When psychedelic-assisted therapy becomes available in Colorado next year, the state will be just the second in the U.S. to regulate the production and use of psilocybin mushrooms.
Oregon was the first state to legalize psilocybin therapy in 2020 and mental health-focused businesses there began offering it in 2023. Unsurprisingly, local regulators have looked to Oregon for guidance as they develop their own rules and regulations.
There are already lessons to be learned. A year and a half after the nascent industry got off the ground, some of Oregon’s psilocybin service centers are struggling to stay open. One in Portland closed earlier this year after operating for just six months.
Oregon’s service centers are where people go to have a therapeutic psilocybin experience or a guided trip, if you will. (In Colorado, these facilities are called “healing centers.”) But in Oregon, owners say the cost of doing business is so expensive that it threatens the model altogether.
Last June, Dee Lafferty opened Inner Guidance Services in Albany, Ore., which served about 165 clients in its first year. But when the time came to renew her center’s license, which costs $10,000 annually, Lafferty launched a crowdfunding campaign to cover the expense.
“Unfortunately the program in Oregon is not set up in a way to where it is profitable. So we do not have the $10,000,” Lafferty said in a Facebook video promoting her campaign.
But the community stepped up, and within two days, eight people had donated enough money to help Inner Guidance Services reach its goal. While that provided a stopgap, Lafferty doesn’t know how she’ll cover next year’s fee.
“When you look at what you have to pay for the facilitators, for the space, rent, electricity — all of the things that you have to have — what have you to pay sums up to more than what you make reasonably,” she said.
Licensing fees are a hot topic in Colorado, as regulators barrel toward finalizing what it will cost for entrepreneurs to participate in this new industry. It’s one of the last pieces to get settled after they spent a year-plus determining occupational requirements for facilitators and rules governing the business ecosystem surrounding psychedelic therapy.
Dee Lafferty, one of the first licensed psilocybin therapists in the country, sits inside one of the treatment rooms at Inner Guidance Services Inc. in Albany, Oregon. The center has operated for a year, but the business model is not profitable, she said. (Photo by Kristina Barker/Special to The Denver Post)
Challenges like the ones Lafferty described were common in the early days of marijuana legalization, said Rachel Gillette, a Denver-based attorney and head of the cannabis and psychedelics group at the Holland & Hart law firm. Even today, banks, landlords and insurance companies often upcharge businesses that work with federally controlled substances because they’re considered more risky, she said.
Additionally, these businesses are subject to a federal tax code that prohibits them from deducting operating expenses from taxable income, driving up costs.
“Everything seems to come with a little bit of premium on it because it’s something that’s federally illegal,” Gillette said. “Until (psilocybin) loses its stigma, until it’s federally legal in some respect, I think that continues, unfortunately.”
Compliance costs don’t stop with initial licensure, she added. These young industries continually evolve and businesses need to adapt to new regulations. Gillette expects there will be a smaller customer base for psychedelic-assisted therapy because it’s so new and because, unlike cannabis, Colorado won’t permit retail mushroom dispensaries.
“It’s going to take time to build the business so that people understand what it is,” she said. “I don’t see somebody opening their doors for a natural medicine center and having lines out the door like they did on the first day of recreational cannabis. It’s not going to happen.”
Pricy for patients
The solution to sustainability is not as simple as passing costs onto the customer, Lafferty said. Psilocybin services are already notoriously pricy in Oregon, where a single guided trip can cost thousands of dollars for the drugs and for a facilitator who supervises each client while they’re under the influence for several hours. Although psychedelic-assisted therapy is considered a mental health treatment by those in the industry, it’s not yet covered by insurance.
“The biggest thing we learned is that the way the Oregon model is set up, it’s a little bit over the price range for our target market, which we knew, but it’s been confirmed,” Lafferty said.
In its first year, Inner Guidance Services provided the equivalent of $33,000 in free services to individuals who could not afford to pay, Lafferty said. Since opening, she expanded the center’s offerings to include microdosing counseling and introductory low doses for people who are new to psilocybin or hesitant to commit to a large dose. People can also register for group sessions, which are cheaper because the cost is split among several participants.
“We are trying to not close, so we are trying a little bit of everything,” Lafferty said.
Jenna Kluwe, co-owner of the now-shuttered The Journey Service Center in Portland, said the public needs more education so they can see the value of their investment not just for the trip, but also the sessions before and after. Those sessions, called preparation and integration, are integral to long-lasting change, she said. Kluwe’s clients have described a guided psilocybin trip as several years of talk therapy — and therapy on its own isn’t always cheap.
“The value of this needs to be emphasized more and more for folks. Not just the sticker shock, but the value,” said Kluwe.
The Journey Service Center closed in March after its investor halted funding, she said. Kluwe now works at another center called Fractal Soul running its equity program.
Psilocybin facilitator students sit with eye masks on while listening to music during an experiential activity at a training session near Damascus, Ore., on Dec. 2, 2022. They are being trained in how to accompany patients tripping on psilocybin as Oregon prepares to become the first state in America to offer controlled use of the psychedelic mushroom to the public. (AP Photo/Andrew Selsky)Lowering barriers to entry
One difference between the programs in Colorado and Oregon is that the laws here allow healthcare providers to integrate psilocybin therapy into their existing practices. (In Oregon, the businesses, facilities and staff must be separate duplicating costs for current healthcare professionals like Lafferty, a social worker with a private practice.)
Regulators created a micro-healing center license for those places that intend to host just a couple of psilocybin sessions per month versus specializing in that type of treatment. Advocates are adamant the micro-healing center license will lower the barriers to entry in Colorado and streamline access for individuals who already have a therapist or psychiatrist. During a rulemaking hearing on Sept. 16, however, they shared concerns that the currently proposed fees are too high.
In its draft rules, the Department of Revenue proposed micro-healing centers pay $3,000 for application and compliance fees in 2025, before ramping up to a cumulative $5,000 in 2026 and $12,000 by 2027. The phased increase in fees is intended to both incentivize early participation and eventually fund the agency’s administrative work overseeing the industry, regulators said.
Shannon Hughes is a social worker who currently offers ketamine-assisted therapy at her practice, An Enduring Love, in Fort Collins. She sees psilocybin as another tool in the behavioral health toolkit and hopes to integrate it once it’s legal. An Enduring Love gets calls weekly from people interested in trying it.
The most logical way to offer that option would be to obtain a micro-healing center license, Hughes said. But if she had to pay $12,000 per year to do so, “it would not fiscally make sense for our small practice.”
“I really don’t know anybody in the mental health community who that would be viable for,” Hughes said. “So I was disappointed and discouraged because you have to be a large operation to afford $12,000-plus in fees.”
It’s worth noting that all license types, including those for cultivation and manufacturing, will be subject to increased fees by 2027. For example, the latest draft rules dictate a standard healing center – meaning one that intends to specialize in psychedelic-assisted therapy – would be required to pay $6,000 in application and compliance fees in 2025, $8,000 in 2026, and $16,000 by 2027.
“There’s a concern that this current structure and approach will be an inoperable program,” Tasia Poinsatte, director of the Healing Advocacy Fund, said during the recent rulemaking hearing, citing challenges in Oregon. “If we set fees that high and discourage participation today, it’s going to make it that much harder to get this off the ground in the first place.”
Regulators plan to discuss licensing fees again at a meeting on Oct. 21.
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Originally Published: September 30, 2024 at 8:48 a.m.
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Publish date : 2024-09-30 03:55:00
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