Austrian hemp industry also mobilizes against proposed tobacco monopoly on CBD flowers

After months of legal uncertainty, the Austrian government has approved an amendment that will place the hemp flowers smokable under the country's tobacco monopoly starting in January 2029.

Until then, CBD and hemp stores will be allowed to continue selling flower under strict conditions—a temporary compromise that many in the industry describe not so much as a relief as a countdown to collapse.

This decision follows a ruling handed down in late 2024 by the Administrative Court and its affirmation this year by the Supreme Administrative Court that flowers are subject to the Tobacco Tax Act, resulting in a tax of 34%.

While non-smokable products such as CBD oils, edibles, or topical products Although they are not subject to European regulations, this decision is having a major impact on the Austrian flower market. According to retailers, flowers are the main source of revenue for hundreds of specialty stores.

«This isn't a rescue—it's a fatal blow.»

Industry representatives did not mince words at a press conference held after the government’s announcement. «This isn’t a bailout—it’s actually a fatal blow,» said Lukas Bock, a retailer in Vienna, who argued that he and «hundreds of others» now face the loss of the flagship product on which their business depended.

The transition period, which runs through the end of 2028, allows stores to continue operating only if they obtain a special hemp license from the agency that manages the tobacco monopoly. To be eligible, businesses must have been in operation since early 2025 and primarily sell hemp-based products—a requirement that small stores fear they may not be able to meet.

The Österreichischer Cannabisbundesverband (ÖCB, which has nothing to do with the brand of rolling papers), founded earlier this year to advocate for the industry, acknowledges that this transition offers temporary relief, but warns that the fundamental problem remains: in three years, unless there is another change in the law, the CBD flower market as it exists today will be dismantled.

A Constitutional Battle on the Horizon

Constitutional law expert Heinz Mayer, author of a legal opinion for the ÖCB, argues that the extension of the monopoly constitutes «an impermissible interference with the freedom to engage in commercial activity» and that it is not justified by any facts. He drew a parallel with a 2015 case in which the Constitutional Court ruled against extending the monopoly to e-liquids—a precedent that, in his view, is strong enough to overturn the government’s current approach.

«We find ourselves today in a situation similar to the one we were in ten years ago with e-cigarettes,» Mr. Mayer said. He expects the case to «ultimately end up before the Constitutional Court.».

The ÖCB filed a complaint with the Federal Finance Court earlier this year, arguing that the monopoly is discriminatory and effectively amounts to a «professional ban.» The case is still pending.

Economic Consequences and Regulatory Contradictions

The stakes are high. According to industry estimates, approximately 500 CBD stores have been severely affected since the first restrictions took effect, and more than 1,500 jobs are at risk. Many report revenue losses of up to 70 %. At the same time, Austria is forgoing tens of millions of euros in potential tax revenue by limiting the market to tobacco retailers. The ÖCB estimates that the legal hemp market could generate between 40 and 50 million euros in annual tax revenue—far more than the 15 million euros projected under the monopoly system.

This situation also contradicts European law, which clearly stipulates that CBD is not a narcotic and that hemp-based products with low THC content can move freely within the single market.

Austrian stakeholders warn that the current approach risks driving consumers toward the unregulated market due to higher prices and reduced access.