2021 was a very eventful year for psychedelic policy and legal reform. After the Psilocybin Services Act was approved by Oregon voters in November 2020, we have seen many additional psychedelic decriminalization and legalization proposals being put forth in jurisdictions across the nation. A number of cities have passed “entheogenic plant and fungi decriminalization” resolutions (in part due to the successful advocacy efforts of Decriminalize Nature and its local chapters), and a handful of states are considering a variety of state-level proposals.
California currently has two of these state-level proposals to consider: Senate Bill 519, and the California Psilocybin Initiative 2022.
SB-519 was introduced by Senator Scott Wiener on February 17th, 2021, and must be approved by the California state legislature in order to become law. (On August 26th, 2021, Senator Wiener temporarily withdrew the bill, though he reported that he will bring it back in 2022). This bill, if passed in its current form, would “make lawful” the “possession, processing, obtaining, giving away without financial gain, or transportation” of psilocybin, DMT, ibogaine, mescaline, LSD, and MDMA “for personal use or facilitated or supported use,” by and with people 21 and older. It is important to note that the bill states that “financial gain” does not include “reasonable fees for counseling, spiritual guidance, or related services that are provided in conjunction with facilitated or supported use of [the substances].” This means that adults who choose to offer facilitated/supported psychedelic administration sessions would be permitted to charge fees for their guidance services, as long as they gave the actual psychedelic substances to their clients “for free.”
Additionally, SB-519 calls for the California Department of Public Health (CDPH) to “convene a working group” that would “study and make recommendations regarding public education, public health, harm reduction, and possible regulatory systems that California could adopt to promote safe and equitable access to certain substances in permitted legal contexts.” However, the CDPH would only implement the regulatory systems recommended by the working group long after all of the bill’s other provisions had already gone into effect, so if SB-519 passed in its present form, California would see a period of time in which psychedelic drug use and psychedelic service provision would be legal, but almost entirely unregulated.
The California Psilocybin Initiative 2022 was filed with the California Attorney General’s Office on July 12th, 2021 by Ryan Munevar, the campaign manager for Decriminalize California (DecrimCA). DecrimCA is a Hollywood-based grassroots organization that was formed for the purpose of putting a psilocybin decriminalization or legalization initiative on the state ballot. Although some of DecrimCA’s supporters also volunteer for Decriminalize Nature, the former group is an independent organization that is not formally affiliated with the latter. In fact, DN co-founder Carlos Plazola even came out publicly against DecrimCA’s initiative at the Emerald Cup cannabis festival of 2021.
DecrimCA needs to gather 623,212 valid signatures from registered voters by March 15, 2022 in order for the Initiative to appear on the November 2022 ballot. If this effort is successful, then California voters will decide whether or not to approve the ballot measure. In brief, the Initiative would legalize the production, distribution, and retail sale of psilocybin, legalize unlimited personal cultivation and use of psilocybin, and call for an “independent certifying body” to be formed to “establish qualifications for healthcare practitioners who provide psilocybin-assisted therapy and to create protocols for such therapy.”
The CA Psilocybin Initiative 2022 and SB-519 represent two independent, parallel attempts at state-level psychedelic legal reform in California. While SB-519 was only introduced in 2021, the effort behind the Initiative began in 2019, when DecrimCA began working to put an older, similar version (“The California Psilocybin Decriminalization Initiative 2020”) on the ballot. While volunteers were able to collect a significant number of signatures, Covid-19 restrictions got in the way of this work before it could be completed. DecrimCA decided to suspend their campaign until collecting signatures in person would become possible again. This summer, the organization submitted the new initiative and began collecting signatures again.
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At this stage, it is difficult to predict how or if SB-519 and the CA Psilocybin Initiative 2022 will interact. There is a great deal of uncertainty regarding whether or not either proposal will pass at all, and the timeframe for the state legislature’s consideration of SB-519 is still largely up in the air (unlike with the Initiative, which has clear, hard deadlines). Furthermore, SB-519 has been amended multiple times since it was introduced, and it will likely be amended more in the future before the legislature votes on a final version (unlike with the Initiative, which cannot be changed after being received and considered by the Attorney General’s Office, and will be presented to voters in its present form if it qualifies for the ballot).
