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May 12, 2021

What Prospective Business Owners Need to Know for the Imminent Shroom Boom

With the decriminalization of psilocybin many are entering the mushroom market. The following panel discussed what to be aware of and how to set yourself up for success. Catherine Sidman was our moderator, with Rocco Iannapollo Director of Business Development for Cannabis Kitchen Supplies, Eli Katz Founder at Zwiski Foundation, Kara Lavaux, CP-FS with Allay Cannabis Consulting and Liz Geisleman VP of 710Spirits® as panelists.

psilocybin panel
Psychedelic Science Conference

Psychedelic Renaissance

Psilocybin, the psychoactive compound found in “magic mushrooms”, has been the newest psychedelic approach to dealing with depression, anxiety and substance abuse, especially those with PTSD. The term ‘psychedelic’ describes drugs that can change an individual’s thoughts, moods and perception of the world. The classification of psilocybin is both an entheogen and empathogen. Entheogen meaning “a chemical substance, typically of plant origin, that is ingested to produce a non-ordinary state of consciousness for religious or spiritual purposes.” Oxford Languages. And empathogen “…increase an individual’s feeling of empathy and benevolence towards others and increase feelings of being socially accepted by and connected to others.” Alcohol and Drug Foundation.

Psilocybin has been the newest hot topic of leaving the criminal column and making way toward decriminalization in many US cities. In November 2020 Oregon legalized psilocybin for therapeutic use after recipients pass a screen test and is administered at licensed facilities. Other cities such as Ann Arbor, Denver, Oakland and Washington D.C. have decriminalized psilocybin.

explanation of empathogens on the drug wheel
Alcohol and Drug Foundation
Decriminalization vs. Legalization

With the continual legislation updates on cannabis and psilocybin it’s important to understand and differentiate what it means for a substance to be decriminalized vs. legalized.

Decriminalization is the taking away of charges when possessing a substance above a certain set standard. The substance still remains illegal over a threshold and those caught with the substances have to pay fine, replacing criminal penalties with civil penalties.

Denver voted into effect Initiated Ordinance 301, Psilocybin Mushroom Initiative in May of 2019 which states to…

  1. deprioritize, to the greatest extent possible, imposition of criminal penalties on persons twenty-one (21) years of age and older for the personal use and personal possession of psilocybin mushrooms; and
  2. prohibit the City and County of Denver from spending resources on imposing criminal penalties on persons twenty-one (21) years of age and older for the personal use and personal possession of psilocybin mushrooms.


Legalization removes all laws against the substance. The general public can purchase and use as they please for either medicinal or recreational use. Oregon’s legislation created the Psilocybin Service Initiative (PSI 2020) and the Drug Addiction and Recovery Act (DATRA) which allows legalized supervision of psilocybin-assisted therapy with a regulated system of production and distribution.

Having psilocybin only being legalized in Oregon with strict regulations, it is important to understand the current laws in your city and understand where you fall on that spectrum. With decriminalization you can not sell retail psilocybin. You can “grow, gift and gather” but not sell to the public. Recognizing the risks you are taking legally within growing, gifting and gathering can determine how your business model in the market place are moving forward. Ensuring to be ready for the eventual shroom boom.

Ways to Structure Psilocybin “Enterprise”

Being aware of how to build your business for the success is crucial as this substance becomes more prevalent in the market. The panel recommend creating a co-op as an agriculture business as the best way for independent businesses to work together. Aiming to aid the industry as a whole toward the legalization of psilocybin.

Make sure when entering the market to be an ancillary AND producer. Establishing as an ancillary company ensures vetting of any and all business you interact with. This in turn creates a foundation of quality and ensuring longevity of your business regardless of the changing regulations and legislation.

When creating your enterprise you want to always be aware of current regulations. Which puts into question how will legislation regulate mushrooms spanning to other states? Many expect the roll out to be much smoother than cannabis. Seeing as there is already established parameters to build on from what regulators have learned with cannabis. Not to mention the extensive research going on currently about the impact of mushroom directed therapy and it’s lasting effects. When marijuana was legalized in 2014 many other regulatory organizations were handed a new substance that had no precedent. Many organizations used food regulations and tried to match those regulations to marijuana. Which, as we are learning, proves to be incredibly difficult and an immense learning curve for legislators, regulators and the populace.

Develop Your Supply Chain

As you establish your enterprise you also should establish a solid supply chain. Future proofing your business can ensure you are successful for years to come. Do your due diligence and know exactly who you’re working with. Having a plan B or C is always best practice. Especially when dealing with supply chain hiccups (Covid pandemic, Texas freezing over, boats stuck in canals). Something is almost always bound to happen. So having back up plans and vendors that you have verified and feel confident using will create a reliable supply chain for your business and peace of mind for you.

Always operate with the language of efficiency and work with your suppliers to know exactly where the pinch points are in the supply chain. Have Standard Operating Procedures (SOPs) in place and make sure you hit them every time.

Be ready for the issues that come up! You don’t know what you don’t know.

