The Dutch have adopted a policy of "gedogen," or blind eye, to its sale and use since 1976. The government distinguished between so-called "soft" cannabis drugs and "hard" drugs such as heroin or cocaine. That's when coffee houses sprang up to sell and let people smoke.
In 1996, the Dutch government began to crack down on cannabis cafes. It now licenses them, bans them advertising their product, prohibits sales to anyone under 18, and limits sales and possession to 5 grams a day per person. Before, people could possess up to 30 grams. Since then, the number of shops in the country has fallen by about half -- to 720 in the country. Last year, shops were forced to choose between serving alcohol and cannabis. Most chose cannabis. The sales aren't subject to tax. However, owners pay taxes on the income they make from selling it.
The government and cannabis advocates say that regulating the sale and use of soft drugs results in less hard-drug addiction.
"If other countries followed our system, there would be less drug abuse in the world," says Mark Jacobsen, chairman of the Amsterdam Union of Coffee Shops.
The Netherlands policy is unique in Europe, where the classification of cannabis as a drug and criminals laws that apply to its possession vary.
The European Union's Monitoring Center for Drugs and Drug Addiction in Lisbon says that cannabis use may pose a risk to physical and psychological health.