This policy brief outlines a proposal to license consumers to purchase psychedelic substances. Similar to medical marijuana programs, psychedelics licenses would be overseen by a health professional and would be required for retail purchases. Psychedelic licenses for consumers have advantages over the current approach in two U.S. states that rely on professionals to dispense and facilitate services because consumer-based licenses are far more accessible and cost-effective than professional-based licenses. Sample legislation is provided in the appendix.
Two American states are already in the process of implementing a regulated market for psychedelic therapies, and several more are being proposed in state legislatures. Under these emerging models, states license professional “facilitators.” Only these certified professionals are permitted to purchase psychedelics, and psychedelics can only be consumed on certified campuses. This model was first ratified in Oregon through a ballot initiative in 2020 and again in Colorado in 2022. Both states are in the process of implementing their regulatory frameworks governing legal psychedelic experiences with psilocybin, the active hallucinogen in “magic mushrooms.”
Though neither state has yet implemented the policy at scale, there are already serious market complications. The first major issue is cost. There are estimates that a single psychedelic session will cost consumers upwards of $3,000. This price range is inaccessible to many working-class Americans, especially considering that in Food and Drug Administration (FDA) trials designed to evaluate the effectiveness of psychedelic therapies, participants receive a minimum of three treatments.
Several factors contribute to this high retail price of treatment. Facilitators in Oregon are required to complete state-approved training programs, which can cost between $8,000 and $20,000 and can take more than four months. Additionally, the state charges thousands of dollars in licensing fees.
Training programs are inherently expensive because Oregon has mandated over a dozen curricular modules (roughly 120 hours of total learning). Students must take classes on everything from the neurobiology of psilocybin to the importance of recognizing racial orientations in facilitation.
It’s unclear how to offer these psychedelic facilitator trainings more cheaply, although this is an ongoing debate within the academic community. There is a bill in New York that attempts to accelerate credentialing by allowing existing licensed medical practitioners to facilitate psychedelic therapies, but it would still require additional coursework that could end up imposing barriers and costs similar to those witnessed in Oregon.
In addition to training requirements, there are numerous expenses associated with managing a site certified to host psychedelic therapies (“healing center”) or for manufacturing psilocybin products. For instance, there is a $10,000 annual licensing fee for retail therapy providers and product manufacturers in Oregon. General business liability insurance is a variable cost and not well documented, but at least one report found that it could cost a service provider $12,000.
Any business involved in producing or selling psilocybin products also faces a substantial federal tax penalty. Internal Revenue Code 280E prohibits taxpayers who traffic in any Schedule I or Schedule II substance (including psilocybin), as listed under the federal Controlled Substances Act, from deducting expenses under the “ordinary and necessary” standard that applies to most taxpayers. Instead, these taxpayers may deduct only the direct costs incurred in producing or purchasing inventory, while ordinary expenses like employee wages, rent or utilities may not be deductible. As a result, these taxpayers are assessed taxes on a modified gross-receipts basis rather than on net income and may owe substantial federal income tax even in years when they operate at a financial loss.
Finally, approval for retail campuses has been unpredictable and costly. In one case, a prominent psychedelic services company in Oregon went bankrupt partly because a local jurisdiction voted to ban service centers, which each jurisdiction is allowed to do by law. The company had already invested millions of dollars in a retreat center and could not afford to relocate.
As a result of these and other regulatory issues, there are reports that most residents will continue to seek psychedelic therapy on the underground market.