Oregon Psilocybin Services Final Rules: Ask an Expert

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    On January 1st, Oregon became the first state in the U.S. to allow adult use of psilocybin in regulated access programs. The Oregon Health Authority has also begun accepting applications for manufacturers licenses as of January 2nd, 2023. Given the recent high-profile police raid of the unlicensed magic mushroom retail vendors ‘Shroom House’ –

    As well as a general sense of public confusion regarding the actual stipulations surrounding Oregon’s Psilocybin Services Act and what it precisely entails, Mycopreneur caught up with Oregon-based attorney Jon Dennis to dial into the granularities of Measure 109 and to answer such questions as

    How much does it cost to access a legal psilocybin session?

    What is required to open a licensed psilocybin services center?

    When are we going to see a psilocybin mushroom retail industry in Oregon?

    Can Oregon residents legally turn a spare bedroom into a manufacturing operation?

    and more

    Listen to the full podcast here

    Jon Dennis, Esq

    Below is an excerpt of the “Oregon Psilocybin Services: Ask an Expert” Mycopreneur podcast episode published January 4th, 2023.

    (DW = Dennis Walker, JD = Jon Dennis)

    DW: Jon Dennis, Oregon based attorney and entrepreneur and the burgeoning legal psychedelic industry in Oregon. Welcome to the Mycopreneur Podcast. A lot’s changed since we connected in Vegas over a year ago. How are things in Oregon today? 

    JD: Thanks for having me. Things in Oregon are really good. It’s a little overcast here in eastern Oregon and, you know, January, January 3rd. And just as of yesterday, the state started receiving applications for psilocybin licenses.

    So it’s just like this whole ecosystem is just getting started and it’s really an exciting time. And I think there’s a lot of electricity around kind of this this new, new era where psychedelics are kind of year and coming above ground.

    DW: A lot of people are following what’s happening in Oregon, setting a legal precedent for a psilocybin mushroom industry.

    And there’s also been a fair amount of controversy and a lot of misunderstanding in regards to the practicality of what’s actually allowed under the Oregon psilocybin services that have just rolled out a day ago, just rolled out January 2nd, 2023.

    So in a broad strokes, elevator pitch, if you were to explain the process for opening a psilocybin service center in Oregon as it currently stands today, what exactly is involved with that?

    JD: Yeah, I think it’s so there’s licensing fees are, you know, in the ballpark of $10,000. If you’re going to be a service center or a manufacturer or testing lab, there are $2,000 if you intend to be a facilitator.

    So that’s the there’s that and there’s some fee waivers for people who may be veterans or have other or have economic kind of like low income or public benefit recipients in this thing, people like that. But at the high level, you know, the Measure one or nine program, as you probably know, is is a supervised adult use program that allows people to take psilocybin virtually for any reason. It doesn’t allow home dispensary type of model. It’s consumed at a licensed premises under the supervision of a licensed facilitator who’s been licensed by the state in order to, you know, safely supervise kind of administration sessions or people who think so.

    So there’s prep work that’s required between the facilitator and the client in advance of the session. And then there’s a mandatory offering of integration after person has their session, their administration session. But overall, people are allowed to take psilocybin for virtually any reason.

    And what we’re expecting to see kind of here shortly, if I’m making projections and predictions of how this is going to play out, I think in very short time we’re going to see this consumer driven marketplace really start to develop into a niche ecosystem where people specialize in either being microdosing coaches or people that specialize in offering more ceremonial or entheogenic type of offerings. Of course, that will be the standard introvert of trip setting types and then probably also kind of people who are doing it in a more social or recreational context where facilitators fill the role, more of a harm reduction person who’s less involved in kind of it, and there’s more extroverted type of experience that people are allowed to have. But there’ll be group ceremonies are going to be allowed. We’re going to have outdoor sessions that are going to be allowed. And yeah, that’s kind of the high level in order to open one of these service centers with these licensed premises where people will take psilocybin, they’ll buy it there and they’ll consume it there. And, you know, it has to be limited on the premises so people aren’t allowed to take since they’ve been outside of the premises, they have to experience all the effects at one of these locations.

