As marijuana legalization continues to blaze through the nation, a new movement has garnered significant traction due to latest research discoveries on its ability to combat the national mental health crisis – psychedelics. Psychedelic plants have been used by non-Western cultures for sacramental purposes for thousands of years. It wasn’t until 1940 that psychedelic drugs were beginning to be rediscovered by Western cultures when Dr. Albert Hofmann, a Swiss chemist, accidently ingested a potential medicine he synthesized on behalf of Sandoz Pharmaceuticals, which we later know as LSD. In the years leading up to the criminalization of psychedelic substances, researchers were conducting a multitude of studies – nationally and internationally – assessing its therapeutic value in treating mental health disorders.
Unfortunately, the War on Drugs eradicated all efforts on revolutionizing therapies available to those suffering from mental health conditions with the implementation of the Controlled Substances Act of 1970 (“CSA”). LSD, MDMA or ecstasy, psilocybin, and mescaline (peyote), along with marijuana were classified as a Schedule I drug – the highest level on the CSA denoting that such substances have no currently accepted medical use, as well as having a high potential for abuse. Although such substances remain labeled as Schedule I drugs on the CSA today, similar to the marijuana movement, psychedelic reform has been sweeping through the country at the state level for the past few years – even known conservative states.
From decriminalization at the local level to state-funded psychedelic research in states like Texas and Kentucky, psychedelic reform is being achieved at various levels at a rapid pace due to numerous advocates pushing for change to help those who are suffering from post-traumatic stress disorder (PTSD), depression, anxiety, and more as traditional pharmaceuticals fail to bring their suffering to an end. Due to such increasing support, two (2) states – Oregon and Colorado – have already passed psychedelic legalization bills to allow licensed facilities and individuals to facilitate, provide, manufacture, and test psychedelics to adults twenty-one (21) years and older for therapeutic use. These two (2) states are just the start to many more enlisting their state government in providing new, innovative therapies to tackle the increasing mental health crisis.
So, what states are offering psychedelic licenses?
The Beaver State has been leading the psychedelic legalization movement as it is the first state to create a regulatory framework to license facilities and individuals to provide psilocybin for therapeutic uses. In 2017, Oregon deviated from federal law as first-time possession of small amounts of psychedelics was downgraded from a Class B felony to a Class A misdemeanor. Furthering this separation of state and federal law, Oregon residents pushed for psilocybin to be an accepted form of palliative treatment through a citizen’s initiative, Measure 109. The purpose of this initiative is to allow access of psilocybin to terminally ill patients whose diagnoses have led to treatment-resistant anxiety and depression.
With the passage of Measure 109—now known as the Psilocybin Services Act, Oregon law enlists the Oregon Health Authority (“OHA”) to create and instill procedural rules and regulations of administering psilocybin. This Act allowed the state of Oregon to develop a “long-term strategic plan” to ensure that psilocybin is not only affordable, but a safe therapeutic option for those suffering from mental disorders.
On January 2nd, 2023, the Oregon Psilocybin Services (“OPS”) began accepting applications on an ongoing basis for the following license types: (i) Manufacturer; (ii) Service Center; (iii) Facilitator; and (iv) Testing Laboratory. Let’s delve into what these license types can do for your endeavors in the newest psychedelic market:
A Manufacturer license allows a business to manufacture, plant, cultivate, grow, harvest, produce, prepare, and propagate psilocybin mushrooms. It also allows the licensee to package psilocybin products and label its container. As of September 18th, 2023, thirty (30) applications have been submitted for a Manufacturer license with only four (4) being approved thus far. A Service Center license allows establishments to administer psilocybin sessions such as psilocybin therapy. To summarize, the services may include: preparation session, administrative session, and integration session. Under this license, a patient will purchase, consume, and experience the psilocybin product under the supervision of a psilocybin service facilitator. Presently, twenty-nine (29) applications have been submitted for a Service Center license with only eleven (11) being approved.
A Facilitator license is issued to individuals who will conduct the services described above at a licensed Service Center. To be a Facilitator, the individual must have a high school diploma, or equivalent, as well as proof of Oregon residency of two or more (2+) years and pass a criminal background check. In addition, they must complete: (i) Training Program approved by OPS; (ii) An exam administered by OPS; and (iii) all other licensing requirements. As of September 18th, 2023, one hundred and eighty-three (183) applications have been submitted by individuals with one hundred and ten (110) being approved. Lastly, a Testing Laboratory license allows entities accredited by Oregon Environmental Laboratory Accreditation Program (“ORELAP”) to test psilocybin and psilocybin products to ensure it is safe for human consumption. Thus far, only two (2) applicants have applied for a Testing Laboratory license with only two (2) being approved. In addition to the above license types, those wishing to work in Oregon’s psilocybin industry must apply for a Worker’s Permit and be approved prior to employment.
To be eligible to apply for any of the above license types, persons must be twenty-one (21) years or older with no disqualifying convictions. Further, to apply for a Manufacturing or Service Center license, fifty percent (50%) of the license must be owned by a resident of Oregon of two (2) or more years. There are some ownership and financial interest limitations those interested in applying should be aware of. A person can own up to five (5) Service Center licenses but cannot have financial interest in more than five (5) Service Center licenses. Moreover, a person can own both a Manufacturer license and a Service Center license at the same or different premise. However, no person can have financial interest in more than one (1) Manufacturer license.
Although there is no cap on the number of licenses to be issued nor an ending date declared on when the application window will close, if ever, now is the time to start strategizing and compiling a strong operations plan to be one of the 1st licensed psychedelic companies in the nation. From receiving local and site approval to providing a Social Equity Plan, there are many unique components to applying for a psychedelic business license.