The California Psilocybin Initiative 2022: What Would it Do?
The CA Psilocybin Initiative 2022, unlike SB-519, would only legalize psilocybin, and not other psychedelics.
One potentially confusing aspect of the Initiative’s language is its use of the term “Psilocybin Mushrooms.” The text defines “Psilocybin Mushrooms” not only as fungal matter that contains psilocybin, but also as “products containing psilocybin, including but not limited to, powdered mushrooms, microdosing capsules, macrodosing capsules, teas, tinctures, chocolates, beverages, and edible products.” The Initiative’s definition of “psilocybin” states that the compound may be “naturally-derived or synthetically-produced,” which means that products containing pure, lab-synthesized psilocybin crystals would be classified as “psilocybin mushrooms” under the Initiative. The terms “Psilocybin Mushrooms” (capitalized) and “psilocybin products” will henceforth be used interchangeably in this article.
The Initiative’s psilocybin legalization model has three main components: (1) the legalization and regulation of Psilocybin Mushroom Businesses, (2) the granting of personal protections to individuals who engage in psilocybin-related activities, and (3) the legalization and regulation of the practice of psilocybin-assisted therapy.
Legalization and Regulation of Psilocybin Mushroom Businesses
The California Psilocybin Initiative 2022 would legalize and regulate the operation of “Psilocybin Mushroom Businesses.” The text of the Initiative states that a Psilocybin Mushroom Business is a “for-profit or nonprofit entity or natural person that is a resident of California that cultivates, manufactures, wholesales, or retails Psilocybin Mushrooms, and includes, but is not limited to, Psilocybin Mushroom manufacturers, Psilocybin Mushroom distributors, Psilocybin Mushroom retailers.”
Although the phrase “Psilocybin Mushroom retailers” might conjure images of psilocybin dispensaries that follow the legal cannabis model, the retail sale of psilocybin products would not be restricted to specialized stores, unlike with cannabis in California. If the Initiative passes, any ordinarily-licensed retail business could begin selling psilocybin products without being required to obtain a psilocybin-specific permit from the state. For example, a grocery store (or head shop, or herbalist, etc.) that is already licensed as a retail business in California could start offering psilocybin products for sale, without having to apply for any additional government authorization to do so. Furthermore, if any adult wants to open an entirely new business to sell psilocybin, all they would have to do is fill out an application for an ordinary retail business license, known as a “California Seller’s Permit,” and submit it to the California Department of Tax and Fee Administration.
The Initiative also keeps the barrier to entry relatively low for individuals and businesses who want to enter into the psilocybin cultivation/manufacturing market. The text states that “no license, fee, fine, or tax, on a Psilocybin Mushroom business shall exceed the amount charged or assessed for comparable non-Psilocybin Mushroom related businesses,” and that “Psilocybin Mushroom Businesses shall be regulated as closely as practicable” to businesses that deal in “non-psychoactive agriculturally produced mushrooms.”
Psilocybin products themselves would be regulated by the California Department of Food and Agriculture (CDFA) as “foodstuff,” just as non-psychoactive agriculturally-produced mushrooms currently are, though all psilocybin products packaged for retail sale would be subject to additional labeling requirements.
