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Benefits of the introduction of the cannabis market in the Republic of Croatia


Cannabis in the Republic of Croatia

Benefits of the Introduction of the Cannabis Market in the Republic of Croatia

Author: Edvin Brnčić (2644054)
Master: Business Administration
Specialization: Leadership & Change Management Supervisor: Sibel Ozasir Kacar

Application Date: 06/11/2019 Submission Date: 31/03/2020 Word Count: 11,206



The copyright rests with the author, Edvin Brnčić. The author is solely responsible for the content of the thesis, including mistakes. The Management & Organization department cannot be held liable for the content of the author‟s thesis.
Some parts of the thesis have been submitted as an assignment for the course “Research in Business Administration”. The course coordinators (David Kroon and Jost Sieweke) have granted permission to use the text from the assignment in the thesis.

In the end, I would like to thank my parents, who always supported me; this would not be possible without them. Also, I would like to thank all the interviewees for taking part in this study, and to Sibel, my thesis supervisor, for her support during the process.



The purpose of this study is to explore how the introduction of the cannabis market in the Republic of Croatia could be beneficial for the country. The study performed this through the analysis of the Dutch model. This qualitative study with a grounded theory approach is based on semi-structured interviews with 12 experts in the cannabis industry, nine of whom are operating in the Netherlands. The three interviewees from the Republic of Croatia include a politician who is in charge of writing a national cannabis policy and two cannabis entrepreneurs.

The primary contribution of this study is to provide new knowledge about the cannabis industry in the Netherlands. This study additionally provides a representation of how cannabis entrepreneurs are coping with the stigma surrounding the cannabis industry. The results specifically contribute to the understanding of benefits that the introduction of the cannabis market would have in the Republic of Croatia.

The results indicate the cannabis market would socially, economically, and environmentally benefit the Republic of Croatia.

Keywords: Cannabis, Cannabis industry, Cannabis tourism, Benefits, Netherlands, Republic of Croatia



New, controversial industries are emerging all over the world, bringing enormous amounts of money to the host countries. The cannabis industry, and especially cannabis tourism is one of them. Legal cannabis sales across Canada, that legalized recreational cannabis nationwide in 2018, are projected to generate $4.34 billion in revenue in 2019, which is four times more than the illegal market (Deloitte, 2018). Moreover, the Colorado Department of Revenue (2020) reported a record sales revenue of $1.747 billion on medical and retail cannabis in 2019. As a result of the cannabis tolerance policy1, among many other reasons, Amsterdam is dealing with over-tourism, and the Dutch government is trying to tackle this issue by imposing various regulations on coffeeshops2; however, the number of tourists visiting coffeeshops increases dramatically. Recent reports by Arcview Market Research project that worldwide consumer spending on legal cannabis will reach $57 billion by 2027 (Arcview Group, 2018).

Furthermore, many findings suggest that tourism is and will remain a key sector of the Croatian economy (Gelo, 2016; Orsini, 2018; Hatanpää, 2019). However, Croatian authorities rely on the current model, based on sun and sea and fail to adapt to the new trends and opportunities. These new trends and opportunities, namely cannabis tourism, brought increasing popularity to host countries and a push in tourism growth. Legalization and/or decriminalization of cannabis have created a tourist offer that satisfies the needs of tourists whose consumption and use of cannabis is a dominant motive (Taylor, 2019). Therefore, this study aims to explore how the introduction of the cannabis market in the Republic of Croatia could be beneficial for the country.

Problem Background

The Office for the Suppression of Drug Abuse of the Government of the Republic of Croatia conducted a population survey about drug abuse in 2015. According to that report, cannabis was the most used illegal drug (2015). The availability of cannabis in Croatia is basically the same as its demand; growing each year. However, with the increase in demand, the market for medical and recreational use of cannabis is still not properly regulated. Recreational cannabis is unregulated; there are no taxes, consumer or environmental protection legislation

1 A drug policy which tolerates smoking cannabis under strict terms and conditions 2 Alcohol-free establishments where cannabis (weed, hash) are sold and consumed


regarding its usage. On the other hand, when the legalization of medical cannabis took place on October 14th, 2015, the Croatian government was caught unprepared (Hrvatska Danas, 2019). Only the use of medical cannabis has been legalized, but not the cultivation. Therefore, medical cannabis products were imported from Canada to pharmacies in Croatia, which resulted in unfair prices. Moreover, doctors were unwilling to prescribe recipes for cannabis products to their patients, as they were uneducated about the medicinal properties of cannabis. Therefore, consumers were illegally cultivating cannabis, buying it from the black market, or going to countries where medical cannabis products are cheaper and actually accessible.

Additionally, tourism in Croatia is merely seasonal because of the limited tourist offer, based on sun and sea. This seasonality is the main problem causing the tourism industry to have a low influence on the economy or low multiplication. In other words, because of the fact that tourism in Croatia lasts only for a few months in a year, and in the rest of the year it practically does not exist, other industries that would be eventually connected to the tourism industry are also limited (Corluka, 2014). Moreover, according to the Eurostat report “Croatia is increasingly vulnerable to climate risks” (European Commission, 2019), and since the tourism industry is weather and climate dependent, this could cause risky returns for Croatia, as well.

Purpose of the Study

While the cannabis industry is increasing dramatically, there is a scarcity of academic research about it. The reason is this industry was recently introduced, and there is a lack of data about it. Therefore, further research is needed to understand this new phenomenon.

According to the Eurostat report, the Republic of Croatia is at the top of the countries in the European Union by total tourism contributions to the country‟s GDP (European Commission, 2019). As reported by The World Travel & Tourism Council (2018), the direct contribution of tourism to GDP was 4.4% of national GDP in 2014 and 11.4% of national GDP in 2016. Tourism, directly and indirectly, covers the biggest portion of Croatian GDP, and the increase in GDP mainly depends on the success of the tourist season, thus the importance of tourism in the Croatian economy cannot be ignored.
Tourism is a labor-intensive industry. An increase in tourism will lead to more employment opportunities and a rise in total GDP and GDP per person. As some political parties in Croatia argue in favor of cannabis regulation, together with many cannabis activists, and considering the


growing trend worldwide, it is fair to assume this industry will be introduced in Croatia. Since the Netherlands is considered, a pioneer in this industry, Dutch knowledge, and experience are used worldwide. Therefore, this qualitative study is based on semi-structured interviews with 12 experts in the industry, nine of whom are operating in the Netherlands. From the perspective of tourism, Croatia can look into the countries where cannabis regulation is already in place, like the Netherlands and some of the states in the US as California or Colorado to see the impacts on tourism and the country as a whole.

