States are Missing Out on Psychedelics Regulation

In 2023, Oregon will have a regulated psilocybin market. Colorado voters will have a chance to vote on something similar this fall (although Initiative 58 would not take effect until 2024). Other than that, not a single other state has any form of psychedelic regulation in the works. Last week, an attempt to simply decriminalize psychedelics failed in California. Washington thought about psilocybin regulation, but that didn’t work out this legislative session. As we sit here today, it looks like the second state-level regulated psychedelics market is years away.

At the same time, psilocybin is on its path towards FDA approval. This could happen in as few as two years. When (not really “if” at this point) FDA approves psilocybin and other psychedelic drugs, that will dramatically change the game for psilocybin across the United States. It will also dramatically change how states regulate psychedelics.

To understand why this is the case, let’s look at how ketamine is regulated. We write on this topic a lot so won’t do a deep dive into it here. Ketamine is a schedule III narcotic. The FDA approved ketamine for a few narrow indications (uses). Nevertheless, physicians routinely prescribe it for off-label indications. This is a regular practice for a host of other controlled substances. It’s also what led to an explosion of ketamine clinics in the United States over the last few years.

Last year, I wrote a post about how MDMA would be regulated when it is approved (like psilocybin, it will probably be approved within two years). My prediction is that MDMA will be prescribed not only for its approved indication, but also in clinics across the United States– similar to ketamine. That’s because the FDA’s approval will mean MDMA is regulated a lot like ketamine.

If psilocybin is approved, chances are that the approved drug will be placed on schedule II or III. Placement of an approved drug on one of these schedules means that physicians and other applicable healthcare professionals (the list depends on the state) may be able to prescribe and administer that drug in clinics and other settings.

Why does this matter for state-level psychedelics regulation? Psilocybin clinics run by licensed healthcare professionals will likely serve as a disincentive for regulators to pass state-level regulatory efforts– especially in more conservative states. Oregon has opened the playing field to non-healthcare professionals in a way that probably just won’t happen once physicians dominate the market for clinics in states.

States that are considering psychedelics regulation should act quickly. In a few years, the status quo will be dramatically different. And they might just get left behind.