Surround yourself with a community that is there to aid and lift up others in the business. Specifically one so new to the marketplace. Have reliable connections and trusted partners to establish success. Those who put in the work early and succeed later. Even if those in your supply chain aren’t necessarily involved in psilocybin. Having faith that those in your supply chain are experts in their individual subject matter can help enact your vision. A network that has previous experience and understands the market operationally will maintain the fast moving pace of the market. While also willing to share information and help each other out facilitates a solid foundation for the growth of the industry.

Have a passion for the industry you are in. It is essential! If you don’t believe in the plant, the medicine, the product you will have little success. Not wanting to push through the difficult times to reap the benefits later can mean high success upfront. But no long term success and non conforming superficial business practices.

Best Practices for Success

Warehouse Space

Warehouse space can be one of the challenges when entering the mushroom market. A proposed solution was converting 25% of your growing space into mushrooms*. Mushrooms produce 0.5 Kilograms (kg) of carbon dioxide (CO2 ) per pound. While a kilogram of dried cannabis release the equivalent of between 2 to 5 tons of CO2 into the atmosphere. Not to mention growing mushrooms needs only attention and little else. No need for grow lights or extensive amounts of water. Converting a percentage of your what you produce can not only have a positive impact on your bottom line but also create goodwill within your community.

Small Production Farms

It also came into question if there is room in the market place for small production farms. As many have already felt the impact of corporate production of marijuana and hemp that left many small grow houses obliterated by the green rush. If you are thinking about entering the market be aware there are always business development opportunities. Regulations will level the playing field for many. And it might be more difficult to stay compliant in a huge facility compared to a small in-house cultivation. Regulations are not written for different business sizes. Make sure to maintain a broad scope of continuing to be compliant. Always start by creating a brand or association with compliance and quality. If you establish your trustworthy brand early on, you ensure the longevity of your success.

State and Federal Regulations

That being said always make sure to be aware of your state and federal regulations. Concentrate on your state first and foremost. Going from local, to state and then to federal ensures you are always aware of what regulations to follow. Health Canada (the FDA of Canada) is also a good frame of reference for the federal level of what a country legislation is doing to facilitate mushrooms in the marketplace moving forward.

*Please note that you can convert 25% of your warehouse into mushrooms when growing hemp NOT marijuana!

Works Cited

Barker, Dylan, and Lynn Marie Morski. “Decriminalization vs. Legalization of Psychedelics.” WayofLeaf, WayofLeaf, 24 Feb. 2021, wayofleaf.com/psychedelics/decriminalization-of-psychedelics-how-does-it-differ-from-legalization.

“Commercial Marijuana Grow Houses & Grow Facilities: Hansen.” Hansen Buildings, 2 Aug. 2020, www.hansenpolebuildings.com/agricultural-buildings/marijuana-grow-house/.

“Denver, Colorado, Initiated Ordinance 301, Psilocybin Mushroom Initiative (May 2019).” Ballotpedia, ballotpedia.org/Denver,_Colorado,_Initiated_Ordinance_301,_Psilocybin_Mushroom_Initiative_(May_2019).

Fox, Alex. “Growing an Ounce of Pot Indoors Can Emit as Much Carbon as Burning a Full Tank of Gas.” Smithsonian.com, Smithsonian Institution, 15 Mar. 2021, www.smithsonianmag.com/smart-news/growing-ounce-pot-indoors-can-emit-much-carbon-burning-full-tank-gas-180977240/#:~:text=On average, the model found,carbon dioxide into the atmosphere.

Fuego, Herbert. “Ask a Stoner: When Can We Buy Mushrooms at Dispensaries?” Westword, 4, 15 Oct. 2019, www.westword.com/marijuana/magic-mushrooms-are-decriminalized-in-denver-but-not-sold-at-dispensaries-11462790.

Jaeger, Kyle. “Federal Prosecutor Emphasizes Psychedelic Mushrooms Can’t Be Sold In Denver Dispensaries.” Marijuana Moment, 11 Sept. 2019, www.marijuanamoment.net/federal-prosecutor-emphasizes-psychedelic-mushrooms-cant-be-sold-in-denver-dispensaries/.

Kenney, Andrew. “Spores of a Psychedelic Mushroom Industry Are Sprouting in Denver after Decriminalization.” The Denver Post, The Denver Post, 26 Aug. 2019, www.denverpost.com/2019/08/23/psychedelic-mushrooms-denver-decriminalization/.

“Overview: Decriminalisation vs Legalisation.” Overview: Decriminalisation vs Legalisation – Alcohol and Drug Foundation, adf.org.au/talking-about-drugs/law/decriminalisation/overview-decriminalisation-legalisation/.

Pavuka, Olga Olga. “The FDA Approves Magic Mushrooms for the Treatment of Depression.” DeepH, 19 Mar. 2019, www.deeph.io/the-fda-approves-magic-mushrooms-for-the-treatment-of-depression/.

“Post-Traumatic Stress Disorder Treatment with Psychedelic Drugs.” NYU Langone Health, med.nyu.edu/departments-institutes/population-health/divisions-sections-centers/medical-ethics/education/high-school-bioethics-project/learning-scenarios/ptsd-treatment-psychedelics.

“Sustainability.” American Mushroom Institute, www.americanmushroom.org/main/sustainability/#:~:text=The carbon footprint of mushrooms,sources of proteins and vegetables.&text=Mushrooms have 0.5 Kilograms (kg,CO2 per pound consumed.