Literature Review Introduction

The recent trend in legalization and decriminalization of cannabis has caused a large shift in the cannabis industry. There is a broad spectrum of laws related to cannabis use; different countries and even different regions within these countries have different regulations regarding cannabis use. These laws range from the full legal use of cannabis for both recreational and medical purposes, legal for medical use only, illegal but decriminalized, illegal but generally not enforced, illegal but a non-criminal offense, or illegal and fully enforced. Uruguay was the first country to fully legalize cannabis use, and Canada has also legalized cannabis in recent years (Deloitte, 2018; Maybin, 2019). Other countries, like the Netherlands and Spain, have focused more on decriminalization of cannabis and developing industry from “coffeeshops” and “cannabis clubs,” respectively (Marks, 2015; Haines, 2017).

Given the number of different laws regarding cannabis use, drug tourism has consequently developed as people who want to try cannabis travel to the regions where cannabis consumption is legal or at least decriminalized. Drug tourism is a growing phenomenon in the changing recreational drug industry. Drug tourism is defined as “the phenomenon by which one‟s travel experience involves the consumption and use of drugs that are illegal in the visited destination or in the country of origin of tourists” (Pereira & de Paula, 2016). Another study defines it is a subset of circumvention tourism, which is “traveling to the destination country to circumvent domestic prohibitions on accessing [drug] services” (Cohen, 2012). Cannabis tourism is a specific subset of drug tourism, whereby travelers consume cannabis outside their home region. It has become popular in areas like the Netherlands, Uruguay, and several American


states where cannabis is legalized, Colorado in particular. Canada and Uruguay provide country models, as they were the first two nations to legalize cannabis use for recreational purposes.

Introducing a new market of a previously illegal substance and shifting societal perceptions to be more accepting of this substance can be difficult. Utilizing change management principles can be beneficial for countries pursuing this shift. Change management has been defined as “making changes in a planned and managed or systematic fashion” (United Nations Development Programme, 2006). In its most common use, theories of change management refer primarily to organizational change (Moran & Brightman, 2001; Kuipers, 2013; Todnem By, 2005). However, many of the same general principles that are present in organizational change can also be applied to a nation-wide change, particularly if the government and country are thought of as a single organization (Melchor, 2008). The purpose of this study is to examine the cannabis industry in the Netherlands and, through change management, explore how the introduction of the cannabis market in Croatia could be beneficial for the country.

There are only a few studies that examine the economic impact of tourism related to legalized cannabis sales on local economies, or on applying one state‟s model to another country. The aim of this study is to provide an initial analysis of the potential benefits of the cannabis market in Croatia at a country-wide level. The model would be based on current practices in the Netherlands, given its European background and popularity as a tourism center for cannabis use.

Introducing a New Industry

Studies and theories related to the introduction of new industry into a market generally refer to the development of a new industry completely (e.g. new technology) or the entry of a previously established industry into a new geographic region. The legal cannabis market is unique in the sense that it does not fit in either of these categories. It is not a new industry as a whole, as it is present in many other countries and is not a new product. However, it also is not typical of a new market entry either, because looking at market entry usually refers to the expansion of a specific company or organization. The introduction of the legal cannabis market is not just a single company expanding; rather, it is the development of an entire legal, social and economic framework within a nation where multiple companies can operate. This makes the introduction of the cannabis industry more difficult to understand according to previously developed concepts.


A variety of legal methods have been used in regions that have legalized or decriminalized cannabis, which provide important learning points. Spain and the Netherlands exemplify decriminalized countries where the cannabis industry has developed in small coffee shops or clubs allowing the use of recreational cannabis (Marks, 2015; Haines, 2017). In these regions, cannabis is not legal, but possession of small amounts is decriminalized, and licenses are available for businesses to allow cannabis products to be consumed on their premises. However, since the production and distribution of cannabis are not regulated, it created many issues in regards to criminality, quality control and so on. Other countries, like Canada, Uruguay, and several states in the United States, including Colorado and Washington fully legalized the recreational use of cannabis. Cannabis is treated similarly to alcohol regarding public consumption and driving under the influence in these countries.

Developing a regulatory framework for the legalization of cannabis is a key factor in ensuring the successful implementation of the industry. Carnevale et. al. (2017) identified five separate areas that should be considered when developing a regulatory framework for the cannabis industry: cultivation, production, and processing; sales, consumption, and possession; taxes and finance; public health and safety; and governance. If Croatia were to legalize cannabis, regulations would have to be developed clearly in relation to each of these areas. Countries that have legalized cannabis have faced many problems, which also provide important learning points. Colorado has had regulatory issues in the cannabis industry that have led to the illegal market retaining a significant market share (Yates & Speer, 2018). This state‟s poor regulatory framework has allowed firms in the industry to find loopholes and exploit them, thereby undermining the legal framework established by the government (Subritzky, Pettigrew & Lenton, 2015). It is apparent there are many regulatory considerations when legalizing cannabis, and learning from other governments is critical to the successful implementation of this market.

The Market

This study focuses on introducing legal cannabis to Croatia and draws on information learned from the Netherlands. According to the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), it is estimated that the retail value of the cannabis market in Europe is 9.3 billion EUR, or 38% of the total illegal drug market in this region (2016). The EMCDDA estimates that 16.6 million Europeans between the ages of 15 and 34 used cannabis in the last


year, which comprises about 13.3% of that age group (2016). Regarding Croatia, it is estimated that 10.5% of young adults of the same age group used cannabis in the last year (EMCDDA, 2016). Tourist regions, in particular, are known to be associated with increased cannabis use. One of the highest rates of cannabis consumption in native Croats is in adolescents who live in tourist regions (Salcin, Damjanovic, Savicevic, Ban, & Zenic, 2019). There is also a significant increase in the number of illegal drugs, including cannabis, consumed in coastal Croatia during the summer as determined by waste-water analysis (Krizman, Senta, Ahel, & Terzic, 2016). Croatia had more than 16 million tourist arrivals and more than 88 million tourist overnight stays in 2016 (Croatian Bureau of Statistics, 2017). Total direct contribution of travel and tourism to Croatia‟s GDP in 2012 was 11.9% (Pavlic, Svilokos, & Tolic, 2015).

