Amidst the existential worldwide pause of 2020, the psychedelics movement was busy as ever: Washington D.C. became the fourth city to decriminalize all naturally-occurring psychedelics; Oregon became the first state to legalize psilocybin therapy; tens of millions of dollars were invested in psychedelic drug development; and Denver, which decriminalized psilocybin in 2019, began to map out what decriminalization will look like in the county. This next frontier of drug policy reform is monumental, overdue, and awe-inspiring. Ahead of these efforts to overturn prohibition, however, it is essential to take a breath and ask: How should psychedelic companies conduct themselves, and how is the government going to behave and interact with legal psychedelics? To answer this question, let’s look at the spirit of these compounds, and what the psychedelic experience, itself, tells us—as well as what happened to cannabis, which is mostly a cautionary tale.
In cannabis, we’ve seen an unhealthy relationship with profit and investment that has created consolidation of the market, perverse incentives, and is slowly driving the lovers and believers out of the game only to be replaced by traditional business fundamentals of “scale,” “ROI,” and “exit strategies.” Legacy operators are increasingly replaced with multistate operators, traditional venture capitalists, and Canadian public company management or ownership. For psychedelics, we have a chance to do this better. Through psychedelics, we are given clear direction toward a system that is less ego-driven and individualistic. Must we choose only between status-quo free market capitalism and nonprofit? Maybe these are not the only options. But first, we have to get weird. And if nothing else, that’s what psychedelics are here to help us do.
Consider for a moment that “profit” or “investment intentions” are not inherently bad or good, that we needn’t pick a side, aligning with all or nothing when it comes to capitalist incentives. Consider that the problem, instead, might be an organization’s erroneous structural relationship to investment, profit, and the placement of profit above all other meaningful priorities (environmental stewardship and low-cost access, as examples). Consider the possibility of a middle ground, a new ground, that we’ll call “just enough.” Let’s reimagine how an organization or company’s relationship to profit, capitalism, and capital can still harness “just enough” entrepreneurial and innovative spirit to fuel expanded access to this radically healing magic—while avoiding a free market, free-for-all that will swallow the movement whole.
Greed and free market capitalism are only possible when we believe in an illusion that tells us we are isolated, separate, lonely, and must fend for ourselves. As a result, we are incessantly obsessed with scrambling toward the security of a “have” in order to escape the woeful lot of being a “have not.” Through market capitalism, we come to believe that we are nothing more than these bodies and overactive minds running amok in the rat race.
But psychedelics show us that’s not true. With psychedelics as our guide and teacher, we can and must challenge the false idol of cash as the prize and replace it with the notion that capital is the servant, catalyst, and partner to the ultimate reality that psychedelics reveal: We are one. This is the veil that is lifted when we tune in. This is the Great Perspective Shift psychedelics can offer.
Instead of saddling the legalization of psychedelics with market capitalism, let’s allow the Great Perspective Shift to show us the way to laws, business models, and regulations that reflect the ethos of these medicines. Let’s use this moment to befriend and heal the abusive relationship between corporate entities and profit, investment, returns, and scale. Let’s learn to harness the power of human valuing— which is fundamentally our own power—rather than turning it against ourselves, yet again.
Why not just mandate “nonprofit” and be done with it? Because cannabis. The legalization of recreational cannabis in California was established through California’s Proposition 64 (Adult Use of Marijuana Act) in 2016 at the ballot box—and the resulting law that was implemented was the Medicinal and Adult Use Cannabis Regulation and Safety Act aka “MAUCRSA.” This law was written and proposed by interests other than the coalition of legacy stakeholders who were on the right track because the cannabis industry wasn’t successful with legalization sooner.
Some background: When California voters first authorized medical use of cannabis in 1996, the elegant brevity of that proposition (“Prop. 215”)—while revolutionary, necessary to public health, and politically savvy—created a vast expanse of unanswered questions that were ultimately filled by a thriving industry left unchecked for 20 years. Prop. 215 legalized medical marijuana for qualified patients who received a recommendation from a doctor and their caregivers. It also allowed them to grow cannabis, creating a completely unregulated paradigm—much like what we might see if the decriminalization initiatives— already passed in Oakland, Santa Cruz, Washington, D.C., Denver, and Ann Arbor—continue to decriminalize the growing and gifting of natural psychedelics, without establishing a regulated framework of distribution.
