Oregon’s Psilocybin Marketplace Could Be Facing a Serious Bottleneck

It’s been a few months since the Oregon Health Authority (OHA) finally announced its regulations around legal medicinal psilocybin—the hallucinogenic compound found in magic mushrooms.

And since then, applications have been pouring in for professional licenses to offer psilocybin services.

But there’s a serious problem…

Based on the current applications streaming in, Oregon could see a major bottleneck in psilocybin service centers.

Let’s break down the application numbers:

For the sake of argument, let’s assume that every application that has been started online will be submitted… every submitted application will be approved… and every company submitting an application has sufficient capital to operate a business.

As the numbers currently stand, Oregon would have 69 manufacturers, 33 service centers, and 175 facilitators.

While it’s dubious to assume that every application that’s been initiated will result in license approval and a successful business… the numbers indicate a clear trend:

Service centers would be outnumbered by a wide margin.

And that trend could have serious implications for the supply/demand picture of Oregon’s psilocybin market.

Let’s start with manufacturing…

A single psilocybin manufacturer would have the capacity to supply several service centers. With 69 manufacturers and only 33 service centers, manufacturers would be producing product with nowhere to go. In short, it would be an abundant oversupply of psilocybin—which would lead to price deterioration… and many of these manufacturers going out of business.

It would be a similar situation to what’s happening with Oregon cannabis producers, many of whom are being forced to close their doors amid widespread oversupply and prices too low to generate a profit.

Back in February 2023, Oregon Liquor and Cannabis Commission Executive Director Steve Marks said the cannabis industry was facing an “existential crisis,” as businesses deal with an oversupply of more than 3 million pounds of marijuana and 75,000 pounds of other THC products. Meanwhile, Oregonians were already smoking as much cannabis as they could consume. 

If psilocybin manufacturers outnumber their pool of customers (service centers) by such a large margin, it’s likely the same scenario would play out in the new market.

Then, there’s the added complication of facilitators…

Without enough service centers, many facilitators would struggle to find work. They’d also lose their negotiating power to receive for a reasonable chunk of the revenue pie. It would ultimately lead to fewer people opting to become facilitators—which would have a negative impact on the revenue for training programs.

Finally, there’s the question of consumer demand. While it still remains to be seen in full, it’s likely demand will far exceed the capacity that such a limited number of service centers are capable of meeting. This would drive up prices for consumers—and reduce the quality of service they receive.

The bottom line: If the trend in professional psilocybin applications continues as it is, the lack of service centers will inevitably create a large bottleneck across the market—impacting everyone else up and down the supply chain from manufacturers to consumers. 

The Oregon Health Authority would be wise to take note of this trend—and get ahead of it sooner than later.