A psilocybin products label must list the names and amounts of all of the psychoactive compounds contained inside the product, in milligrams per package, milligrams per serving, and as a percentage of the total mass. The label must also include a “readily visible” image of the “Universal Psilocybin Symbol” in order to “alert consumers that the product contains psilocybin,” and a QR code that is “linked to a unique public product web page maintained by the manufacturer, with additional product information that is too extensive to be listed on the original packaging, and can be amended as future regulations and testing technology evolve.” Additionally, all psilocybin products must display the following statement on their labels (“capitalized and bold print, in at least 6 point font”):
GOVERNMENT WARNING: THIS PACKAGE CONTAINS PSILOCYBIN, A SCHEDULE I CONTROLLED SUBSTANCE. KEEP OUT OF REACH OF CHILDREN AND ANIMALS. PSILOCYBIN MAY ONLY BE POSSESSED OR CONSUMED BY PERSONS 21 YEARS OF AGE OR OLDER UNLESS RECOMMENDED BY A MEDICAL PROFESSIONAL. CONSUMPTION OF PSILOCYBIN IMPAIRS YOUR ABILITY TO DRIVE AND OPERATE MACHINERY. PLEASE USE EXTREME CAUTION.
The Initiative states that psilocybin products that are “grown or sold for medical, therapeutic, religious, or spiritual purposes” would not be subject to “any sales, use, or excise tax.” Psilocybin products that do not fit into any of these four tax-exempt designations could be sold as “dietary supplements,” and would be subject to ordinary sales taxes.
Granting of Personal Protections
The Initiative would make it “lawful” for individuals who are 21 years of age or older to engage in a number of psilocybin-related activities. Adults would be permitted to possess unlimited amounts of psilocybin, to cultivate unlimited amounts of psilocybin mushrooms, indoors or outdoors, “on private property where such cultivation is not visible from outside the property,” and to give away unlimited amounts of psilocybin to other adults, as long as no money, goods, or services are received in exchange.
Adults would be also allowed to use unlimited amounts of psilocybin “in one’s home or on any privately owned property in a manner that does not endanger others,” and to “be under the influence of psilocybin” in public, “except as provided in subdivision (f) of section 647 of the [CA] Penal Code.” That specific section of the CA Penal Code prohibits individuals from being publicly intoxicated on any substance to the point of being “unable to exercise care for [their] own safety or the safety of others,” or to the point of engaging in behavior that “interferes with or obstructs or prevents the free use of any street, sidewalk, or other public way”).
The Initiative specifically states that the “social consumption” and “onsite consumption” of psilocybin “shall be lawful in this state.” This would open the door for adults to legally use psilocybin together on private property in a variety of ways, including in ceremonial contexts. In an interview for this piece, Ryan Munevar of DecrimCA gave some predictions regarding what “social”/“onsite consumption” might look like under the Initiative. For example, he imagines that veterans suffering from PTSD would hold psychedelic “mutual support circles” in private homes. He also mentioned the possibility that individuals who own large plots of land could host psilocybin-fueled music festivals and other similar private events.
…he imagines that veterans suffering from PTSD would hold psychedelic “mutual support circles” in private homes. He also mentioned the possibility that individuals who own large plots of land could host psilocybin-fueled music festivals and other similar private events.
The “social”/“onsite consumption” protection would enable any adult to facilitate psilocybin sessions on private property, with some restrictions. All psilocybin session facilitators would be allowed to accept money in exchange for their facilitation services, but only facilitators who first obtained a California Seller’s Permit would be able to charge for the psilocybin itself. Facilitators would not be permitted to offer or advertise their psilocybin sessions as psychotherapy or as medical/psychiatric treatments without first obtaining a certification from the independent certifying body that the Initiative would create.
Legalization and Regulation of the Practice of Psilocybin-Assisted Therapy
The California Psilocybin Initiative 2022 would allow psilocybin-assisted therapy to be delivered by “qualified healthcare practitioners” who have “obtained specialized training certifications to administer psilocybin.” According to the text of the Initiative, the specialized training certification requirements would be developed by an “independent certifying body” (a non-government entity) and adopted, implemented, and enforced by the “California Department of Consumer Affairs and the California Health and Human Services Agency.”
