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Changes to the Legal Status of Psilocybin

The loosening of restrictions on psilocybin is moving forward on two fronts. As with cannabis, the first major changes to the legal status of psilocybin mushrooms and related drugs have come in the medical context. While it is still illegal to possess, sell or use psilocybin at the federal level, federal criminalization of psilocybin looks increasingly dated. The Food and Drug Administration (FDA) has recognized psilocybin’s potential as a treatment for depression, applying its Breakthrough Therapy designation to two drugs developed for that purpose. Those drugs receiving the Breakthrough Therapy designation — and any others that receive this designation in the future — will benefit from expedited development and review.

This focus on psilocybin’s mental health benefits was the driving force behind Oregon’s legalization of psilocybin in 2020. While prescriptions and doctors’ referrals will not be required, the state is limiting the administration and use of the drug to licensed psilocybin therapy centers. As the first state to permit psilocybin and establish a program for its use, Oregon is an example to states considering their own approaches. Psilocybin treatment centers and the potential for FDA-approved psilocybin drugs present enormous business opportunities for companies, investors and entrepreneurs.

The second path forward for psilocybin is the decriminalization or legalization of recreational use. The next steps on this front are less clear than in the medical context. However, municipal governments are leading the way by downgrading psilocybin as a law enforcement priority. Cities that have done so include:

  • Denver in 2019.
  • Ann Arbor, Michigan, and Washington, D.C., in 2020.
  • Cambridge, Massachusetts, and Seattle in 2021.

These moves by local governments across the country signal a growing acceptance of psilocybin use. If psilocybin continues to follow the pattern of cannabis, we may eventually see recreational use decriminalized or legalized at the state level. This would present another set of opportunities for psilocybin-focused businesses.

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