    And so, of course, the locations are going to be designed to be, as, you know, pleasant, enjoyable to make, help people make the most out of their experience and give them kind of it’s a consumer driven marketplace. So it’ll be really interesting to see how how the market responds to the different offerings that are out there.

    And I think it’s anybody’s guess as to really where with it with the people will support with their with their. Right. So so it’s a really interesting kind of experiment that’s just kicking off. 

     I mean, you got to go through multiple layers of local land use permitting process according to land use and zoning and city planning departments and things like that.

    So that can be kind of a whole process unto itself and, you know, clearing building codes and all that sort of thing. And so by the time it’s all said and done and you get your security cameras and your ADA accessible kind of ADA accessibility and you get your say for your products and all those sorts of

    things. I mean, it’s the expectation. I mean, my projection is around a quarter million dollars kind of on the lower end of what it would cost to open one. And that’s at the extreme, you know, pretty, pretty low end.

    And of course, it can be, you know, millions and millions of dollars, depending on how how luxurious people want to want to get with it. But that’s kind of it. Yeah. At a high level, that’s kind of the overall process, as I understand it.

    DW:And along those lines, I’ve noticed a robust gray and black market product landscape – especially in cities where psilocybin mushrooms have been decriminalized. And all of these brands are quite impressive. Many of them actually, they’ve got their QR codes and link to third party testing results and things like that. But I think there’s some misunderstanding about what you actually can and cannot do, especially in a decriminalized city, because my understanding is decriminalize just means deprioritized, so it doesn’t actually take it off the docket of potential police action.

    And there was a high profile case of a retail shop opening in Portland, which of course, was shut down by authorities. Shroom Shop, I believe, was the name of that. There have been several other magic mushroom dispensaries that have openly operated in cities like San Francisco and north of the border in Canada as well, which is another story.

    But I’m curious if you have any insights into if a retail side of psilocybin mushrooms is going to be something that we see on the horizon?

    Is there any wiggle room for people with underground mushroom retail products to enjoy legal protection or is that by and large going to remain a completely underground black market?

    JD: That’s a great question. Measure 110 designates a new class of of punishment called a Class E violation that a person may be subject to if they are caught with a personal use possession amount of any controlled substance in Oregon. So for some of those, those are clearly defined. So for instance, for psilocybin, if you have under 12 grams, you are in this Class E range.

    And for LSD, if you have under 40 user units, which I think is them trying to avoid the more colloquial term ‘hits’- if you have under 40 hits of acid on your person, you don’t really risk being charged with a serious crime.

    You basically risk this minor slap on the wrist that you would actually result in either a $100 fine or you can call a drug treatment screening hotline to see if drug treatment is indicated.

    And if drug treatment is indicated, you’re not actually obligated to pursue treatment. It’s just trying to give people contact points with these, you know, recovery type programs that are, you know, available, I believe, free through through measure 110, which is repurpose some cannabis moneys to provide for addictions kind of recovery.

    So in Oregon, we don’t have an option for, you know, growing or distributing or, you know, foraging or gifting or selling or anything like that. So and the only type of activity that is protected at any level is really just personal use possession, which, you know, is only, for instance, under 12 grams of mushrooms, which, you know , isn’t isn’t really a lot. You know, we do see on the horizon there’s talk of about a ballot initiative in Portland that would change that within the city limits to make it a low law enforcement priority. But no matter which law enforcement agency happens to find you with some personal possession amount of whatever controlled substance in the state of Oregon, as long as it’s a state and not a federal agency, you know, you really don’t have any substantial risk, you know, from a from a criminal liability perspective. So, I mean, it’s it’s it’s sort of misleading because I think a lot of people think, you know, we hear the term decriminalize and we think that it’s fine, you know, but without really unpacking what that means, I think there’s a lot of people, for instance, who thought that the shroom shop was legal when it was open in Portland and, you know, in and it wasn’t.

    And those people, I think, are facing like 40 felony counts right now and in many long years in prison for for running that that storefront in downtown Portland. You know, they’re open for six weeks. I think they made substantial money in a short amount of time.