Neither the Initiative text nor the DecrimCA FAQ provides any further information on the “independent certifying body,” or a roadmap for how and when the group would be established. However, Ryan Munevar was able to offer a bit of clarification regarding DecrimCA’s vision as to how this would play out. Munevar predicts that the state government would open a “public request for proposals,” and that a variety of organizations (e.g. MAPS, Field Trip, CIIS, or even Johns Hopkins University) would submit their own plan or model for the independent certifying body, hoping to be selected by the state. He also noted that SB-519 would set up a “working group” tasked with establishing a training, licensing, and certification framework for the practice of psychedelic-assisted therapy. If both SB-519 and the Initiative were approved, Munevar imagines that the state-assembled “working group” would then serve the role that would otherwise be served by an independent certifying body.
Analyzing the Initiative in More Detail
Now, it is time to address some specific (and sometimes technical) questions about the Initiative.
The Initiative states that psilocybin products would be categorized into five different designations: those sold as “dietary supplements” (which would be taxed), and those sold for “spiritual,” “religious,” “medical,” or “therapeutic purposes” (none of which would be taxed). What exactly are these different designations, and what are the criteria for categorizing psilocybin products into each one?
Neither the DecrimCA FAQ nor the text of the Initiative provides any answer to this question, although Ryan Munevar did offer a response during an interview for this article.
“Basically, it’s whatever someone wants to slap on what they are doing,” he explained, clarifying that the government would not provide any definitions for the different designations, nor provide any official criteria for placing different psilocybin products into the designations. However, Munevar suggested that psilocybin product categorization would not necessarily be a complete free-for-all: “For medical [use], most people think you need to have some kind of medical certification, degree, or program you’ve gone through for that; that’s already out there and well-accepted.” But when it comes to “therapeutic” use, things get fuzzy, he noted, because many who are not registered therapists call what they do “therapy” (think “massage therapy,” or even reiki).
Munevar then turned to “religious” and “spiritual” use: “If [people] don’t like organized religion, they can fall back on ‘spiritual’; to some capacity, that can be anything from tarot card reading to tea leaves.” His input therefore suggests that “medical,” “therapeutic,” “religious,” or “spiritual” use are activities that occur in the context of some kind of psilocybin service provision, from psilocybin-assisted medical treatments all the way to psilocybin-assisted tarot readings (unlike “dietary use,” which encompasses at-home personal use). There is nothing in the text of the Initiative, however, that actually states any of this.
If there are no official, on-the-books, enforceable criteria for categorizing psilocybin products into the five designations, then why would businesses choose to sell their products as dietary supplements (which are taxed), when they could instead label the products as being for “therapeutic,” “medical,” “religious,” or “spiritual” use, and thus avoid taxation?
Attorney Omar Figueroa, the legal advisor for DecrimCA, responded to this question in a DoubleBlind interview, explaining how existing laws and legal precedents would impact psilocybin product categorization. He focused on the “religious” and “spiritual” use designations.
According to Figueroa, an entity does not need to be “designated as a religious non-profit” by the government in order to sell psilocybin for “religious” or “spiritual” use, although there would still be some restrictions on this activity:
“Can anyone claim ‘religious or spiritual purposes?’ YES, at any time, and then they get into a dispute with the IRS about it, with the tax authorities about it,” Figeuroa said. He explained that in each case, the tax authorities will ask, “is this bona fide religious use, bona fide spiritual use, or is it [exploiting] a reverse-engineered loophole just to not pay taxes?”
The phrase “bona fide” is Latin for “in good faith,” and it means “sincere,” “genuine,” or “authentic.” In order for a group to qualify as a “bona fide religious organization,” it must be established and maintained for “sincere religious purposes,” rather than ulterior motives (e.g. financial gain, fraud, etc.). Likewise, for an activity to qualify as a “bona fide religious practice,” it must be engaged in for sincere religious purposes, rather than ulterior motives.
