Oregon’s successful move to decriminalize cannabis in 2015 paved the way for another progressive action concerning the use of drugs still banned at a federal level.
In 2020, the majority of Oregonians voted to legalize the medicinal and therapeutic use of psychedelic mushrooms, the active ingredient of which is psilocybin.
This move was included as part of Measure 109 and made Oregon the first state in the union to take this step — though some cities like Oakland, Santa Cruz, and Washington, D.C. have decriminalized the substance.
As psilocybin growers, retailers, investors, medical practitioners, and users in Oregon look to take advantage of the change of legislation, it has spurred many business opportunities in the state. However, it is not without considerable hurdles as psilocybin remains illegal in every other state as well as at a federal level.
Our Oregon psilocybin lawyers can help you navigate the significant challenges involved in setting up a psilocybin business here and prepare you for what lies ahead – just as we’ve done for many cannabis businesses across the country.
History of psilocybin use and its medical benefits
Psilocybin is a psychoactive substance with a rich history. It is estimated from rock paintings that psychoactive mushroom usage dates back more than 9,000 years.
Here in the Americas, the Mayans are famous for their ritual use of mushrooms and their so-called mushroom stones — dancing figures wearing mushroom caps —carved between 1,200 and 1,700 years ago.
From the Spanish conquistadores to the modern day, the use of psilocybin has been almost continuously frowned upon by society. During the 60s and 70s in the U.S., interest in the drug was reignited and the term “magic mushrooms” was frequently used.
These substances have been determined to have a “high potential for abuse and serve no legitimate medical purpose in the United States.” This is a characterization that the majority of people in Oregon appear to disagree with when it comes to psilocybin.
In fact, the DEA itself says that psilocybin is not addictive and has no documented, negative, long-term side effects so the risks of usage appear minimal.
Its long history of being criminalized means that few scholarly studies on the medical benefits of psilocybin have been funded or performed. That is changing as new interest has emerged in recent years.
Cannabis research helped to change perceptions towards the criminalization of cannabis and early research suggests that there may indeed be medical benefits from the use of psilocybin, which could pave the way for more widespread legalization.
Psilocybin business law
Psilocybin business law in Oregon is complex and the industry is heavily regulated — much like the cannabis industry in many states.
The Oregon Health Authority has been charged with licensing and regulating the manufacture, transportation, delivery, sale, and purchase of psilocybin products and the provision of psilocybin services.
Our experience in working within the restrictive frameworks of such a highly regulated industry as cannabis, where state law conflicts with federal law, means that our advice and support can save you many headaches when you set up your psilocybin business in Oregon and prepare for what’s around the corner.
We will minimize your risks, ensure you’re compliant, and help position you for success in the years ahead even as the psilocybin business laws evolve.
How will the medical use of psilocybin help grow the industry?
Psilocybin research has increased in recent years as the public calls for greater transparency about the substances classed as illegal in the U.S. The opioid crisis has changed many people’s perceptions, as has the growing body of evidence about the medical benefits of cannabis.
The main arguments for the legalization of psilocybin center around its effect on behavior, brain function, and mood, and it has been associated with the treatment of several common mental disorders.
In particular, proponents of psilocybin claim positive effects in the treatment of PTSD, addiction, anxiety, and depression — and research from institutions like Johns Hopkins’s Center for Psychedelic and Consciousness Research has supported the claims.
We can expect more research supporting these claims in the near future, which should open up the psilocybin industry in other states besides Oregon.
We can also expect policy changes that help the psilocybin industry evolve here in Oregon. To thrive in a quickly changing landscape such as this, you need insight, advice and support from a partner that you can rely on…
How can our psilocybin legal services help?
For growers, manufacturers, retailers and medical practitioners looking to enter the emerging psilocybin industry in Oregon, there are many opportunities — and potential pitfalls.
The risks are high but our cannabis business lawyers have been key players in the medical and recreational cannabis markets for many years.
The experience of our team in helping entities in the cannabis industry can help you thrive and take advantage of the opportunities in the emerging psilocybin industry in Oregon.
If you’re thinking of starting a psilocybin-based business here, we can support you as you plan, incorporate, begin operations and look to grow a successful business.
For informed legal advice, call 866-329-0729 for a consultation with a knowledgeable psilocybin consultant at Cannabis Law Solutions.
How will our cannabis and psychedelic business services help you
Cannabis & psychedelics business entity formation
Whether you are looking to form a limited liability company (LLC) or a corporation, our experienced business lawyers can discuss the pros and cons of both and help you incorporate your business with the optimal structure to achieve your goals.
Cannabis & psychedelics business licenses
If you want to run a cannabis or psychedelics business, you will need a valid business license issued by your state authority as well as local permits. Eligibility criteria are likely to be stringent and we can help you navigate the often-complex license application process.
Cannabis & psychedelics corporate documentation
Whether you need to prepare for a license application, transfer of business ownership, change of corporate structure, transfer business location or another business process, we can help you identify and draft the documentation you need to operate legally in your state.
Cannabis & psychedelics administrative law
State authorities watch licensed and unlicensed cannabis and psychedelics businesses closely. If you violate regulations, you could face an administrative penalty. Our attorneys can provide representation or help you prepare for an administrative hearing, settlement conference or appeal.
Cannabis & psychedelics disputes and litigation
Whether you have a dispute with another business, a legal issue with one of your partners or a licensing or administrative issue, you may need legal assistance to help resolve it. We are adept at alternative dispute resolution methods as well as civil litigation.
