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Dutch report Dutch report
by Euro Reporter
2013-01-15 10:58:13
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New marijuana ban for foreigners sees change after intense lobbying

On a wet winter afternoon, the place was empty. The palm-tree murals went un-admired, the elaborate smoke-extraction system was turned off and the Tupperware containers of cannabis sat unsmoked on the shelves. Owner Henk Peelen says his "coffee shop" — the Dutch term for a cannabis cafe — has fallen victim to laws that came into force last year to stop foreigners from taking advantage of the Netherlands' tolerant approach to soft drugs. "Because of the ban on customers who came from abroad, I had to sack all my staff, 11 people," he said. About half of Maastricht's 14 coffee shops have shut down since May, when the new rules took effect. Others have seen a radical decline in customers and Peelen says almost 400 people have lost their job across this southern city. "It's costing the city a lot of money," he complains. Amsterdam is a two-hour drive north of Maastricht. In the heart of the capital's red-light district, the scene in its best-known coffee shop could hardly be a bigger contrast. The cheerful, international crowd spilling out of the canal-side Bulldog is an illustration of the complexity of Dutch drug laws.
 
The ban on foreigners entering coffee shops came into force last May in the Netherlands' southern provinces and was due to take effect across the whole country on Jan. 1, limiting access to marijuana outlets to Dutch residents who register to obtain a "weed pass." However, after intense lobbying by city authorities in Amsterdam, which feared a loss of tourist revenue, a new Dutch government elected in September agreed to change tack. The law still stands, but it's now up to each city to decide how to apply it. "We would like to inform you that coffee shops are OPEN in Amsterdam," the Bulldog proclaims on its website. That may be good news for tourists hoping to chill out with a toke after a trek around the flower market or Van Gogh Museum, but not for the weed lovers of Maastricht.
 
"It's death penalty for cannabis culture," says Roger Willemsen, whose Organic Earth store sells cannabis seeds and other products for customers seeking to grow their own. "It's the world turned around. Instead of going forward they are going backward." The city hall in this pretty riverside university city of 122,000 — close to the Netherlands' borders with Belgium and Germany — sees things differently. Mayor Onno Hoes had lobbied for the new restrictions, complaining Maastricht was being overrun by rowdy foreign youngsters flooding into town to get stoned. "In Amsterdam there are tourists going to visit the museums and the canals who go to the Bulldog or some other coffee shop to smoke some weed. Here you had people coming in just to visit four or five coffee shops and buy up the maximum amount of weed," explains Gertjan Bos, the mayor's spokesman. "They were noisy, unruly, a nuisance." Bos says the weed pass has successfully halted the flow of an estimated 1.6 million foreign visitors a year who came to the city for pot.
 
Although the coffee shop association calculates the decline in dope-smoking visitors has wiped out income of about $185 million, Bos denies there's been any significant impact on the city's wider economy. However, he acknowledges that the weed pass idea has not been entirely successful. Provisions designed to turn the cannabis outlets into private clubs where all clients must register as members have scared away Dutch customers, forcing the closure of coffee shops. Recognizing the problem, the city hall announced in September it was dropping the registration requirement so customers need only show their Dutch passport or local residence papers to gain access to coffee shops.

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Banks demand commission-free ranges

Dutch banks are putting pressure on asset managers to review their fund ranges in light of a self-imposed ban on inducements that will begin in January 2014. Fund managers say they must now create share classes that have commission payments stripped out if they want to maintain their lucrative business ties with large distributors in the Netherlands such as ABN Amro, Rabobank and ING. Current Markets in Financial Instruments Directive (Mifid) rules do not allow member states much room for manoeuvre on the issue of rebates, but the country’s Authority on the Financial Markets (AFM) announced in 2011 it would enforce upon Dutch banks a “self-regulatory” ban on commissions. Commission payments offered by non-Mifid products were banned in the Netherlands in January this year, covering mortgage loans, payment protection insurance and life insurance. Hein Kuijpers, head of intermediary for the Netherlands at Schroders, says: “The big banks are only selecting commission-free share classes at the moment and it will be very difficult to do business if you do not have them at the start of 2014.

“All the asset managers are launching these share classes now. It will have huge operational issues for banks.” Steven de Vries, head of fund sales for continental Europe at Henderson Global Investors, adds: “These banks have said to us they want us to launch clean share classes if we want to continue doing business with them. It was an easy decision for us. If we don’t do it, we jeopardise our relationship with them.” Dutch banks want to clean up their reputation by banning commission payments, says Mr de Vries. “Banks are using this as a sign to the market that they support transparency, even though there is no official regulation in the Netherlands yet,” he says. The Dutch inducement ban echoes reforms in the UK, where rebates paid by product providers to advisers ended on January 1 with the introduction of the retail distribution review (RDR).

Bastiaan Siemers, principal counsellor at Simmons & Simmons, says: “The idea behind it is the same as the UK, and we see movements in the Netherlands that indicate the market should be free from inducements.” Mr de Vries says Henderson’s experience with RDR in the UK has given it a head start in preparing for similar moves in the Netherlands. “We started preparations for RDR in the UK during the first quarter of last year, and by the third quarter we had announced what we were going to do.” For its offshore fund range based in the Netherlands, Henderson has already developed clean H-share classes for retail clients, which will be launched next month with a management fee of 0.6 per cent.

Most asset managers operating in the Netherlands that have experience of the UK retail market are likely to have started work on rolling out clean share classes, says Mr de Vries. “It also depends on your existing business in the Netherlands. We have been active in the country for 25 years and it is a key market for us,” he adds. “Last year was one of the best for us in terms of fund flows in the Netherlands. We do not want to jeopardise that.” Hans Janssen Daalen, general director of the Dutch Fund and Asset Management Association, says: “The Dutch banks have asked all their asset managers to provide them with non-rebate share classes as soon as possible.”

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Care farms

Beginning in 1988, the government of the Netherlands has been financing a “care farm” program that enables individuals with developmental disabilities and mental health concerns to be employed on small farms. The rural environment, with its fresh air and abundance of domesticated farm animals, appears to have a therapeutic value for those in the program. The film shows how the care farms encourage teamwork, build self-esteem and develop skills that offer a physical and emotional strengthening for the program participants, who range from young autistic children to elderly Alzheimer patients. It also builds a degree of agricultural self-reliance within the Netherlands – farm owners are paid with funds that were previously designated for day care centres that previously warehoused the program participants.

The success of the Dutch example has been noticed across Europe, and other countries on the continent have created their own programs. However, the film notes that the U.S. appears to be more focused on the development of pharmaceutical strategies, which often create more problems than solutions. Of course, there is a significant cultural difference between the progressive Dutch government and its bureaucratic American counterparts, and it seems unlikely that Washington will immediately embrace this low-cost, farm-friendly program.

Still, American medical professionals and agricultural leaders should take a look at this intriguing film – there appears to be a great deal that can be harvested here.



        
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