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The Austrian Supreme Administrative Court has ruled that smokable hemp flowers are subject to the country’s tobacco tax, and may only be sold in licensed tobacco shops.
While the tobacco tax, which amounts to 34% of the retail price, is expected to generate millions of Euros in revenues for the government, restricting sales to tobacconists is likely to bring a crippling blow to the country’s hemp shops, where raw flowers and smokable pre-rolls are leading items.
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The hemp operations in Austria has been shocked by a recent decision by the Administrative Court (Verwaltungsgerichtshof). The court has determined that dried hemp flowers qualify as smokable products, making them subject to the Tobacco Monopoly Act.
Therefore, only authorized tobacco shops, or Trafiken, are now permitted to sell hemp flowers with low THC concentration. It is anticipated that this ruling will change the industry by restricting consumer access and possibly raising pricing.
Not a week ago, we summarized current situation in Austria that it has some of the most strict cannabis regulations. Austria has not eased its restrictions, whereas other countries have. Access to medical cannabis is also difficult. There is only Dronabinol, and getting it involves a difficult prescription procedure.
A new, developing sector at risk
In recent years, hemp stores and vending machines that sell low-THC (less than 0.3%) cannabis flowers have exploded all around Austria. These products, which are marketed for their therapeutic benefits and aromatic properties, have become very popular. But because of the court’s decision, they are now subject to the same laws as tobacco, which essentially limits their sale to authorized sellers and imposes a high tobacco tax of 34%.
It seems likely that the industry and consumers would be significantly impacted financially. Based on a forecast market value of €50 million for hemp flowers, the Austrian government expects the new tax to generate an additional €15 million in revenue annually. However, the decision is a significant setback for hemp companies, especially those who operate in cities. Many have made hemp flower sales their main source of income, and now they must make a difficult choice to either change their business models or close.
Industry reaction: “There’s more to hemp than just smoking it”
Leaders in the business have criticized the decision, claiming that hemp flowers have many use outside of smoking. In an interview with Vorarlberger Nachrichten, Daniel Feuerstein, the creator of the hemp brand Hanafsan, expressed his worries, pointing out that many consumers utilize hemp flowers to make extracts, lotions, and fragrant combinations.
“We have clients that purchase flowers to create lotions and extracts. Others use them to make incense mixtures because they like the aroma, Feuerstein said. He criticized the decision as being rash, claiming that it ignores the numerous non-smokable uses of hemp and unfairly singles out companies that are functioning within the law.
The court case which changed everything
A dispute regarding a hemp store in Vorarlberg that imported dried hemp flowers from Switzerland led to this historic ruling. Austrian customs officials claimed that the flowers were subject to the Tobacco Tax Act and requested €30,000 in tobacco charges. The store challenged the assertion, arguing that hemp is not tobacco and shouldn’t be subject to tobacco taxes.
However, the Federal Fiscal Court decided that tobacco laws apply to any smokable product, regardless of whether it contains tobacco. By upholding this decision, the Administrative Court essentially closed a legal gap. So far, it was permitting hemp sellers to sell flowers without tobacco restrictions.
Future of hemp industry in Austria
According to Austria’s Ministry of Finance, the decision is definitive and effective right away. Since hemp flowers will now only be available through tobacco shops, consumers will pay more and have less access to them. It marks a significant change for companies, causing them to reevaluate their products and business plans.
Although this is a major blow for the business, it also highlights the continuous conflict in the cannabis space between innovation and regulation. Businesses and supporters of hemp will need to lobby for laws that recognize the wide range of uses for hemp outside of smoking, as the legal environment continues to change.
The days of readily available hemp flowers in Austria, which were waiting stores and vending machines, seem to be over for the time being.
https://cannabizeu.com/austria-new-rules-for-hemp-flowers/