In 2004, in an attempt to establish a system of distribution for patients, the California legislature passed SB 420, allowing patients to form nonprofit medical cannabis collectives. The nonprofit mandate was intended to create a fair, accessible system of distribution for patients and their caregivers, but, instead, it allowed largely unregulated cannabis brands—who were willing to take the risk of being shut down—to establish a foothold in the grey market and massively profit.
In 2010, Proposition 19 proposed full adultuse legalization in California, but did not pass. Why? At least one of the reasons is that many operators believed maintaining the unregulated status quo of Prop. 215 was more lucrative, and as a result didn’t support Prop 19. Whether this actually was in the minds of voters or not, it turns out to have been a 100 percent accurate prediction: Legalization has been a massive and incredibly expensive headache, at best. The illicit market in California is thriving at the expense of the legal market. Illegal sellers outnumber legal and regulated cannabusinesses almost 3-to-1, according to a 2019 analysis by The United Cannabis Business Association—and many Californians are choosing to continue buying from the illegal market, because excessive taxation makes prices at legal retailers too expensive.
By 2015, when the Medical Marijuana Regulation and Safety Act (“MMRSA”) (the precursor to Prop. 64 and MAUCRSA) was passed by the California legislature, those of us who worked with industry legislators, and stakeholders had tried hard to put in controls, like caps in cultivation size, in order to prevent massive scaling and market domination by public corporations and mega investment. But it was mostly too late. Twenty years of a robust, sophisticated medical market that did not, in reality, operate in a truly nonprofit fashion turned out to be too much to overcome. Profiteering without regulation had already become the norm.
Add to this that proponents of Prop. 64, the proposition which legalized recreational weed in the state the following year, sincerely hoped that inviting in the energy of the free market—by largely unchecking the size of operations and allowing out-of state owners (to induce capital markets to invest)—would be the thing to finally end prohibition. This didn’t happen, as evidenced by the fact that today, four years after Prop. 64, more than 70 percent of California jurisdictions still ban legal cannabis businesses. Even worse, it has also whitewashed and homogenized the face of the ownership of cannabis companies by raising the cost of entry such that only highly capitalized, traditional investor profiles can compete, creating a market that most can agree should not be intentionally recreated with psychedelics.
There is already a profit-based market for psychedelic plants and fungi so the idea that when we decriminalize or legalize, we can prevent the issues discussed here simply by requiring companies to be “nonprofit,” is unrealistic and ultimately counterproductive. Specifically, leaving this market free to develop under a “nonprofit” mandate (like that required by Prop. 215) alone is like putting up a dam with no release valves and expecting the water to stay at bay, upstream. It’s not going to work.
Decriminalization is critical and must be adopted across the board, across the world; we must stop putting people in cages for drugs. But we must also recognize that decriminalization alone, without any kind of distribution framework, does eliminate a measure of risk for folks who want to get in early and creates a new market, even if it’s initially an underground one. We’re already seeing beautifully-branded underground psychedelic products—mushroom teas and chocolates, DMT vape pens, etc.—growing in popularity. The makers of these brands are undoubtedly waiting on the sidelines for a measure to pass, decriminalization or otherwise, which will make it safe enough for them to start selling outside their communities.
We must anticipate that without a new model, the same status-quo capitalist structures will be installed for psychedelics. So here’s the question we must ask: Should the impending psychedelic market be filled by thoughtful regulation that mandates certain ethosdriven, psychedelic experience-based business models, or should it be filled by human beings left to their own unconscious devices in a free market model? If the latter, we can anticipate the same failures we see with California’s legal cannabis market. Instead of repeating this mistake, let’s learn from cannabis and do it better this time. But how?
Let’s allow the teaching of psychedelics to inspire more creativity and idealism.
Let’s acknowledge and grapple with the entrepreneurial, capitalistic drive that is so embedded in our culture.
Let’s require business models and methods that serve health and healing and minimize greed and a profits-first mentality.
Let’s do it now, in the first instance, in the first laws that will legalize and liberalize these medicines.
