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Psilocybe cubensis, known colloquially as psychedelic 'magic' mushrooms, at Rose City Laboratories, where the psilocybin-containing mushrooms will be tested for potency in accordance with Oregon state law, in Portland, Oregon, on May 10.ROBYN BECK/AFP/Getty Images

Sam Chapman’s wish list for legalizing psychedelics in Oregon included a few things. He wanted the state to be a pioneer in providing access to psilocybin, the compound in mushrooms that can be a potent tool to jar people’s mental states. He wanted to craft rules that made such treatment broadly available – without a diagnosis – while barring access to those to whom it could be dangerous.

And Mr. Chapman, former campaign manager of the ballot measure that made mushroom use legal, wanted to do it without any of the unruly mess of cannabis, with its explosion of interest, enormous outpouring of capital investment and subsequent crash.

Psychedelics promise to be a lucrative new business, creating mainstream approaches to address some of the most intractable maladies in mental health, including treatment-resistant depression. The market could be worth billions of dollars.

Oregon is at the forefront, this year becoming the first place in the U.S. to legalize psilocybin. Its pioneering program does not involve dispensaries or self-administration. Instead, regulators and entrepreneurs devised a system in which licensed facilitators – people trained in psilocybin preparation, administration and integration – can support clients through a mushroom trip inside a regulated service centre.

It’s meant to create safe places for what can be a life-altering experience.

Not so high, not so fast

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But in Oregon, at least, it shows no sign of being big business. Indeed, those who built the state’s system as an experiment in progressiveness – some local proponents veer into quasi-communist language – wanted very little to do with business at all. They wrote rules to give priority to smaller local players, enforced with residency requirements for owners.

“We chose the hard but righteous path,” said Mr. Chapman, executive director of the Healing Advocacy Fund, which promotes psychedelic use and education.

Instead of furious competition, Oregon has multiple Slack channels where those building mom-and-pop service centres can exchange ideas and commiserate with those still testing the waters.

“It’s all about supporting each other,” Mr. Chapman said. For many of those building new service centres, “their goal is to break even. Which in a capitalist economy and society is a crazy thing to do.”

That strategy has largely succeeded in keeping outside money at bay. The venture capitalists that brought frenzies of cash to cannabis have almost entirely stayed out of Oregon psilocybin.

What’s less clear is how well this progressively minded industry will serve the people it’s meant to help.

The first psilocybin provider to make public a price schedule said a single high-dose trip will cost US$3,500.

And while other providers say they will offer lower pricing, the early days of legalized psilocybin in Oregon have strained to find much magic in the mushrooms.

The state’s psilocybin effort is “struggling,” said Jason Luoma, a scholar with Oregon Health and Science University who is chief executive of Portland Psychotherapy, a research clinic.

“Not as many people have rushed into the space as you might have expected. There’s just a lot of barriers.”

He is convinced psychedelic medicine will soon become a widely accepted part of treatment. “I think a lot of people who get mental health care will have some form of psychedelic-assisted therapy in 10 years,” he said.

But he is skeptical enough about the Oregon model to decide against creating his own psilocybin service centre.

So, too, have many chasing psychedelic profit.

Brom Rector, founding partner of Empath Ventures, which invests in early-stage psychedelic startups, is more interested in the companies pursuing approval from the United States Food and Drug Administration for formulations of ketamine, psilocybin and MDMA, better known as ecstasy.

“The medicalization pathway is dominating most investors’ interest now, because once a drug is approved, it’s approved,” Mr. Rector said.

In Oregon, there are “concerns about the way the law is written that limits the amount of growth and scale that can happen,” he added.

Colorado has also legalized psilocybin, with an approach that offers more latitude for personal cultivation and sharing of mushrooms. Other states are likely to follow, introducing their own changes. Investors hope California will be one of the next, with its sizable market and history of learning from experiments in other states.

“Where it’s similar to cannabis is where we saw a lot of things get thrown against the wall. Some stuck, some didn’t,” said Joshua Barber, co-founder of Enthea, which is creating health insurance plans that can include psychedelic services as a workplace benefit. “We know the only way to scale any of this is for insurance to ultimately cover it.”

His pitch to companies is based on a return on investment: Access to psychedelic care such as ketamine-assisted therapy can, he believes, improve workers’ performance.

Companies in Oregon have asked whether Enthea can cover psilocybin therapy there, too. Mr. Barber has said no. That’s “off-limits” at the moment, he said, citing legal risks.

“We have to let Oregon and Colorado and other states take a little more time to figure it out before we can jump into that.”

In Oregon, early providers are experimenting with business models. One, InnerTrek, expects to offer group sessions, in hopes of “creating a much more accessible entry for potential clients, where the full service may cost closer to $500,” said Nate Howard, director of operations. He was an adviser to Ballot Measure 109, which legalized psilocybin in the state, and is co-founder of a cannabis breeding operation with his brother.

But he says the imperative with psilocybin is not profit. Better, he says, to pursue “collective consciousness changing, realignment – core values we were born with.” He acknowledges that comes with its own challenges.

“Right now, in the absence of traditional investments, it’s very challenging to scale up to the point where we could expand.”

Local authorities argue they have acted in the best interests of those who need help. Oregon has been “learning how to create rules in a way that protects the client’s safety and well-being,” said Angela Allbee, manager of Oregon Psilocybin Services Section, which is under the state’s health authority.

But navigating the state’s regime has “been confusing for a lot of people,” said Elizabeth Nielson, co-founder of Fluence, which has secured a licence to provide a training program that teaches psilocybin preparation, dosing and administration for facilitators – the people who can guide clients through their trips.

The training curriculum must be approved by Oregon Psilocybin Services, but can only be delivered with an operating licence provided by the state’s Higher Education Coordinating Commission. (They aren’t cheap, either: One training provider charges $8,500 a person).

Henry Fields was among the first to go through facilitator training. He used LSD in high school, beginning a life of experimentation with psychedelics and other drugs.

He nonetheless remains torn about Oregon’s new program. “There’s a lot of bureaucratic decisions and procedures that, I think, are overshadowing the actual benefit of what is a simple reattuning to these natural forces.”

For all the struggles, however, the Oregon program has begun delivering psychedelic treatment. On July 16 the first client completed a dosing session under Oregon’s new program at a licensed facility operated by Bendable Therapy, in Bend. It was “really awe-inspiring,” said Bendable executive director Amanda Gow.

She dismisses critics who say the Oregon program is too cumbersome and too slow.

A measured approach, she said, ensures “we do this well, so we can share with the rest of the country – and the world – our findings and outcomes, to show this is safe and this is something that could be beneficial in other places as well.”

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