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During the second half of the 1990s, the use of hallucinogenic mushrooms and other 'natural' products have gained popularity in the Netherlands and elsewhere. This demand was met with a quick response from commercial markets. One component of this trend was the opening of smart shops – venues selling legal and predominantly 'natural' products. In this article the demand and supply side as well as the applicable law and regulatory strategies concerning this new trend are explored. The issues discussed include the following: what are smart shops and what products do they offer; and what are the health and social risks involved in the use of these products? Following this, current Dutch policy strategy with regard to this new trend is described. The current approach is based on the interface between drug policy, public health, consumer protection and pharmaceutical policy. This approach is based on the outcome of a health and social risks assessment by the Working Party on Smart Shops (1998) which concluded that these shops and their products do not currently pose major health or social risks. Nevertheless, the emergence of this new trend was thought to require the development of a policy that is based on reliable information, innovative prevention attempts and close monitoring. Whether this tolerant policy will continue much longer is now at issue, however, for a proposed scheduling of hallucinogenic mushrooms on the Opium Act in the near future could, if implemented, bring about significant change.

Contemporary Dutch drug policy is a product of many long-term political, demographic and social changes that have taken place in the Netherlands since the nation's first drug law was enacted in 1919. Shifts in policy emphasis are described and explained in terms of three principles that serve as the cornerstones of the Dutch approach, these include the following: (1) a separation of the markets for hard and soft drugs; (2) normalization of the phenomenon, which means treating drug users as ordinary citizens entitled to government assistance, but also required to assume responsibility for their actions; and (3) harm reduction efforts directed at minimizing the damage done by drugs to users, communities and to the society as a whole. The changing policies regarding cannabis are utilized here as a case study to illustrate how these principles work in practice. Several contemporary issues are analyzed in terms of their influence on recent policy changes. These include drug-related nuisance, the participation of organized crime in drug markets and criticism from abroad regarding the impact of Dutch policies on other nations. The article concludes with a reconsideration of the effects of decriminalizing cannabis, contrasting the Dutch application of the expediency principle with its use in other nations.