The coffeeshop phenomenon began in the early 1970's. Even back then, the Netherlands realised that the war on drugs was lost and that they needed to find a way of reducing the impact of drugs on their society. To that end, they sought to draw a clear line between hard and soft drugs and concentrated their law enforcement effort on hard drugs. Those involved in smuggling and trading heroin and cocaine were to be hunted down and prosecuted; those addicted to heroin were to be treated as sick, like alcoholics; and those in possession of cannabis were to be, virtually, ignored.
The pioneering coffeeshops exploited this situation by openly selling cannabis. The first coffeeshop was probably Mellow Yellow founded by Wernard Bruining (the present day shop is in a different location and under new management). Another early entry was Rusland but the most famous trailblazer was undoubtedly The Bulldog established in 1975 by a guy called Henk de Vries in a former brothel in the Red Light district. The Bulldog withstood regular busts and kept coming back for more. It may not have been the very first but its perseverance established the coffeeshop concept. It is still open for business and has now become a tourist attraction in its own right.
In 1976 the first steps were taken to decriminalise cannabis. The law was changed so that the possession of up to 30 grams of cannabis was no longer a criminal offence. Coffeeshops, however, remained completely illegal until 1980. Nevertheless, they continued to thrive and multiply.
1980 saw the beginning of the 'tolerance' policy towards coffeeshops. So long as there were never any hard drugs on the premises and they were reasonably discreet, they were generally left alone. Coffee shops continued to proliferate in Amsterdam and throughout the Netherlands until, according to some, there were as many as 1500 of them at their zenith.
By the 1990s the coffeeshop scene had grown from its hippie roots into big business. The unregulated coffeeshops were becoming attractive to organised crime as a means of laundering money and the Amsterdam authorities decided to dramatically reduce their numbers. Around the same time many of the more reputable coffeeshops had organised themselves into a union, the BCD (Bond van Cannabis Detaillisten).
In 1995, all of the recognised coffeeshops in Amsterdam were issued with licences (I've read that 350 were issued). A licence is allocated to an address and, if the shop there breaks a rule, that address loses its licence. By this means the number of coffeeshops has been steadily reduced.
In 2007, the few remaining coffeeshop-bars in Amsterdam were forced to chose between alcohol and cannabis. Some gave up their coffeeshop licences.
In 2008, a no coffeeshops within 250m of a school rule was introduced. In combination with Project 2012 this has closed many more shops, especially in central Amsterdam.
The mayor of Amsterdam says there will still be 160 coffeeshops after this latest round of closures but, whereas many of the shops lost in the 1990s will not be missed, the more recent closures have ripped the heart out of the city.
Meanwhile, outside Amsterdam the talk has been of the Wietpas (Weed Pass). This was an attempt to restrict sales to residents of the Netherlands and end cannabis tourism in towns near the German and Belgian borders. The pass was never implemented but the towns of Roosendaal and Bergen op Zoom closed all of their coffeeshops and Maastricht has banned foreign tourists in coffeeshops.
In the early days, coffee shops sold mostly imported hashish (cannabis resin). Nowadays Dutch-grown grass dominates most menus (although hash is still available). The famous 'Skunk' originated in America. When it was introduced into the Netherlands, the more relaxed environment and endemic Dutch horticultural skills led to this variety being further improved. Although Holland's climate is not particularly conducive to growing marijuana, the use of artificial lighting for indoor growing has become highly advanced. There are now hundreds of named varieties of seeds available and large-scale cultivation supplies the coffee shops with a good range of exotic herbs.
Growing up to half-a-dozen marijuana plants for home consumption is, effectively, legal. Commercial growing is, however, still illegal so the 'grow rooms' that supply the coffeeshops are still very secretive.
Despite all of the closures and talk of a Wietpas, there are still hundreds of coffeeshops open for business. The vast majority, including all in Amsterdam, also welcome foreign tourists.
This site lists nearly 1400 shops, past and present, with a clear indication of which ones are still open. Check out the Directory for details of all of the shops. The forum is also available as a source of news.