There has been little research on the economic impact of legalized cannabis consumption, thus far, although data suggest there is likely a significant economic impact of cannabis sales in popular cannabis tourism centers. The Netherlands and Colorado have some of the most well- studied cannabis industries. In the Netherlands, it is estimated that marijuana production added 2.3 billion EUR to the country‟s GDP in 2015 (“Dutch News,” 2018). It is also estimated that 25- 30% of tourists who visit Amsterdam also visit a „coffeeshop‟ (Haines, 2017). A reported 1.6 million tourists visited coffee shops in Amsterdam alone in 2012 (Rodriguez, 2013). A separate study determined that persons who travel to Amsterdam and report cannabis as the primary purpose of travel have the highest total expenditures per day compared to other studied groups (Van Loon & Rouwendal, 2017).

Colorado‟s sales revenue in both medical and retail cannabis in January 2019 totaled $124.8 million USD (Colorado Department of Revenue, 2019). From 2014-2019, Colorado experienced a 51% increase in cannabis tourism, having 6.5 million tourists in 2016 alone (CB Insights, 2019). There is some basic information on tourists versus resident purchases in Colorado, with a reported 44% of metro area retail sales of cannabis in Colorado to tourists, ranging up to >90% of sales in certain popular tourist regions (Light et. al., 2014). The information provided above indicates cannabis availability attracts tourists, which can have a large economic impact.

Kang et. al. (2016) divide the economic impact of cannabis tourism into three categories: direct, indirect, and induced. Direct economic impact refers to the direct sale of cannabis and related products. This would include cannabis sold in coffee shops and directly sold from


dispensaries. Indirect economic impact refers to associated industries affected by tourists visiting the region, such as hotels tourists stay at, transportation used, food purchased, and so on. Induced economic impact refers to the wages paid to local employees working in the tourism sector.

With the development of cannabis tourism, several new sub-industries have developed in regions where cannabis use is popular and legalized. Cannabis tourist agencies have developed that organize trips and vacations for tourists wishing to have experiences related to cannabis, like the company Kush Tourism in the United States (CB Insights, 2019; Hauser, 2019). Other businesses have begun arranging “wine and weed” tours in the United States, or “bud and breakfast” lodging (CB Insights, 2019). Wellness retreats have also been developed that focus on a spa-like experience with cannabis-related products available (Hauser, 2019; Kovacevich, 2018). These are several examples of the more common forms of cannabis tourism that have appeared.


The majority of research on cannabis tourism thus far has focused on defining the population that travels for cannabis and examining the risks and their motives. One of the earlier studies in this field looked at tourists who travel to Amazonian cities to try a substance called Ayahuasca, which consists of a mixture of psychedelic compounds, administered by a local “shaman” to have a “personal experience” (DeRios, 1994). The changes in cannabis laws have influenced the choice of vacation destination for a reported 49% of tourists to the state of Colorado (Blevins, 2015), implying this is a major motivating factor for traveling to this state. As mentioned previously, 25-30% of tourists who visit Amsterdam spend time in a coffeeshop, implying this is a major attraction for the area (Haines, 2017). Another comprehensive study analyzes the motivating factors of tourists consuming cannabis, reporting experimentation, pleasure and diversion-seeking, quest for authenticity and accessible purchasing as the primary motivators (Belhassen, Santos & Uriely, 2007). Similarly, another study states that tourists who are interested in purchasing cannabis during their stay are more likely to expose themselves to risk (Uriely & Belhassen, 2006).


Change Management

Cannabis initially gained popularity as a medicinal product, particularly in the 1970s after new chemotherapy drugs came with significant nausea and vomiting side effects (Grinspoon, 2001). Since that time, its use has evolved to include a sleep aid, appetite stimulant, and to improve intraocular pressure in patients with glaucoma (Grinspoon, 2001). As additional medical uses have been identified for cannabis products, its use is becoming more widely accepted for these medical indications. This is one method of influencing social change: providing scientific evidence and data to support a claim. By providing evidence that cannabis has legitimate medical uses, this has given a stronger argument for the legalization of this substance.

Several key concerns are often brought up by opponents of cannabis legalization. Their concerns include that it is seen as a “gateway to other drugs” or it could affect the youth and influence them to start using cannabis at an early age. Many of these theories have been proven false. It has been found that allowing recreational cannabis stores to operate in a community, or passing medical cannabis laws, does not alter high school student cannabis use or attitudes towards cannabis (Peters & Foust, 2019; Wall et. al., 2016). In the Netherlands, no association has been found between offering/selling legalized cannabis at „coffeeshops‟ and any shift in the use of other illegal drugs (Monshouwer, van Laar & Vollebergh, 2011). It has also been found that having a legalized/decriminalized cannabis market tends to better separate the cannabis market from other illegal drugs, such as heroin and methamphetamines (Reinarman, 2009). It has also been demonstrated in another study that allowing the consumption and purchase of cannabis in the Netherlands is not correlated with increased consumption of cannabis in the general population (MacCoun, 2010; Monshouwer, van Laar & Vollebergh, 2011).

As Kang et. al. (2016) pointed out, earlier research considers drug tourists as “deviants,” but this view is shifting drastically as cannabis is legalized. A recent study demonstrated a spectrum of tourists who purchase cannabis, ranging from those who travel specifically for that purpose, and others who purchase incidentally, but did not plan to prior to their trip (Taylor, 2019). Taylor (2019) suggests a new definition of cannabis tourism: “purchasing with the intent to consume cannabis products while temporarily traveling away from one‟s normal place of work or residence” (Taylor, 2019). This definition differs from previous definitions as it does not require that the primary reason for travel is to purchase cannabis, but it could be purchased without prior planning.