    And the irony of it. For me is that, you know, we see people selling basically overpriced mushrooms for profit and now facing 40 felony counts. You know, and here now in January, the state certain to accept licensing for people who are going to sell overpriced mushrooms for profit.

    You know, and they’re not facing that. So because it’s not through this, you know, highly regulated one or nine system, it’s illegal. And those people are facing really long jail times potentially, depending on on how that that case plays out.

    But to contrast that with Colorado, thankfully, Mason Marx just wrote a blog a couple of weeks ago about kind of interpreting, you know, the Natural Medicines Health Act there, which in his in my reading, we actually think that it would allow for retail dispensaries within Colorado’s program, depending on how the regulations there roll out.

    I mean, they have a whole rulemaking process. They have to go through that they’re just now getting started on. But but potentially in Colorado, once they go live in about a year and a half, then they should they’d have the option depending on how their regulationss shape up.

    DW:I’ve heard plenty of criticism about lack of perceived, lack of accessibility, prices, etc. It seems to be mainly about how much it costs to open and maintain one of these centers and ergot how much it costs to access the services themselves –

    But I also believe don’t let the perfect be the enemy of the good, actually. And there’s a lot of that’s not what’s happening to your stream. But if you were to name a few areas for improvement this year?

     

    JD: Now what we see is that, you know, the only way to access psilocybin is through this highly regulated, really cost prohibitive system. And what, you know, right now, not very many people are making any money off of this yet.

    But as time goes on, there’s going to be more financial interest in keeping the system so that, you know, the kind of stewards of the system make money off of it. So the concern is that as time goes on, it becomes harder to have these more affordable ways when there’s people whose financial self-interest depends on it being the way that it is right now. So the Colorado model of combining the decorum with the regulated access really is the gold standard that I’m hoping. As you know, these psychedelic policy legal reforms start to spread throughout the country, that that is kind of the starting point for most, if not all of them, that they have that , because otherwise you have these these kind of absurd results where, you know, shroom house people go to jail for selling, you know, $50 mushroom access as opposed to the people who can’t afford to pay the 1500 dollars with the regulated whole bells and whistles kind of piece. So to really make sure that this ecosystem evolves in a way that keeps it people centered and accessible, you know, that that’s that’s the big the big kind of ticket there that I’m hoping future states will kind of hopefully learn from our lesson. And I’ll say to that end, when measure one and anguissola measure decorum, nature came out and opposed it because they they kind of foresaw that this would create this psychedelics industrial complex that’s going to be exactly what happened and when that occurred. I was really critical of them. And I thought, you know, just like you don’t let the perfect be the enemy of the good. And how could you oppose this when these people suffer now and all that kind of thing?

    And as we saw rulemaking play out in Oregon, I kept thinking, well, I hope that they were wrong. I hope that they were written the DRM was wrong to oppose this. And I think in my view, the jury’s still out on whether they were right or wrong to oppose this. I mean, I think this will play out in history over the next 20 or 30 years, how this ecosystem unfolds. But if this becomes this kind of ecosystem where the only way to access it is by paying $1,000 to get access, then and everything else remains criminal then I think that we’ve we’ve done a real injustice here. So so that’s that’s like the the high level and then in the minutia.

    So there’s a bunch of details that still kind of remain to be figured out. And I think, first off, I want to give it a lot of credit because they did have an enormous job in figuring out an entire comprehensive, regulated, you know, program, right, when this has never been done before. So the enormity of that task, I definitely want to offer some grace, you know, for that and understand that, you know, it’s reasonable under such circumstances to start conservative and to become more, you know, you know, tend to evolve over time as you gain more experience and competence in managing and regulating a program like this. So I’m sensitive to those kinds of concerns. So I’ll start with that and then say the areas where I think that they really have to improve upon going forward are in these areas of financial availability and affordability. So particularly in the high dose range, they have a 2 to 1 facilitator to client ratio, which means that for every two clients you have to have one facilitator.

