The Oregon Health Authority announced Tuesday it won't move forward with proposed regulations that would have doubled yearly licensing costs for companies in the state's legal psilocybin industry and removed fee reductions for veterans and people with low incomes. The decision comes after fierce opposition from magic mushroom businesses, which warned they couldn't survive the added financial burden. The authority had argued the increases were needed to fund the nation's first regulated program allowing adults 21 and up to consume the psychedelic substance with a trained guide present.
Documents released by the health authority last week show Oregon's psilocybin program faces serious budget trouble regardless of whether fees go up. The worst-case scenario projected a $4.2 million deficit in the current two-year budget period if businesses abandoned their licenses rather than pay higher fees. Even without the fee hikes, the program is expected to fall $3.8 million short. A third scenario assumed licenses would remain stable despite the increases but still showed a $2.9 million gap. The records also revealed that the number of state psilocybin licenses has dropped since the program launched in 2023.
The authority's statement said it chose not to adopt the fee increases after hearing from the Oregon Psilocybin Advisory Board, rule advisory committees, and public commenters. Every person who testified at two public hearings last week opposed the proposed hikes. Andreas Met, who co-founded the Ashland-based service center Satya Therapeutics and leads the Psilocybin Alliance trade group, called the industry's successful fight against the fees "a profound thing." Multiple speakers during the hearings criticized the agency for failing to share detailed budget information, making it impossible for the industry to help solve the financial problems.
Released documents suggest state officials don't anticipate lawmakers will provide general fund money for the psilocybin program in the next budget cycle. When voters approved the pioneering program through a 2020 ballot measure, supporters pledged it would sustain itself through fees rather than requiring ongoing taxpayer funding after initial startup costs. The health authority is now looking at raising the 15% product tax that service center clients pay on the psilocybin they consume during sessions. A recent study in JAMA Network Open found that 346 adults who used Oregon's psilocybin services reported reduced symptoms of depression, anxiety, and PTSD, plus better overall mental well-being. Both industry advocates and the Healing Advocacy Fund say the authority needs greater transparency as it works to make the program financially stable, especially if fee revenue alone can't cover costs.