An illustration of how a change in the cannabis industry is actively taking place can be seen in the recent increased interest in the legalization and decriminalization of cannabis use in the United States at the federal level. As of the end of November 2019, the U.S. government is working on the bill “Cannabis Opportunity Reinvestment and Expungement Act” (MORE Act) to decriminalize cannabis at the federal level (Gunther, 2019). The bill proposes using a percentage of cannabis sales to support charities for people adversely harmed by illegal substances (Gunther, 2019). This bill provides an example of one country‟s methods for decriminalizing cannabis use.


This study incorporates the above-mentioned information to qualitatively examine factors that will influence the introduction of a cannabis market to Croatia. By drawing on studies that have examined the cannabis industry, this study will focus on how the introduction of the cannabis market in the Republic of Croatia could be beneficial for the country. In looking at similarities to other studies, this research looks at cannabis as a way to attract tourists to Croatia. It examines Croatia as a whole, not focusing on different regions in the country. It differs from other studies by looking specifically at how to introduce an entirely new, controversial industry into a country, and how to benefit from it. It will also examine this process from a change management perspective to better elucidate key factors to take into consideration when introducing such a market.


The aim of this chapter is to provide the methodology used for data collection and analysis to be able to provide an answer to the research question. The purpose of this qualitative research with a grounded theory approach was to explore how the introduction of the cannabis market in the Republic of Croatia could be beneficial for the country through the analysis of the Dutch model. Thus, this chapter details the research design in this study. The chapter subsequently follows with the description of interviewees, selection process, data collection and procedures, instruments and data analysis.


Research Design

A qualitative, inductive research approach is proposed for this study (Saunders et al., 2012). As not much research has been done on the topic, this study is explorative in nature. “Qualitative research is about exploring ideas” (Bansal & Corley, 2012, p. 512). In this study, semi-structured interviews were used, as they allow the interviewees to express their views freely and allow the researcher more room for exploration. Moreover, an interview guide was developed by the researcher. It provided a clear direction necessary to generate reliable, comparable qualitative data. Furthermore, as grounded theory is recommended for studies that investigate situations to which people must adapt as in the case of cannabis introduction in Croatia, and given the exploratory nature of this research, this methodology fits perfectly to the aim and the nature of the study (Corbin & Strauss, 2008; Gioia et al., 2012; Glaser et al, 2017). This approach inspires the sort of flexibility which is important to the qualitative researcher who can move in new directions, as new information and a better understanding of what is relevant is acquired (Blumer, 1954).


The interviewees in this study consisted of twelve individuals, who are experts in the field of cannabis (Figure 1). The individuals who participated in this study were operating in diverse areas in the cannabis industry. All interviewees and their organizations allowed me to reveal their names prior to conducting the interviews.


Figure 1: Table of Interviewees

Interviewees were selected through purposive sampling, which is a “strategy in which particular settings, persons or events are selected deliberately to provide important information that cannot be received from other options” (Maxwell, 1996, p. 70). The total number of people reached for this study was around fifty, but some of them were unavailable for the interview, the twelve remaining were identified as the most valuable: including potential participants of the Dutch government‟s weed experiment; the prime government contractor for the analysis of medicinal cannabis; a representative of the world‟s best-known coffeeshop; a CMO of the second oldest European Cannabis Seed company; a coordinator of Cannabis Liberation Day; a social scientist studying illegal and drug markets since 1990; various managers and founders of cannabis-related businesses and organizations. Last but not least, most of the participants worked with or advised the Dutch government regarding cannabis policies. In addition, the researcher tried to reach the politicians who are against cannabis, but they did not respond. Nine out of twelve interviewees were from the Netherlands, while three of them were from the Republic of


Croatia. The reason for this is the Netherlands is considered a pioneer in this industry, and Dutch people have more experience and knowledge about this topic. The three interviewees from the Republic of Croatia include a politician who is in charge of writing a national cannabis policy and two entrepreneurs who are considered first movers in this industry in Croatia. Furthermore, all of the interviewees have the first-hand experience of operating in this industry. Interviewing people from many areas of the cannabis industry is beneficial, as it will provide a broader and more detailed picture of the industry.

Data Collection & Procedures

Semi-structured interviews were conducted in this study as a primary research method. The interviews were conducted in two months, from the end of December till the end of February.

The data collection could not be performed in a quantitative way, because of the in-depth nature and personal experiences of the respondents. The data for this study were collected from twelve individuals by using open-ended questions. It was planned to do all twelve interviews face-to-face, but in the end, this was not possible for four interviewees, so a Skype video call was determined as the best alternative. All interviews were recorded and the average duration of the interviews was 45 minutes. During these interviews, the researcher used an interview guide that was developed by him. All interviews in the Netherlands were conducted either at the interviewees‟ office or at their home, with one interview conducted at VU Amsterdam. The first interview in Croatia was conducted in a quiet café bar. The data were collected by the researcher working on this qualitative study. Last but not the least, these interviewees were reached directly by the researcher via e-mail, LinkedIn, or by phone.


The researcher used in-depth, face-to-face interviews with eight participants. The remaining four were conducted via Skype video call. The researcher obtained signed consent from each interviewee before beginning the interview sessions. The audio recorder was used in every interview session, to make sure data is fully obtained. Furthermore, the audio recordings were transcribed manually by the researcher and imported into Atlas.ti for further analysis. All interviewees answered the questions in the interview guide (Appendix B).


Data Analysis

For the data analysis, this study uses open-coding. Open-coding is “the process of breaking down, examining, comparing, conceptualizing and categorizing data” (Strauss and Corbin, 1990, p. 61). During the process of first-order analysis, it is important “to get lost before you can get found” (Gioia, Corley and Hamilton, 2012, p. 20). As a result, 285 first-order concepts emerged from 12 interviews. The next step was to thoroughly inspect the initial 285 first-order concepts, using line-by-line coding, to make sure something was not overlooked. The researcher started identifying similarities and differences among the initial 285 first-order concepts. This was necessary to put many similar concepts together, and as some concepts occurred in transcripts only once, they were not grounded, and the researcher decided to disregard them. For example, concepts like „Dutch brand‟, „Dutch knowledge‟, „Dutch technology‟ and „Dutch greenhouses‟ were placed into the „Knowledge & Technology Advantage‟ concept. As a result, initial 285 first-order concepts were narrowed down to 18 first-order concepts.

