Gray Market Emerges as Psychedelic Industry Takes Shape
When Colorado voters gave the green light to legalize psilocybin last year, they set the state on an uncharted course toward a future potentially featuring a state-regulated psychedelic sector. Six months later, where do we stand in this unfolding narrative?
Early Signals of a Psychedelic Industry
Colorado’s legal landscape underwent significant changes at the start of this year, reducing criminal penalties related to the possession and use of psilocybin mushrooms and select psychedelic substances. This alteration has paved the way for a “gray market” to emerge, with entrepreneurs offering services ranging from guided psychedelic experiences to advice and supplies for “microdosing,” all within mostly legal boundaries. While actual sales of these substances remain illegal, it has become easier and more cost-effective to acquire mushrooms.
A Formal, Regulated Psychedelic Industry on the Horizon
Simultaneously, the state is preparing for the establishment of a more formal, highly regulated psychedelics industry. Starting late 2024, government will begin accepting licensing applications for approved healing centers staffed by qualified facilitators who can oversee psilocybin usage.
Key Takeaways from Colorado’s Psychedelic Transformation
- Decriminalization Progress: Proposition 122, endorsed by Colorado voters in November 2022, initiated the transformation. The proposition eliminated criminal penalties related to the cultivation, possession, and consumption of psychedelic mushrooms and select substances, with certain restrictions. While it became legal to give away these drugs, selling them remains prohibited.
- Age Limitation: The usage and sharing of these substances are restricted to individuals aged 21 and above.
- Legal Parameters: The law permits individuals to cultivate and consume psilocybin, psilocybin mushrooms, and their derivatives, as well as ibogaine, mescaline, and DMT for “personal use,” without specifying quantity limits. However, LSD remains fully criminalized.
- Service Provision: People can offer services related to harm reduction or support concerning the use of psychedelic drugs, with the option to share the drugs with clients, free of charge. These service providers are prohibited from advertising their services, and unregulated practitioners must inform clients that they operate without a license.
- Cultivation Rights: Individuals are allowed to cultivate mushrooms within a 12-by-12 foot area on private property.
- Restrictions: Displaying or consuming psilocybin mushrooms “openly and publicly” is illegal, resulting in fines and public service hours. It is also illegal for individuals under 21 to possess or consume the listed substances, as well as to share them with minors. Importantly, psychedelic mushrooms and the other affected drugs remain illegal at the federal level, subjecting growers and users to potential federal law enforcement consequences.
The Mushroom Market: Easier Access Raises Concerns
It’s not just the proliferation of unregulated guides and psychedelic educators. The mushrooms themselves appear to be easier to obtain since decriminalization. A search on Facebook Marketplace revealed dozens of listings of what appeared to be psychedelic mushrooms for sale, often accompanied by photos of large tubs of fungus and links to private messaging services.
In interviews with CPR News, online sellers said there’s been an upswell of people growing and distributing the drug with relatively little fear of punishment — along with some scams meant to lure aspiring psychonauts. The act of sale remains illegal, but it’s now harder to get caught now that the criminal penalties for growing and possession have disappeared, they said. Additionally, the drug is relatively easy to grow, requiring much less space and energy than cannabis. Some worry that will lead to a sprawling, unregulated market with few controls on quality.
Looking Ahead: The Complex Psychedelic Landscape
As Colorado treads deeper into the world of psychedelics, it faces a multitude of challenges and unanswered questions. Only one other state, Oregon, has decriminalized mushrooms on a statewide basis, and the results are still unfolding. In Oregon, the new law allows for supervised mushroom services, similar to Colorado’s healing centers. The first of these centers opened recently, with prices exceeding $3,000 for a single trip.
Colorado is likely to introduce rigorous requirements and costs for facilitators, involving training, licensing, and extensive supervision for each client. This raises questions about the accessibility and affordability of these services, with no legal retail option for mushrooms, leaving Coloradans to choose between tightly regulated, expensive clinical services, a potentially cheaper unregulated market, or personal recreational use.
Moreover, there are concerns that powerful players in any new regulated market will have an incentive to push the state to crackdown on their gray-market competition, as seen in the medical cannabis industry.
Colorado’s journey into the realm of psychedelics is far from over. The state faces complex decisions about how to regulate this evolving industry while balancing the interests of public health, safety, and personal freedom. The next chapters of this story will undoubtedly shed more light on the future of psychedelics in Colorado and beyond.