The great state of Colorado is the 2nd state in the US to approve of a psychedelic legalization bill to allow a regulatory framework for psychedelic business licenses. In 2022, Colorado passed Proposition 122 to legalize psychedelics, specifically psilocybin for therapeutic uses in mental healthcare. Presently, Proposition 122, also known as the Natural Medicine Health Act (“NMHA”), is the most comprehensive psychedelics measure ever introduced on a statewide ballot. Under NMHA, the appointed Natural Medicine Advisory Board will make its first recommendations by September 30th, 2024, for regulatory oversight, so licensed healing centers can begin offering psilocybin by late 2024. Further, the Act removes criminal penalties for various types of “personal use.” As of December 27th, Coloradans twenty-one (21) and older can grow, gift, gather, and consume a number of naturally occurring psychedelics, which include psilocybin, psilocyn, DMT, ibogaine, and mescaline (excluding peyote). Due to its more expansive legislation, Proposition 122 further allows officials to develop similar programs by 2026 for these other psychedelic substances or known as “natural medicines.”
Unlike Oregon, Colorado designed their license Healing Centers to be vertically integrated rather than developing individual licenses for the supply chain. A significant difference is Proposition 122 paving a way to structure psychedelic business licenses for additional psychedelics in the future, whereas Oregon focuses on psilocybin only. Further, there is more fluidity in Colorado as to where these substances can be provided permitting facilitated use outside of licensed Healing Centers.
Pursuant to Proposition 122, there are three (3) license types interested parties can apply for: (i) Facilitator; (ii) Healing Center; and (iii) Testing Laboratory. A Facilitator licensee is an individual, who is twenty-one (21) years of age or older, that is licensed by the Department to provide natural medicine services to a participant and has met all regulatory requirements. Further, a Healing Center licensee is an entity licensed by the Department that is permitted to acquire, possess, cultivate, manufacture, deliver, transfer, transport, supplies, sells, or dispenses natural medicine and related supplies. Further, this will be where licensed facilitators will hold preparation, administration, and/or integration sessions for participants. Lastly, a Testing Laboratory licensee is an entity licensed by the Department to conduct independent testing of natural medicine for concentration and contaminants to ensure all products are safe for human consumption.
So, when can I apply? Currently, the Department will have until January 1, 2024, to adopt rules to establish Facilitator licensee requirements. Moreover, they will have until September 30, 2024, to adopt rules to implement the program and to begin accepting applications. One should note that although Proposition 122 permits additional psychedelics in the future, the program will only include psilocybin and psilocyn in the first year or so.
States to Come
Although Oregon and Colorado are the only states in the US to approve of legalization establishing a regulatory framework for psychedelic business licenses, they will not be the only ones for long. Currently, Senate Bill 58 has been sent to Governor Newsom to receive approval to legalize mescaline, DMT, psilocybin, and psilocyn for therapeutic and facilitated use. If passed, it will establish a workgroup under the California Health and Human Services Agency (“CHHSA”) to study and make recommendations on developing a regulatory framework to permit adult access to the substances for therapeutic and facilitated use. Under the proposed law, the workgroup will have until January 1, 2025, to create a regulatory framework to license entities and individuals to provide access. Governor Newsom will have until October 14th, 2023, to either approve or veto the measure.
California will not be the last either as various other states have seen psychedelic reform measures brought before them during the 2023 legislative session. In New York, Senate Bill 4911, also called the “Psilocybin Behavioral Health Access and Services Act,” would authorize the production and use of psilocybin to promote health and wellness for adults over the age of twenty-one (21), as well as decriminalize and expunge past offenses involving psilocybin production, possession, use, and distribution. Further, in Illionis, House Bill 0001, also known as “The Compassionate Use and Research of Entheogens (CURE) Act,” was introduced to remove criminal penalties for the possession, delivery, or manufacture of psilocybin, psilocin, ibogaine, and mescaline (except peyote). It would set the stage for a psilocybin service program similar to Oregon and Colorado to allow licensure for approved entities to operate psilocybin service centers and facilitate such services.
Even states that have been slow to enter the cannabis industry have seen psychedelic reform bills in their legislature, specifically urging the state to conduct research to help those who desperately need alternative to traditional pharmaceuticals such as veterans suffering from PTSD. In 2021, Governor Abbot of Texas allowed House Bill 1802 to be approved without his signature, which permits the study of psilocybin and its effects on those with PTSD. Even Kentucky’s Opioid Abatement Advisory Commission is now considering whether to support an application for Kentucky to provide $42 million to support clinical trials on Ibogaine, a potential medication for combatting opioid addiction.
How Can We Help You?
To enter the legal psychedelic market, there are various regulatory requirements that are demanded by the state. Due to the relative similarity of the psychedelic licensing market and cannabis business licensing industry, our Team has an in-depth understanding of how to successfully meet all such requirements to ensure your team creates a strong, trusting relationship with the state’s regulatory body. Depending on your team’s needs, we offer an array of services to best meet your current and future goals. From building a team, including local partners and organizations, to introducing you to our network of lobbyists and expert industry professionals, we will make sure you have a strong group to enter such competitive markets. Further, we provide proven Standard Operating Procedures and personalized narratives to ensure we represent your team as an efficient, turnkey group who is eager and ready to enter the industry. Our Team will collaboratively develop innovative strategies to help differentiate your team from the rest through tactical funding, community outreach initiatives, and identifying ideal facilities.
Due to the novelty of the psychedelic market, we understand that having an expert Team of Psychedelic Business License Consultants behind you to overcome the complex regulatory obstacles is essential to ensuring your success. If you are interested in discussing your options, contact our Team today via our website or through email.