In the second part of the analysis, the researcher arranged these first-order concepts into appropriate themes or theoretical categories, as these should help “describe and explain the phenomena that was observed” (Gioia, Corley and Hamilton, 2012, p. 20). Every quotation that was part of a first-order concept was examined in detail, to make sure it is placed in the correct theme.

Last but not the least, by combining various second-order themes the researcher came up with three aggregate dimensions: learn from other countries, change in perception about cannabis, and social, economic and environmental benefits. These aggregate dimensions remain the themes of the analysis, and they should provide a better understanding of the research question in this study. These will be further elaborated in the Findings section.


By narrowing down the initial 285 first-order concepts to 18, the researcher started a second part of the analysis. In the second part of the analysis, 18 first-order concepts were grouped into six appropriate second-order themes. After that, a deep analysis of themes was conducted, which resulted in three aggregate dimensions: Learn from other countries, Change in perception about


cannabis, and Social, economic & environmental benefits. In the following chapters, these results are discussed in detail.

Learning From Other Countries

The Netherlands is considered a pioneer in the cannabis industry, and as a result, Dutch knowledge and technology are used in countries all over the world that legalized or regulated cannabis. Still, cannabis in the Netherlands is only decriminalized, with a certain tolerance policy in practice. Coffeeshops are allowed to sell cannabis for personal use, but the cultivation and the supply of cannabis are illegal. If the Republic of Croatia is to introduce the cannabis market, to benefit from it, the first step is to look at the other countries and learn from them.

Issues in the Netherlands

During the interviews, many experts have said that since 1976, when tolerance policy in the Netherlands took place, the government failed to improve this policy. From their experience, instead of improving the policy, from 2000, the Dutch government started introducing repressive measures. Due to these measures hundreds of coffeeshops had to close, coffeeshops in some cities stopped selling cannabis to foreigners, and in general, working in this industry became challenging. While all of them agree it is in the government interest to keep the coffeeshops open, a reason for this transformation from tolerance to repression remains unknown to many. However, there is a perception that this is all due to international relations and problems with France at the end of the „90s. According to experts, back then, the Netherlands was ready to legalize cannabis; they even had a written law on the table that was agreed in the parliament. But, Jacques Chirac, president of France at that time, started calling the Netherlands a narco- state, blaming the Dutch coffeeshops for causing drug problems in France, and threatening that France will stop doing business with the Netherlands if they legalize drugs. The interviewees were unsatisfied with the approach taken by the Dutch government; they criticized the government for not protecting their own citizens and devoting more attention to international relations with other countries. The Croatian government should consider these issues when solving possible international conflicts.

This is the trauma that they have…What Netherlands government should have done is, when Chirac came with this bullshit is: “Mr. Chirac, please, how many hard drug heroin


addicts are there in France? 400,000 people. How many are in the Netherlands? And how many people use cannabis? Because it is a lot higher than in France. How many people die of drugs? It‟s pfff, 50 times even more relative to the Netherlands.” So they could have said, “Maybe before you criticize us, you should look after your own policy, open up some coffeeshops.” If they would have taken that approach, more oppositional, it would be legalized. – Derrick Bergman

Moreover, according to our experts keeping the cultivation and supply of cannabis illegal (backdoor problem) was the biggest mistake of Dutch policy. Many experts stated that, in the beginning, when this policy was introduced, the market consisted of small cannabis growers, unarmed, normal people who loved and consumed the plant. What they had left would be sold to coffeeshops, and this was a good and safe product. By keeping this part illegal, they think that the government created a gap that was filled by criminal organizations. Experts stated the government was warned by many criminologists, researchers and the justice department itself, about possible outcomes of the policy, but they decided to ignore the advice. For that reason, many experts believe the Dutch government is to be blamed for creating criminal organizations that are nowadays in control of this industry.

They, the government and the government policy, and the regression policy, the closing of coffeeshops, they created a big illegal market. They created!!! It is not consumers, companies, no… So, I am critical, I am critical criminologist, I am also critical to the government. That‟s what I always said, that‟s why I studied criminology; I saw that the government creating criminals. – Laura Rastovac

In addition to criminality, experts raised an issue about the quality of cannabis sold in the coffeeshops. Many experts stated that criminal organizations care only about the profit, so their products are often contaminated with pesticides, mold, or sometimes even a glass to add on weight.

We started this company (Project C) because we really think we should make a different system in the Netherlands with the distribution of this cannabis. Because about 1 million Dutch people use cannabis every year, 3 million tried once in life, but the quality is shitty. There are pesticides, mold… – Joep van Meel


Since the product is coming from the illegal market, there is no quality control, and coffeeshops are not allowed to test their products. Moreover, during the data analysis, it became apparent that the situation regarding the availability of medical cannabis in the Netherlands is similar to the situation in Croatia. Although medical cannabis is produced in the Netherlands by the company called Bedrocan, it is not reimbursed by health insurance, therefore it is extremely expensive, and the majority of doctors are unwilling to prescribe it. Simultaneously, medical cannabis produced in the Netherlands is exported to Germany, where cannabis is reimbursed by health insurance. Under these circumstances, according to experts, there is still a majority of medical cannabis patients obtaining their products from coffeeshops or straight from the illegal market.

I did quite a big study with more than 9,000 cannabis consumers, part of them are medical cannabis consumers. And you could see that only 15% of the people who call themselves a medical cannabis consumer go to the pharmacy. All the others buy it from the illegal markets, in coffeeshops; they know somebody, and they make it themselves. This means that 85% of people who want to use cannabis in a medical way, but they still have to go to the illegal markets. – Nicole Maalsté

Last but not the least, many experts raised some challenges when operating a business in this industry, saying that everything is harder than for a “normal” company. For example, as the cannabis industry is considered a controversial industry, many entrepreneurs are not allowed to open a bank account for their business. From their perspective, this does not make sense, because if something is controversial, it would make more sense to observe it better. Moreover, a cannabis seed company, Dutch Passion, which is already 33 years in this business, experiences repeating issues with their partners. Courier services like DHL and UPS would suddenly block their accounts, simply because they did not want to be associated with any company in the cannabis industry. While cannabis seeds are 100% legal according to Dutch law, and according to many international laws, still, other companies are very hesitant of working with companies in these industries.