Figueroa predicts that it would be difficult for people with clear ulterior motives to secure “bona fide religious use” protections in order to evade taxes:
“If someone says, ‘I’m starting a new religion, and it’s the magic mushroom religion,’ but it’s really reverse engineered for me to not have to pay taxes, you know, usually the courts say ‘That’s not a bona fide religious practice, that’s just reverse engineering your religious beliefs from what the law is, and they’re not arising independently.’” He expects that in cases like this one, “the taxman is gonna say, ‘this is not for bona fide religious or spiritual use, this is just a way to circumvent the taxes.’”
Figueroa gave more background on how “bona fide religious use” cases have been decided before, explaining that “if we were talking about what the religious defense is, you basically have to show that use of the controlled substance is indispensable to the practice of the religion, that you cannot practice that religion without that sacrament.” He also explained that courts look for a distinction between “sacred and profane use” of the substance in the religion, and that they have “uniformly rejected” bona fide religious use claims from groups who do not include this sacred/profane distinction in their practices (i.e. group members use the sacrament in a relatively unrestricted/indiscriminate manner). He specified that this has been the case whenever self-described religious organizations have attempted to secure protections for their cannabis use.
As Omar Figueroa has shown us, existing law and legal precedent provide some important criteria for determining whether or not a Psilocybin Mushroom Business may legally sell psilocybin products for “religious purposes.” However, the situation is significantly less clear when it comes to “spiritual use” and “spiritual purposes.”
Figueroa said that “spirituality” is a much, much “fuzzier” concept than “religion,” particularly in terms of law and legal precedent, and that if the Initiative passed in its current form, the courts and tax authorities would end up having to weigh in on many very “tricky” cases.
It is not so difficult to imagine that if the Initiative was approved, a large number of people in California would attempt to start selling psilocybin for a wide variety of self-described “spiritual purposes.” It is also not so difficult to imagine that these people would be acting on a wide variety of different motivations (including financial gain), and that some would attempt to take advantage of gray areas/ambiguities/loopholes in the new law (we have ample evidence indicating that opportunistic, relatively risk-averse actors have already been exploiting legal/enforcement gray areas for the purpose of selling psychedelics for a profit). “Will the exceptions swallow the rule, will these religious or spiritual tax exceptions swallow the rule?” Figueroa asked. “I don’t know.” One might also wonder about whether or not the medical or therapeutic tax exceptions would “swallow the rule.” It seems reasonable to predict that there might be some gray areas, ambiguities, or loopholes associated with the “therapeutic” use of psilocybin, similarly to “spiritual” use. This probably would not be the case with “medical use,” because the practice of medicine tends to be much more narrowly defined and strictly regulated than all the various healing arts that are called types of “therapy” (e.g. “massage therapy,” “aromatherapy,” “music therapy,” etc.).
It seems odd to sell, label, market, and/or regulate psilocybin as a “dietary supplement.” Would existing law allow this to happen?
If we look at the California Code of Regulations, Title 17, Section 10200, we see the following statement:
“A dietary supplement does not include an article authorized for investigation as a new drug, antibiotic, or biologic for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, and which was not, before its approval, certification, licensing, or authorization, marketed as a dietary supplement.”
Psilocybin clearly checks all three of those boxes: 1) The FDA has authorized multiple clinical trials to investigate the substance as a new drug for use in the treatment of depression, 2) the existence of these clinical trials has been made public, and 3) the substance has never been
marketed as a dietary supplement before. Therefore, it appears that psilocybin cannot legally be sold/labeled/marketed/regulated as a dietary supplement in California, according to state law.
When alerted to this potential legal problem for the Initiative, Omar Figueroa examined the text of the existing law. After some brief discussion, he agreed that psilocybin likely does “not qualify as a dietary supplement under California law,” meaning that state law would likely “not allow for marketing [the substance] as a dietary supplement.”
Figueroa acknowledged that this issue will have to be fixed at some point, likely by changing or replacing the “dietary supplement” designation with a new “personal use” designation that does not conflict with existing law. He said that this “is something that really should have been looked at in the beginning,” and expressed surprise that no one had caught the problem earlier.
