Consumption of cannabis is not criminalised. Possession of small amounts of cannabis is prohibited under the Addictive Drugs and Narcotics Act (Law no. 65/1974), and the most common sanction is a fine. More severe acts such as import, export, sale, purchase, exchange, delivery, reception, production, and preparation are prohibited according to article 2 of the law and result in a prison sentence. 

Medical cannabis
Medical cannabis is strictly regulated in Iceland, much like in Sweden, Norway, and Finland. There are a few exceptions for medical purposes, including the product Sativex, which is available on prescription (Directorate of Health, 2015). 

Drug offences

Registered drug offences have been on the increase in Iceland, with 2221 registered offences in 2017 compared to 911 in 2001 (The National Commissioner of the Icelandic Police, 2018). Most of the violations concern possession for personal use. Information on individual substances cannot be detracted from the data, which means that the share of cannabis cases is unknown.

The official drug policy in Iceland has been to reduce consumption and sale of illicit substances through prevention, punishment, and treatment (Olafsdottir & Bragadottir, 2006). The focus has been on reducing consumption rather than on harm-reduction efforts, which have taken time to be introduced (ibid.). There
was a downward trend in registered drug offences from 2006 to 2009, but the numbers then rose again and reached a peak in 2014. The decreasing trend in the mid-2000s may be attributed to a change in police enforcement: the focus shifted from possession and consumption to trafficking cases, local production,
and seizures of illicit substances (United States Department of State, 2010).

To combat drug violations, the police have access to different coercive methods, including searches of private homes, wiretapping, and random stop-and-search (Gunnlaugsson, 2015b). In the 1990s, 29 warrants were issued during a threeyear period for wiretapping 42 telephone numbers, all for drug violations.

Cannabis market in Iceland

The least seized illicit substance is heroin, while police figures from 1985–1995 show that the police seized mostly cannabis (147 kilos) and amphetamines and cocaine (20 kilos) (Gunnlaugsson & Galliher, 2010). In 2002–2007 the numbers increased: over 200 kg of cannabis, 100 kg of amphetamines, and 30 kg of cocaine were seized.

Two police reports argue that the domestic production of cannabis is growing and that the cannabis market is close to self-sufficient (The National Commissioner of the Icelandic Police, 2015 and 2017). This claim is confirmed by Helgi Gunnlaugsson, professor of sociology at the University of Iceland. The production increases in the countryside outside the capital in an organised fashion with facilities that are more spread out and with fewer large factories (The National Commissioner of the Icelandic Police, 2015 and 2017).

According to the reports, domestic growing increased after the banking crisis in 2008. Olafsdottir (2015) notes that the crisis indeed had an effect on other home-grown products such as vegetables, arguing that this also likely affected the domestic production of illicit substances. The number of cannabis confiscations also increased between 2008 and 2014 (ibid.), although it has to be said that this is not necessarily an indicator of increased cannabis circulation. The police attribute the increased supply of cannabis to rising cannabis consumption in the general population in recent years (The National Commissioner of the Icelandic Police, 2015 and 2017).

The cannabis sale market is varied and closed social media groups function as a space for distribution. 

Penalty levels

Possession of cannabis for personal use is a crime that is handled and decided by the police commissioner in a summary procedure in accordance with Article 148 Act no. 88/208 on the handling of criminal proceedings (State Attorney, 2009). A summary procedure presumes that the fine not exceed 500,000 ISK.

The penalty is a fine issued on a progressive scale. There is a basic fee for possession, and extra fees are added for every gram or part of gram. The state attorney guidelines for fining cases stipulates that the police must investigate whether the possession is for personal use or for sale no matter the amount, because a sale always leads to prosecution in court (ibid.). There are explicit limits for amounts that can be considered for sale, but doubtful cases should be thoroughly investigated. In an earlier version of the guidelines from 1996, 10 grams of cannabis was the limit for considering sales (Søe Sandell, 1997).

Possession of small amounts of cannabis typically ends in a fine through a summary procedure, even though the penal scale also includes imprisonment (Søe Sandell, 1997). In practice, only sales result in prison terms (Gunnlaugsson & Galliher, 2010).

The Supreme Court ruled in 2015 that the growth and production of 169 marihuana plants (including possession of marihuana and money laundering) had a penalty value of 18 months in prison subsumed under the Addictive Drugs and Narcotics Act. The accused person admitted to about 120,000 EUR in profits. A
lower court had previously sentenced the accused to three years in prison, but this was overruled in the Supreme Court partly due to the length of the judicial process (H. Gunnlaugsson, personal communication, 050218).

Penal sanctions system

The rising drug problem has consequences for the prison system (Gunnlaugsson, 2015b). In 2014 about one third of the prison population were incarcerated due to drug offences (Hildebrandt, 2016), compared to about 10% in the early 1990s (Gunnlaugsson, 2015b). 

In cannabis violations, fines for possession for personal use dominate the system but imprisonment is not uncommon for distribution, import, or production. Possession for personal use of cannabis results in most cases in a summary procedure, which means that conditions of treatment never apply. 

In the recent decades, new forms of alternative sanctions have been introduced in the justice system. Community service was introduced as late as 1995 and was made permanent in 1998 (Olafsdottir & Bragadottir, 2006). Community service is not a penal sanction. Instead the Prison and Probations Administration decides whether to use community service, as is done with conditional release. The possibility for alcohol and drug treatment during imprisonment or at the end of a prison sentence was introduced in 1988 in Iceland (Bragadottir, 2004).