And that‟s not because they don‟t want that business, it is because they noticed the governments are very scared of the whole cannabis subject, and they don‟t want to have a bad name on them. – Jouke Piepenbrink


In addition to that, as experts stated, the Dutch government was collecting a value-added tax on cannabis, an illegal product. Henry Dekker, the owner of five coffeeshops in the Netherlands, was the first to discover this, back in the „80s.

So, he (H. Dekker) goes to the tax office, and he says “I want my value-added tax back, please, over the last 6 years.” And they laugh at him; they take him to the court. And at the highest, highest court, European court, they say “the guy is right”. “It is technically illegal in your law to even have it, and then you can‟t tax it”. So they had to give him back 3 million Dutch guilders [approximately 1.3 million EUR], and ever since that verdict, no one pays value-added tax, nobody. – Derrick Bergman

This might suggest that, even though the Netherlands was ready for cannabis legalization a long time ago, they decided not to do it, due to the international relations. Furthermore, it can be concluded from the statements of the experts that the Dutch government failed to regulate the cannabis market in relation to all the above-mentioned areas, which caused many problems in this industry but only in the areas that were not regulated properly. We can see that cultivation and supply are in the hands of criminal organizations, which is tied to public health and safety. Financing in this industry does not function properly, and the taxing example above shows how, this policy in general, was not completely developed. If the Republic of Croatia is to introduce the cannabis market, it has to be regulated in relation to all areas: cultivation, production, and processing; sales, consumption, and possession; taxes and finance; public health and safety; and governance (Carnevale et. al., 2017).

Benefits in the Netherlands

According to experts, no matter how bad the current policy is, it served its initial purpose. This tolerance policy was introduced to separate soft and hard drugs, and taking that into consideration, experts said that the policy was successful. Besides market separation, experts believe that coffeeshops have significant social functions in relation to providing social control and a secure place for customers. Additionally, these customers are able to inform and educate themselves about the product and ways of consuming it. They argue that, as there are bars for alcohol consumers, there should be a place for cannabis users as well. Many of these experts think that coffeeshops are one of the greatest Dutch inventions of all time. This might suggest


that countries that are planning to experiment with cannabis need to make sure to have a place for consumption.

The main reason to do it like this, back in 1972, was to make sure that people that go to coffeeshop don‟t have a connection with hard drugs easily, that it won‟t work as a gateway drug. Somehow, that succeeded. You don‟t see many problems with hard drugs and stuff in the coffeeshops. – Joep van Meel

Moreover, the Dutch government is nowadays collecting profit tax from coffeeshops, and according to the experts, this amounts to ~400,000,000 EUR per year. However, these experts argue that if the cultivation and supply of cannabis were regulated or legalized, the government would make at least double the amount they are making at present. Therefore, to fully benefit from the cannabis industry, countries should legalize or regulate all areas in this industry.

When we legalize the backdoor, it will be double. So it is going to be one billion when they legalize it, to start with, and that is going to grow a lot. – Dimitri Breeuwer

Besides, the cannabis industry is generating many jobs in the Netherlands. The interviewees stated that there are jobs for both, lower and higher educated workers and that young people seem to be especially interested to work in this industry. The Croatian government should reflect on this, considering the country‟s growing emigration crisis.

In terms of cannabis tourism, Amsterdam was always considered a cannabis capital of the World and a must-visit destination for all cannabis enthusiasts. The interviewees noted that besides cannabis enthusiasts, there are many tourists visiting Amsterdam for other purposes. Even though cannabis tolerance was not their primary motive, these tourists see coffeeshops as a tourist attraction, and they end up experiencing that side of Amsterdam as well. However, as the interviewees added, in some cities like Breda, coffeeshops are not allowed to serve tourists, which causes a nuisance on the streets. This might indicate that to fully benefit from it, the cannabis policy should be universal for the whole country.

Also, for harm reduction, it is good to open more coffeeshops in Holland, and also for the tourism and the crowd in the other coffeeshops, they have to open more coffeeshops, in my opinion. – Dimitri Breeuwer


Furthermore, experts stated that besides economic benefits, the cannabis industry plays a role in research and education. From the research perspective, there are companies trying to provide clarity in the whole debate about cannabis as a medicine, and ultimately, improve the quality of life in patients. From the educational perspective, cannabis museums and the cannabis college in Amsterdam are perceived among the interviewees as great educational sites. This suggests that the cannabis industry can be beneficial for both, the local community, and for tourism as well.

Change in perception about cannabis

Alcohol and tobacco products are completely legal in most of the countries worldwide. On the other hand, while there are no recorded cannabis deaths in the history of civilization, this plant is often portrayed as a gateway drug and equally dangerous as heroin and other hard drugs. According to the interviewees, there is a lot of misinformation about cannabis, and this misinformation is used typically among very traditional and religious political parties, to keep this plant illegal.

Lack of education

The majority of people, including doctors and politicians, do not possess enough knowledge about cannabis. Experts stated that misperceptions about cannabis as a dangerous and a gateway drug are not based on any evidence. On the contrary, according to them, many governments of countries worldwide are doing research on how harmful and addictive substances available there are, and cannabis always ends up at the bottom of the list. For example, in that same research only crack and heroin are found to be worse than alcohol, and yet, almost no one is challenging its legal status. On top of that, alcohol is advertised on national TV and many other forms of media, while in the Netherlands, according to the experts, more than 4,000 people die of alcohol every year. Moreover, experts believe that when something with cannabis is scientifically proven, people tend to disregard it only because it is cannabis.