“The funny thing,” he said, “is that the Attorney General’s Office and the Legislative Analyst’s Office did not identify these issues.” Strangely, he noted, no one in either of those offices was “raising up any red flags” when they wrote the fiscal impact statement for the Initiative.
Deputy Legislative Analyst Drew Soderberg replied to a DoubleBlind press inquiry on behalf of the CA Legislative Analyst’s Office. He acknowledged that the dietary supplement legal conflict does indeed exist, though his response did not do much to clarify whether or not the office had originally considered the issue. Soderberg wrote that “courts normally rule that changes made by initiatives supersede existing state regulations,” and that therefore it is possible that the existing law in question “may not prevent psilocybin from being sold as a dietary supplement” after all. He did make it very clear, however, that the courts could also rule that the California dietary supplement regulations do indeed prevent psilocybin from being sold under the dietary supplement designation.
If existing law ultimately prevents psilocybin from being sold as a dietary supplement, how would this impact the Initiative’s legalization model?
One consequence of the disappearing dietary supplement designation is that we would be left only with the “medical,” “therapeutic,” “religious,” and “spiritual” use designations, meaning that there would no longer be a catch-all psilocybin product designation that encompasses “personal” or “adult use.”
There would also be consequences in terms of tax revenue. According to the Initiative’s taxation framework, only psilocybin products sold as dietary supplements would be taxed. If psilocybin cannot legally be sold as a dietary supplement, then the single taxable psilocybin product designation is gone, leaving only the other four tax-exempt ones, and no opportunity for “the taxman” (as Omar Figueroa likes to say) to collect any revenue from the retail sale of psilocybin products. It is easy to imagine that “the taxman” might have some complaints about this situation somewhere along the line.
What does DecrimCA intend to do about the dietary supplement issue?
As mentioned earlier in this article, it is impossible for any changes to be made to the Initiative after it was received and considered by the Attorney General’s Office. DecrimCA could choose to submit a new, amended initiative and attempt to get it on the ballot, but then the organization would have to start over again with gathering signatures for the new initiative. According to Ryan Munevar, DecrimCA does not intend to take that path:
“First, there’s no way we can change any language at this point, since we will miss our deadline for the November election,” Munevar wrote.
“Second, few initiatives are ever perfect” he continued, explaining that DecrimCA intentionally included “Severability” and “Liberal Construction” provisions in the text so that “if one part [of the Initiative] doesn’t work or stalls for regulations, it doesn’t cancel out the rest of the Initiative.”
Omar Figueroa also pointed out that the Initiative “allows for amendments” to be made by the state legislature after voters approve it as a ballot measure. He predicts that “the legislature will come up with clean-up bills, which happens with any initiative that allows amendments.”
So, unless there are any surprises, we can expect that DecrimCA will keep running with the Initiative that they submitted to the Attorney General’s Office in July of 2021, hoping that the dietary supplement issue does not dissuade voters from approving it. However, it is possible that voters will be alerted to the issue in the November 2021 Official Voter Information Guide. The Attorney General’s Office always publishes a new report for the Official Voter Information Guide when an initiative qualifies to be on the ballot. Sometimes the new reports catch issues that were missed during the first pass, and this may happen with the dietary supplement issue.
If the Initiative qualifies for the ballot, and is then approved by voters, we will have to wait and see what the courts decide to do about the dietary supplement issue. No matter what the outcome is, it seems likely that the legislature would take interest in making amendments to the new law, perhaps with collaboration from the DecrimCA team. Dietary supplement issue aside, there are other aspects of the Initiative that could be tightened up and adjusted. In particular, the legislature would probably want to address the potential gray areas, ambiguities, or loopholes associated with the different psilocybin product designations.
With 2021 coming to a close, many of us are thinking about the new year and what might unfold in the future. The psychedelic renaissance is picking up speed, so it shouldn’t be surprising if 2022 ends up being a very eventful year for the psychedelic space.
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