin, and the historical success of the cannabis market would imply that the Italian market has real potential to flourish.

Italy needs to commit to cannabis liberalisation. The current state of back-and-forth, yes-and-no, here-or-there regulation is holding back a potentially huge and vibrant market.

All opinions expressed in this article belong to the author only and are not necessarily endorsed by EPICENTER. 

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).