There are also people who are not even willing to look at the research that is there, so there are now accepted cannabis medicines like the drug called Epidiolex, from GWpharmaceuticals, which went through all phases of a clinical trial in the USA, so it is now registered medicine on the market. It means they proved it works. And even then


some people still don‟t want to look at this product because it is cannabis, so that is obviously wrong. – Juriën Koster

According to interviewees, cannabis has many useful properties. Hemp, for example, can be used in the textile, paper, transport, construction, and many other industries. Besides being one of the most versatile plants on the planet, it is also one of the most sustainable ones. At present, the population is facing the effects of climate change, but according to one of our experts, hemp can be used to mitigate this change, which is unknown to many people.

Hemp can be used for phytoremediation, or in other words, to clean the soil. Besides that, it absorbs CO2 and considering it is a fast-growing plant, her potential in absorbing CO2 is 4 times bigger than with common trees. So, this is one fact that is unknown to many people. Therefore, hemp is a very, very useful plant in mitigating climate change as well. – Mirela Holy

Having all that in mind, the stigma surrounding cannabis is still present all over the world. Many interviewees said that among millennials and young people in general, this stigma does not exist. However, when it comes to the baby boomers, and other generations, that were taught in schools and in the news that cannabis is the same as heroin, this stigma is something that cannot be easily broken down. Many of these elderly people can be helped medically with the cannabis, but they are not even thinking about it, because of the stigma surrounding it, experts said. One of the experts and a mother of three kids informed us how she is dealing with this stigma and what is necessary to make a change:

I really believe that if you want to change something you have to do it with yourself. So that‟s what I do. My children know what I do, what kind of work I do; they know what it is, that you need a paper or can use a vape or whatever. I tried educating them. That doesn‟t mean that I am smoking with my children, but I am also not drinking with my children. And I think if people start approaching cannabis the same as they approach their drink, then we are talking. – Simone van Breda

However, on the country level, unpredictable events can happen that can initiate this change faster. One of these events, according to one of our experts, happened in the UK. He said there were talks about medical cannabis, but they were not planning to regulate it. And then, there was


a boy (Billy Caldwell) who traveled with his mother to Canada, bought his cannabis medicine there, and imported it back to the UK. He was stopped at the border control; they took his cannabis medicine, and there was a lot of media attention. Public reaction on taking medicine from a small kid, who needed this medicine for epilepsy, was severe. Within the next sixth months, the policy in the UK was changed. This suggests that heart-breaking cases like this had to happen, to change the policy. Besides that, many interviewees stated they see students writing a master thesis on the topic of cannabis, as a way to take the stigma of cannabis.


As the cannabis product range is expanding, there are more and more new users that want to experiment with it. According to experts, edibles (cannabis-infused food) are at the moment the most popular cannabis products among cannabis consumers all over the world. Besides the food industry, cannabis can be also used in beauty and wellness, as a cream, soap or lotion. The potential surrounding cannabis is huge.

These new ways of consuming are also a much healthier alternative than smoking cannabis and a way of altering the perception about cannabis. Furthermore, many experts stated CBD (cannabidiol) products were especially gaining popularity outside the Netherlands, where the laws are loose. Two entrepreneurs in Croatia also stated that these CBD products are becoming quite popular in Croatia as well. They see customers from all generations experimenting with these products, only because they are legal. So this suggests CBD is a way to normalize the market, and it can be seen that it is already happening in the Republic of Croatia as well.

Social, economic and environmental benefits

The cannabis market has been proven to have more positive than negative effects when it is introduced properly. Many benefits were mentioned in the chapters above, thus, the focus of this chapter will be on the current situation with industrial hemp and medical cannabis in Croatia.

Areas for improvement

Back in history when Croatia was part of Yugoslavia, Yugoslavia was one of the world‟s leading hemp producers and exporters. This hemp culture remained active in villages all around Croatia, even nowadays, as it was expressed by one of the interviewees. His company (Protect Pharma) is


located in a village of 1,000 people, and many households there, own something made from hemp, or they own tools for treating hemp. This suggests that this culture is not forgotten in Croatia and that knowledge is still present there. However, experts found regulations that Croatia made as an independent country concerning hemp very restrictive. Imposing THC limit, while having indigenous variety (Fleischman) in this area that exceeds that limit, made no sense to them. Furthermore, experts stated that due to these limitations, Croatia missed many investment opportunities.

Back in 2011-12, Croatia regulated the cultivation of industrial hemp, but full potential was never utilized. This regulation said the cultivation of industrial hemp is allowed only for food production. On behalf of that stupid regulation, Croatia missed some very big and serious investments, investors, who wanted to cultivate industrial hemp, produce fibers, construction material and so on. – Mladen Falamić

As we already learned, and the interviewees confirmed, tourism in Croatia is seasonal, focused at specific locations and unsustainable. According to our interviewees, the introduction of cannabis would benefit tourism and the economy as a whole. The interviewees suggest that cannabis would expand tourism all year long, and it would spread it from the seaside to all over the country. Furthermore, they believe that cannabis tourism would change the image of Croatia, from being conservative to an open and liberal country. Since Croatia is already a popular tourist destination, enriching its offer with cannabis would definitely benefit the country, as the interviewees stated.

Regarding the medical cannabis in Croatia, all interviewees from that country agreed that its implementation was not successful and that it should be improved. Even though they believe the policy was introduced on time and that Croatia, compared to other countries made a step forward; they find prices unacceptable, and products mostly unavailable due to their price. As one of the interviewees tells from his experience:

I talked with Dr. Ognjen Brborovic, who was a president of the Commission for medical cannabis in Croatia. So, from experience, I can tell you that this was more of a public smear campaign because, in practice, medical cannabis in Croatia didn‟t function. – Tvrtko Kračun


Discussion and Conclusion

The purpose of this study was to explore how the introduction of the cannabis market in the Republic of Croatia could be beneficial for the country. The study aimed to perform this through the analysis of the Dutch model. This study additionally provided new knowledge about the cannabis industry in the Netherlands and a representation of how cannabis entrepreneurs are coping with the stigma surrounding the cannabis industry. The results indicated that the cannabis market could be beneficial economically, socially and environmentally for the Republic of Croatia.