    So for a group of 11 clients who are taking three and a half grams equivalent of mushrooms, they’d have to have six facilitators there on that are, you know , on staff and they’re supervising the whole thing, which may be completely. Overkill. How many are actually needed? Probably not six. And so that’s going to what I create, what I call a facilitation cost floor, meaning that the average client on a high dose session is going to have to pay for at least 3 hours of facilitators time and an absolute legal minimum. And probably more than that, just for the administration session, that does include prep and integration. So basically creating some opportunity for proportionality within the safeguards between, you know, how safe between the safeguards and the safety needs of a of a driven group like.

    There’s no flexibility for or for for a group to decide, you know, how how many paid staff they need. So that’s one thing that the state could do that would radically, you know, especially in the community context and religious kind of context. And people who are not psychedelic, naive, you know, that would reduce their barriers to access pretty substantially. And so that’s that’s one big piece. And then on the other piece, you know, not really allowing like essentially a homegrown type of mushroom option within the 109 program. All mushrooms have to be participate in this highly commercialized, highly regulated system where the products get tested every 20, you know, every batch for potency. And, you know, that’s going to add substantially to the cost and create kind of a bottleneck in the in the supply pipeline that adds to the costs and doesn’t clearly add to the safety of the program.

    So I think those are, in my view, the two big things. And then the other thing is, you know, we have matched group size of 25, so that stops there from being like a concert or a festival type thing. And the 109 program would be a really great place, in my view, to have music events and things like that, where people there’s just like more transparency, there’s more safeguards in place. You know, I think the maps case that just came down, you know, recently where there they got sued, you know, the maps, the zendo, volunteers really didn’t know what substance people were on. They didn’t know dosing amounts that, you know, there’s a lot of things like that where if they would have gone through a program like one or nine, they would have had all that information. They would have known that the supply was safe and all that kind of thing. And so this kind of the max group size of 25 really stops more kind of cultural expressions or cultural use of psilocybin. And I think that that was something that, again, you can understand them wanting to go slower at first, but hopefully over time they kind of start easing some of those types of restrictions so that, you know, they can actually reflect how people use psilocybin in the real world.

    DW: I’d love to talk about what what is required to apply for a manufacturer’s license. We have quite a few cultivators who listen to the show to varying degrees of scale with their operations. And I’ve hosted people who I know are doing R&D in Jamaica, and they’re multinational companies, essentially ready, probably already have applied for a manufacturer’s license. But I also know people who have moved from Oregon to Colorado because they find that that ecosystem might be more accommodating for mycopreneurs

    JD: When I talk to clients or people, I won’t necessarily discourage them from getting involved with the products market, but I think it’s going to be an exceptionally tough market because I think they allow on average 20 kilograms to be possessed, you know , equivalent dry weight mushroom to be possessed at a time by any manufacturer and I think ten kilograms equivalent dried weight. But for us for a service center. So when you think about how big Oregon’s program is going to be, you know, 2010 or 20 kilograms is a lot and it’s going to go a long ways. And I think a relatively few, like a small number of manufacturers are going to be able to supply the entire program. So I think what that results in under most normal market conditions is really low cost products because everyone’s saturated and there’s not enough places to buy them or to move them to. So they you can’t sell them anywhere outside of the one I and if they’re grown in one or nine, they have to stay in one or nine and they have product tracking and all that kind of thing to make sure that it goes like that. So, you know, I think it’s going to be just a really tough business, particularly for growers. And I think there will be some opportunities for people who do like food products, who are making, you know, edibles or tinctures if they have some kind of novel recipe or brand kind of thing like that.I think there would be that’s probably where, you know, if there is any money to be made in the product side in Oregon, it’s probably going to be in my projection kind of in those kinds of realms. But even those could be really tough because I think there’s going to be an oversaturated market because everybody wants to get experience. And I’ve heard that there are a number of people who are, you know, basically thinking of Oregon as an opportunity to gain experience without even expecting to make money off of it. So when, you know, when you as a as a as a business person or have that as your competition where the money means nothing to them and it’s just about doing it, you know, I mean, it’s really going to be tough, I think, for for most people to have to actually make that like a job that that they can sustain themselves off of. But. Yeah, that’s about my understanding of it so far.