As a Business, Psilocybin Will Be a Bust, Law Firm Says

Looking to make money in psychedelics? Look elsewhere.

That’s the message from lawyer Griffen Thorne at Harris Bricken Sliwoski LLP, a Portland firm that specializes in the legal cannabis industry and, more recently, psychedelics.

“Anyone familiar with the cannabis industry knows how difficult it is to make money,” Thorne wrote on the firm’s site today. “Things are going to be even worse for people in the state-legal psychedelics industry—much worse.”

Thorne cites a half-dozen hurdles for anyone trying to make a living with psilocybin: competition from physicians if psilocybin wins Food and Drug Administration approval (it’s in Phase 3 trials); opposition from pharmaceutical companies that are working to get those approvals; high costs for running a psilocybin service center; black-market competition; and growing religious use of psilocybin.

As of today, the Oregon Health Authority has been licensing psilocybin manufacturers, testing labs, service centers and facilitators for six months. Applications and approvals have been lackluster. Only three manufacturers, two testing laboratories, and 30 facilitators have been approved.

The biggest bottleneck might be service centers, the highly regulated offices where people are allowed to take psilocybin legally. Just five of those have been approved. Seven licenses are incomplete, OHA says.

Running a service center isn’t cheap. The state demands an annual fee of $10,000 and requires expensive infrastructure. Service centers must have commercial-grade security systems, including specific arrays of surveillance cameras and a 375-pound safe to store psilocybin or a “limited access area of the licensed premises that is secured with at a minimum, a properly installed steel door with a steel frame, and a commercial grade, non-residential lock.”

To cover costs, service centers plan to charge thousands of dollars. Lucid Cradle, a Bend company, plans to charge $15,000 for an eight-hour trip, with a six-hour prep session the day before and an integration session the day after.

Fees are high for psilocybin licenses because Oregon’s program is supposed to be funded by fees, not tax revenue.

“The Oregon Health Authority does not have the authority to set or regulate costs of products or services,” OHA said in a statement. “Licensees will determine these costs as independent businesses. It is also important to understand that the model created by the Oregon Psilocybin Services Act that was passed by Oregon voters in 2020 is fee-based, and no additional funds were allocated to subsidize costs of services for clients.”

OHA did, however, ask for taxpayer money to keep the program running. With licensing revenue falling short, OHA requested $6.6 million to fill a budget gap for the fiscal biennium starting tomorrow, according to a 13-page “policy option package” made public earlier this year. The Psilocybin Services Division of OHA is waiting to hear from its budget team whether the Legislature allocated the money, spokesman Afiq Hisham said in an email.

Of all the threats to psilocybin profit margins, the black market might be the biggest. Psilocybe cubensis, the species of psychedelic mushroom specified as legal in Oregon law, is easy to grow. Spores are abundantly available on the internet and at local outlets, and even amateurs can grow dozens of grams in plastic tubs in their basements.

Many facilitators are operating without licenses, too, driving down prices.

“Illegal cannabis tends to cost less than legal cannabis, but illegal psychedelics will likely be thousands of dollars less than service center sessions,” Thorne wrote. “This virtually guarantees a massive illegal market.”

Despite the headwinds, at least one shroom entrepreneur is undaunted: Andreas Met, founder of Satya Therapeutics Inc. in Medford. Satya has had a manufacturing license since March, and today it got a license for a service center in Ashland. Met hopes to open by July 17.

Met plans to charge about $750 per session, one of the lowest public rates so far, by having seven rooms in his service center and turning them twice a day, giving him enough volume to be viable.

“If you think you’re going to get rich, you’re in the wrong business,” Met says, “but you can make a living.”