Why now? Because at this moment—in the context of a pandemic, when there’s a bright light on systemic racism, and environmental and political crises—we’re all being forced to take a long, hard look in the mirror on many levels: public health vs. perceived personal liberties, white privilege vs. racial justice, entertainment vs. facts. Let’s examine profit-first vs. public and community health. And let’s do this all in the daylight.
This is not easy, but it is essential. It is also not optional. In the words of Carl Jung: “There is no coming to consciousness without pain. People will do anything, no matter how absurd, to avoid facing their own soul. One does not become enlightened by imagining figures of light, but by making the darkness conscious.” Let’s find ways, together, of harnessing the collective power of “value,” with regulatory and business model controls that mirror what the psychedelic community is all about.
Far-Out Business Models for an Ethical Psychedelics Industry
B-Corps with Teeth
A Benefit Corporation is a for-profit business that prioritizes purpose, as opposed to profit. Well-known Benefit Corporations, sometimes referred to as B-Corps, include Ben & Jerry’s, Patagonia, and Dr. Bronner’s Magic Soaps. It depends on the state, but in order to become a benefit corporation, a company typically has to adhere to a number of higher, ethical standards than normal corporations in regards to their mission and transparency. In psychedelics, let’s require, not simply advocate for, a B-Corp model that mandates organizations reinvest profits into specific, defined initiatives (community reinvestment, healing race-based traumas, poverty, addiction). The idea is to engender less costly access to psychedelic medicine, less greed—and to put some teeth into that pursuit: Let’s also require that all assets (including intellectual property and real property) be owned by the license-holding B-Corp (so that companies can’t circumvent these rules by simply establishing another company that owns the assets or handles operations for the primary business). Lastly, let’s require that all companies they do business with be B-Corps, too.
Ever, in any packaging or product, period. Truly recyclable or compostable packaging only.
Let’s look at the Cannabis Cooperative (a new legal entity structure of member-companies created by MAUCRSA) as a model idea for how we can (1) keep production small, local, and numerous; and (2) allow commercial cultivators and producers of psychedelics (fungi, chemical compounds, and plant medicines all included) to work together and hold each other accountable.
Limits on Branding and Advertising
More, smaller operators, rather than a few mega-production, multi-state corporations. Isn’t a smaller-scale, closer connection to the medicine what psychedelics show us is needed?
Radicalize Patent Law Concepts
On a most basic level, a patent is a legal status we give to inventors that allows them to prevent others from making, selling, or utilizing the invention for some period of time. Essentially, the public policy behind this legally sanctioned monopoly is to encourage investment and innovation. But patent law offers a few avenues to tweak this model for the greater good, while still protecting the inventor. A few avenues to explore are FRAND Licensing, GNUs, and public-private partnerships between government and research universities.
A F/RAND License is a “fair, reasonable, and non-discriminatory” license required to be extended by a patent holder under certain circumstances. Here, we get to keep patent law, but put some fences around the ability to monopolize psychedelic medicines.
GNU and the resulting concept of a “General Public License” are computer science creations, founded and championed by Richard Stallman, that are the genesis of open source coding. In the psychedelics context, this could mean that inventor X creates a process of synthesizing MDMA that may then be used by any other manufacturer (who may even sell that product for a profit), but the downstream manufacturer would only be allowed to use the “General Public License” if it follows some set of rules set by that license, such as, for example: (1) the entity must be formed as a B-Corporation with reinvestment of profits to therapeutic research, social justice initiatives, and others; and (2) must use proceeds to fund low-cost options for consumers and is restricted from price gouging.
Lastly, the public-private partnership rules implemented in 1980 through the Bayh-Dole Act allow certain inventors who receive federal funding to retain title to their inventions. However, the federal government has a “march-in right” that has rarely, if ever, been used, which allows the funding agency to disregard the patent and allow use by others if certain public policy goals are not met. No federal agency has yet to exercise these rights. Perhaps some tweaking of Bayh-Dole in the psychedelics context is in order.
We don’t need to break the current system entirely, but including some additional rigor with regard to how patents are utilized and monetized, which puts public interest back in the front seat, could be a good start.
Nicole Howell practices law, meditation, journeying, and being here now. She is the co-founder of Clark Howell LLP, California’s leading women-owned law firm serving the cannabis and hemp industries and leaning into discussions around the culture and ethics of psychedelics legalization and commercialization.