Want to make money in psychedelics? Look elsewhere.
That’s with attorney Griffin Thorne at Harris Bricken Sliwoski LLP, a Portland firm specializing 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 company’s website today. Things get even worse for those in the government’s legal psychedelics industry.
Thorne cited a half-dozen hurdles for anyone who wants to manage psilocybin: Competition from doctors if psilocybin gets Food and Drug Administration approval (it’s in Phase 3 trials); opposition from drug companies working to get those approvals; High cost of running a psilocybin service center; Black market competition; and the growing religious use of psilocybin.
Starting today, the Oregon Department of Health has been issuing licenses to psilocybin manufacturers, testing labs, service centers and distributors for six months. Applications and approvals were rare. Only three manufacturers, two testing laboratories and 30 facilitators are allowed.
The biggest hurdle is likely to be service centers, the highly regulated offices where people are allowed to legally take psilocybin. Only five of them were accepted. Seven permits are outstanding, OHA says.
Running a service center is not cheap. The state requires an annual fee of $10,000 and requires expensive infrastructure. Service centers must have commercial-grade security systems, including special surveillance cameras and a 375-pound safe psilocybin or “restricted authorized premises, at least a secure area, with a properly installed steel door. Steel frame, and commercial grade, non-residential lock.
Service centers plan to charge thousands of dollars to cover costs. The band company Lucid Cradle plans to charge $15,000 for the eight-hour trip, including a six-hour preparation session the day before and an integration session the following day.
Fees for psilocybin licenses are high because the Oregon program is funded by fees, not tax revenue.
“The Oregon Health Authority does not have the authority to set or regulate the costs of products or services,” OHA said in a statement. “Licensees determine these costs as independent businesses. It is important to understand that the model created by Oregon’s Psilocybin Services Act of 2020 is fee-based and no additional funds are allocated to subsidize service costs for clients.
But OHA has asked for taxpayer money to keep the program going. With licensing revenue declining, OHA has requested $6.6 million to fill a budget gap starting tomorrow. Psilocybin Services Division OHA is waiting to hear from the budget team on whether the Legislature has appropriated the money, spokesman Afiq Hisham said in an email.
Of all the threats to psilocybin’s profit margins, the black market may be the biggest. Psilocybe cubensis, a psychedelic mushroom declared legal under Oregon law, is easy to grow. Spores are widely available on the Internet and in local stores, and even amateurs can grow dozens of grams in the ground in plastic tubs.
Many facilitators are operating without a license, as well as offering a discount.
“Illegal cannabis is less expensive than legal cannabis, but it can be illegal psychoactive substances. Thousands of dollars less instead of service center sessions,” Thorne wrote. “This almost guarantees a huge illegal market.”
Despite the headwinds, at least one shroom entrepreneur is undaunted: Andreas Matt, founder of Satya Therapeutics Inc. in Medford. The Satya has had a manufacturing license since March and today received a license at the Ashland service center. He hopes to open on July 17.
The Met plans to charge $750 a session, one of the lowest public rates ever, with seven rooms at the service center and flipping twice a day.
“If you think you’re going to get rich, you’re in the wrong business,” Matt says. “But you can manage.”