The results of the analysis of the Dutch model support recommendations of Carnevale et. al. (2017) about the five areas for developing the regulatory framework for the cannabis industry: cultivation, production, and processing; sales, consumption, and possession; taxes and finance; public health and safety; and governance. Based on the lessons learned from the Dutch model, it is recommended to consider all of these areas, to reduce the possibility of the emergence of the illegal markets, to protect the health and safety of consumers, and to enable normal working conditions for cannabis entrepreneurs. The results suggest that if Croatia were to legalize cannabis, regulations would have to be developed clearly in relation to each of these areas, to fully benefit from this market. Furthermore, the results of the analysis confirmed Reinarman‟s (2009) idea of the necessity of regulated systems to achieve a separation of markets. The results suggest that in Dutch cities where coffeeshops are allowed to sell cannabis to foreigners, consumers are unlikely to be associated with other illicit drugs. During the data collection process that took part in Breda, where coffeeshops are not allowed to sell cannabis to foreigners, the author had the first-hand experience of being rejected in the coffeeshop for that reason. This resulted in the street dealer approaching the author in front of the same coffeeshop, and offering all kind of drugs, which additionally confirms Reinarman‟s idea.

Furthermore, in the example of the Republic of Croatia, these results suggest the introduction of the cannabis market would benefit the country. Regarding the economy, hemp would benefit the industrial sector of the country. Transport, construction, shipbuilding, textile and paper industry are some of many examples where hemp can be used more efficiently than the current materials. Considering that hemp is a fast-growing plant, and results suggest that knowledge about cultivation and processing is still present in some areas of the country; Croatia


could re-establish its historical leading position in this industry and achieve significant economic benefits.

Besides the industrial sector, cannabis is seen as a tourist attraction or one of the main motives for tourists coming from the countries where cannabis is illegal. Since Croatia has the highest total contribution of tourism to the country‟s GDP in Europe, the results suggest that this economic impact could be higher than in any country that introduced the cannabis market so far. The results indicate cannabis would expand the tourism season in Croatia to all year long, and to all regions in the country, thus, solving the problem with the current model based on sun and sea. Besides, as Croatia is already considered a popular medical tourism destination, the results suggest that enriching its offer with cannabis, which has many known medicinal properties, could boost the economy even more.

Furthermore, taxes from this industry could be invested in developing the educational programs, protection of public health and safety, schools, law enforcement, and many other areas. The results suggest that, by benefiting many areas of everyday life, the impact that cannabis could have within the society is significant. The results indicate coffeeshops, besides separating the drug markets, have important social functions in relation to providing social control and a safe place for customers. Regulating this market would contribute to public safety, by allowing law enforcement to focus on other types of crime. Additionally, the results suggest elderly citizens could benefit from cannabis as a medicine, and that cannabis would increase the quality of life in the population. Furthermore, considering Croatia‟s growing emigration crisis, these results suggest the introduction of the cannabis market would attract many young people to come back home and work in this industry.

In regards to the environment, many previous studies showed that cannabis is one of the most sustainable plants on the planet. The results of this study suggest that hemp, due to its CO2 absorbing potential, has enormous climate change mitigation properties. Paper, plastic and fossil fuels can be replaced with hemp, which suggests that Croatia could set an example for other countries in relation to sustainability, and especially as a sustainable tourism destination.

Last but not the least, the current Covid-19 situation where only the essential infrastructure remained open, unexpectedly made cannabis an essential product. With coffeeshops and dispensaries all over the world remaining open, this suggests that cannabis is getting normalized in today‟s society, but also within the governments. The results also show


that this process of normalization has already started in Croatia with the introduction of cannabidiol (CBD) products that gained popularity with the country‟s general population. Since the socio-economic impact of Covid-19 is yet to be seen, but considering the significance of the tourism sector in the Croatian economy, Covid-19 might be fatal for Croatia. Unexpected cases like this one, or heart-breaking case in the UK, could make countries change the policy faster. Therefore, this study suggests Croatia should introduce the cannabis market as soon as possible, to combat the economic downturn as a result of Covid-19.

By drawing on the existing studies about the cannabis industry, this study is focused on the introduction of the cannabis market in the Republic of Croatia. Prior literature on the topic of the introduction of the cannabis market in the Republic of Croatia is not existent, which makes this study unique and theoretically relevant. This study also fills the gap in the existing literature about the cannabis industry by looking specifically at how to introduce a new industry to a country. While there are some studies about the benefits of the cannabis industry, they are mostly done in the USA and the Netherlands, countries that already have regulated cannabis markets. This study builds on that knowledge, but also extends it further, by providing possible benefits that this industry can have on a country where it is not regulated at the moment. Furthermore, it provides a baseline for future researchers that will examine the cannabis market in the Republic of Croatia further.

Regarding the practical implications, this study has the potential of providing a better understanding of the introduction of the cannabis market to politicians and policymakers in Croatia. Another practical implication of this study is that it can serve as market research for (potential) cannabis entrepreneurs in Croatia, by providing them with a better understanding of the market, and about the customer needs.

Limitations & Future Research

The limitation of this study is that it could be affected by the researcher‟s bias, as the questions asked during the interviews could affect the results of the study. Secondly, due to the current cannabis policy in the Netherlands, the researcher was unable to reach the coffeeshop owners. Collecting data from coffeeshop owners, together with other industry experts, could increase the quality of data collected.


This study was conducted prior to the proposed government experiment about the cultivation of cannabis for recreational use. The purpose of that experiment is to control the supply of cannabis to coffeeshops; therefore, it might affect the industry and its players. The recommendation for future research is that it should examine this industry during, and after the proposed experiment. Additionally, future research should also include coffeeshop owners and more politicians in the sample size, to increase the quality of data collected.




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Appendix A: Interview Guide

Hello, I am Edvin Brnčić, master student of leadership & change management at Vrije Universiteit Amsterdam, and I am writing my master thesis on topic of cannabis industry. You were identified as someone who knows a lot about the topic and who could help me develop it further.

I would like to thank you for participation. And to ease note taking, I would like to record this conversation, and here you need to sign this consent form.
Those recordings will eventually be destroyed after they are transcribed, and they will be available only to me, my supervisors and eventually to those people grading the thesis.


Appendix B: Research Consent Form


Appendix C: Data Structure

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