Cannabis & psychedelics regulatory compliance
As the cannabis and psychedelics industries emerge in states around the U.S., they are more heavily regulated than most other industries. We can help your business navigate the red tape and plan to stay on the right side of the regulatory authorities in whichever state you are based.
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Opening a successful and legal marijuana dispensary begins with hiring a knowledgeable cannabis attorney and learning all that you can about this industry and the applicable laws. The next step is to set up a corporate business structure and create a retail business plan, which an attorney can also help you with. You will also need to research potential locations for your business to find out where licensing is legal.
Next, obtain the necessary licensing to operate your cannabis business and ensure that your operational infrastructure follows all laws and regulations. If you are not growing or producing your products yourself, you will need to contract with cultivators and product manufacturers to supply your business.
Before you begin the process of applying for a cannabis license, you need to establish a business from which to apply. The state will not consider an application from an individual; instead, the applicant must be a business entity in good standing with the state.
Your business will begin when you choose a legal entity and file the appropriate paperwork with the Secretary of State. After that, you will file with the IRS and obtain a taxpayer identification number.
You would start with articles of incorporation and include other key corporate provisions in the bylaws that state how your company will be governed. If your business is a partnership or limited liability company, you will need an operating agreement. Depending on your line of business, you may also need other licenses to operate.
In addition, you will also need other corporate documents that the Department of Health will want to see when they are considering your cannabis application. Of importance here, your application would ask you to provide:
Your articles of incorporation
Certificate of good standing
An attorney can help you both choose the appropriate business entity and draft and file any necessary documentation. When you are seeking to enter the cannabis field, it is important to get your business formation process right to make the best possible impression on the Department of Health. Doing so will allow you to devote as much time as possible to your cannabis-related business arrangements.
As a precursor to even being able to apply for state approval of your cannabis business, you must have a properly formed business entity. As a result, the first documentation you must file is the documentation establishing your business.
Next, you will need to obtain a tax identification number by registering with the IRS. In addition, the licensing application also asks you to provide your current state business license registration.
Beyond your general business licenses, you would also need specific permission to operate a cannabis business. This involves a very strict registration process where the state will closely scrutinize your application. You can expect the state to review each of the licenses that they request since it wants to be sure that your business complies with laws before they are granted the right to operate in the cannabis industry.
Compliance means making sure that you follow the myriad of laws that apply to your state’s cannabis businesses. Further, the regulatory landscape is fast-changing as the state gains more experience overseeing the businesses.
What this means for you is that knowledge is one of the most important things that you can have. Not only do you need an expert in the current laws, but you also need to be able to anticipate future changes in the law. This means that each business needs an expert who understands the laws and can advise them as to the best means of following them.
Also, compliance also means that you have sound policies and procedures in place that govern your business. The Department of Health is already looking at your policies when they evaluate your initial application. However, they reserve the right to audit and inspect your business to verify that you are complying with the law. You should always be ready for an inspection by documenting how you are following the regulations.
The best way to show compliance is by keeping your paperwork organized and conducting your own internal audits. The Department is interested primarily in your safety procedures, so you should be ready to show how you are following your own procedures. Further, you should always reevaluate your own policies to see if there are any weaknesses or changes that can be made to strengthen them.
The major thing that the Department of Health is interested in is the safety of both the product and the operation. As a baseline, the state wants to know who all of the owners are and the people who will be working in the operation.
While there are common documents among all the application classes that the Department is seeking, there are also special requirements for each of the categories.
For example, when the Department is evaluating a manufacturing application, it will pay close attention to measures that your business takes to ensure proper hygiene and testing methods. The Department also will pay attention to the manufacturer’s procurement practice and the security of its inventory.
With regard to laboratory submissions, the focus is partially on the testing processes and equipment that the business will use. The Department wants technical, scientific details of the exact tests and the quality control that the laboratory will use for testing. The emphasis is on ensuring product safety.
For courier businesses, the Department will scrutinize the safety and security of the delivery process, including the vehicles and the delivery routes that are used. The emphasis is on the safety of qualified patients, primary caregivers, and courier staff in light of the product being delivered. In addition, since there is interaction with patients, the Department wants to see how the applicant plans on protecting patient privacy.
Cannabis legalization often works in a series of steps. Broadly speaking, cannabis policy reform occurs in the following stages:
Prohibition: Criminal penalties apply for the possession or use of cannabis.
Decriminalization: Low-level criminal penalties are removed for cannabis usage (e.g., personal possession) and criminal penalties may be replaced with civil fines.
Medical legalization: Full medical legalization with commercial licensing and testing may come straight away or in a series of stages.
Legalization: State laws are changed to make any cannabis activity a crime no longer. Cannabis must be removed from the Controlled Substances Act and new rules added for the legal commercial cultivation, distribution, testing, and sales of cannabis.
Oregon and Colorado states have decriminalized the use, sale, and possession of psilocybin, which is the active ingredient in “magic mushrooms” and has been shown to have great value in treating certain medical conditions, like depression, anxiety and life-threatening cancers.
Besides these states, the cities of Oakland and Santa Cruz in California as well as Washington, D.C., Somerville, Cambridge and Northampton (Massachusetts) have all decriminalized psilocybin.
It should be noted that all psychedelics are illegal in the United States under federal law and drugs like MDMA, DMT, ketamine, LSD and psilocybin are Schedule 1 controlled substances. This means they are viewed as having no medical purpose and no legitimate commercial application