The city's mayor is hoping to curb crime by banning smoking marijuana outdoors. Residents have complained that the tourist-fueled nightlife has made the city unlivable.
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The ban, which will come into effect in mid-May, is seeking to tackle crime and anti-social behavior to improve the quality of life for the area's residents.
Amsterdam is a popular tourist hotspot and its marijuana cafes as well as its brothels and strip clubs draw in millions of visitors every year.
"Residents of the old town suffer a lot from mass tourism and alcohol and drug abuse in the streets", the city said in a statement.
"Tourists also attract street dealers, who in turn cause crime and insecurity," it added.
Mayor on a mission
The move, hailed as a "historic intervention" by Dutch newspaper Het Parool, is part of a larger campaign to crack down on the city's "huge anti-social behavior" issues.
The initiative comes from Amsterdam's first female mayor, Femke Halsema, who has set out to make the city more livable for its residents.
Other measures have also been introduced, such as restricting drinking hours and enforcing earlier closing times for cafes, bars, restaurants and brothels.
The ban on the public smoking of cannabis will be limited to the canal-lined streets that host the city's sex shops and strip clubs.
But if the intended effects are not achieved, the city has said it may extend the rule to the terraces of marijuana cafes too.
Tourism industry hangs in the balance
According to Dutch law, consuming cannabis is technically illegal but possession of anything under 5 grams (0.18 ounces) was decriminalized in 1975.
In principle, only Dutch residents are allowed to purchase cannabis in so-called "coffee shops," but there is an exception for shops in Amsterdam.
There are 570 shops across the country — euphemistically called coffee shops — of which 166 are in Amsterdam, according to Health Ministry and city data.
Halsema has previously said she wants to encourage tourism to Amsterdam for other reasons than sex and drugs, but studies have shown that banning tourists from marijuana cafes would lead to a sharp decline in visitors.