Colorado’s Department of Revenue (DOR) and Department of Regulated Agencies (DORA) jointly govern the Natural Medicine Program and have now completed the rulemaking phase to launch the nation’s second state-regulated legal psychedelics market.
While DOR’s Division of Natural Medicine has jurisdiction over Natural Medicine Businesses, DORA’s Division of Professions and Occupations governs matters that fall within the profession of natural medicine facilitation.
Colorado’s final rules provide consumer rules for consumption and further stipulate how licensees may legally and commercially cultivate, manufacture, and sell certain psychedelics.
Read on for an outline of the business license types that will become available, and how the natural medicine supply chain will operate.
What Types of Psychedelics May Be Commercially Sold?
At this time, Colorado rules solely allow psilocybin and psilocin (“Natural Medicine Product”) to be used and sold commercially. That said, the state has the option to expand the Natural Medicine Program to include dimethyltryptamine (DMT), ibogaine, and mescaline (excluding peyote) on or after June 1, 2026.
What Specific Business Licenses Will Be Available?
The final rules define the license types that will be available, specific application requirements, and all applicable operating rules for relevant Natural Medicine Business(es).
The license types include:
- Healing Centers,
- Natural Medicine Cultivation Facilities,
- Natural Medicine Products Manufacturers, and
- Natural Medicine Testing Facilities.
What is a Healing Center License in Colorado?
A Healing Center is a licensed location whereby facilitators may provide Natural Medicine Services. Natural Medicine Services, as defined in the regulations, include a preparation session, administration session, and integration session. The preparation session will include a safety screen to identify any relevant risk factors in the participant, which will dictate whether the facilitator may provide services to that individual.
Natural Medicine Services must be provided by a licensed facilitator, and may be provided at a licensed Healing Center or other “authorized locations.” Sessions may be provided to individual participants, or to a group. A serving of Regulated Natural Medicine Product may contain a maximum of 10 milligrams of Total Psilocin. However, each participant and facilitator can agree to administer any number of servings during a session.
There are standard Healing Centers and micro-healing Centers.
At micro-healing Centers, no more than 750 milligrams of Total Psilocin may be stored on site at a given time. This license type is geared towards mental health practitioners that want to incorporate Natural Medicine Services into their existing practice.
All Healing Centers may provide water and pre-packaged food goods to participants, and may apply for a retail food establishment license to serve fresh food and beverages to guests.
Compared to Oregon’s Psilocybin Services Program, Colorado’s Natural Medicine Program is more friendly to businesses. For example, the rules provide considerable flexibility in terms of the types of activities permitted at Healing Centers. Healing Centers may be co-located with other Natural Medicine Business license types, including cultivation, manufacturing, other Healing Centers, or healthcare facilities. Healing Centers may also be utilized for purposes other than Natural Medicine Services, and may even operate on the same parcel (so long as the premises do not overlap) as a marijuana or alcohol license.
Healing Centers are required to maintain participant confidentiality, meaning they cannot disclose any personally identifying information revealed in participant records.
What is a Natural Medicine Cultivation Facilities License in Colorado?
There are two license tiers for cultivation operators: The standard cultivation tier, and the micro-cultivation tier.
Micro-cultivation tier licensees may store up to 750 grams of dried Fruiting Bodies (i.e., the spore producing organs of Psilocybe cubensis). As a default, standard cultivation tier licensees may store up to 5.000 kilograms of dried Fruiting Bodies of Natural Medicine Product at any given time. Standard cultivation licensees have the option to submit an application to increase their cultivation and storage limit by demonstrating significant commercial demand.
Cultivator licensees may only use Psilocybe cubensis spores and mycelium from their previous inoculations to cultivate Regulated Natural Medicine Product. Cultivators may conduct or submit samples to licensed testing facilities for research and development purposes, and must submit products for specific testing before being transferred into the natural medicine supply chain.
What is a Natural Medicine Products Manufacturers License in Colorado?
Applicants that desire to make Natural Medicine Products that are not in whole, dried mushroom form must obtain a Natural Medicine Product Manufacturing license. By default, licensed manufacturers may only produce products for oral ingestion, which is limited to capsules and tea bags. However, applicants may apply to obtain an extraction endorsement, which permits manufacturers to also produce chocolate, gelatin or agar-based gummies, pressed tablets, and tinctures using an extraction process.
Colorado rules prohibit manufacturers from performing ethanol extractions while applying heat, performing extractions at pressures above or below atmospheric pressure, and performing solvent removal, concentration of extracts, or distallations.
Importantly, manufactured products must not “appeal to children.” Similar to the regulated marijuana market, in evaluating whether a product appeals to children, the DOR will evaluate, among other things, whether the design, brand, or name is reminiscent of an existing product that is primarily consumed by and marketed to children, or whether the product is in the shape of an animal, fruit, person, or cartoon.
What is a Natural Medicine Testing Facilities License in Colorado?
Prior to entering the natural medicine supply chain, all Natural Medicine Products must be tested by a licensed testing facility. Testing facilities are required to be licensed by DOR and must be separately certified by the Colorado Department of Public Health and Environment for each test type they are required to conduct on natural medicine products.
Testing facilities must conduct potency testing and contaminant testing, and may conduct additional non-required procedures, such as tests to evaluate heavy metals or shelf-stability.
Of note, Natural Medicine Testing Facilities may be co-located within a facility that is a Licensed Marijuana Testing Facility and/or a Certified Hemp Laboratory.
In order to avoid potential conflicts of interest, Owners of a Natural Medicine Testing Facility may not hold a Financial Interest in licenses for healing centers, cultivation, or manufacturing facilities.
What are Owner & Natural Medicine Handler Licenses in Colorado?
Each Natural Medicine Business must have at least one Owner licensee, and facilitators are authorized to obtain an Owner License. Owners may hold a Financial Interest in no more than five Natural Medicine Business licenses.
In an attempt to quickly stymie bad actors, if an Owner with multiple licenses has one license suspended or revoked, all of their Owner Licenses are automatically suspended or revoked for each business the licensee is an Owner of.
Non-owner individuals that have unrestricted access to or directly handle Natural Medicine Product must hold a Natural Medicine Handler License. This includes facilitators, as well as non-facilitators working in any Natural Medicine Business.
Colorado Natural Medicine Business and Facilitators License Applications Opening Soon
Per Senate Bill 23-290, the governing regulatory agencies are required to open license applications for Natural Medicine Business and Facilitators on or before December 31, 2024.
The race to win license applications is expected to be quite competitive. Having procured over 200+ commercial cannabis licenses, Manzuri Law’s team of psychedelic attorneys are well positioned to help you successfully navigate Colorado’s novel regulatory and licensing structure.
Contact us today to discuss your psychedelic business plan and ensure you’re strategically positioned to win a license when applications open.
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This information is provided as a public educational service and is not intended as legal advice. For specific questions regarding licensing and compliance requirements governing the Colorado Natural Medicine Program, please contact Manzuri Law at (310) 912-2960 or info@manzurilaw.com to schedule a confidential legal consultation.