Colorado Releases First Peek at Psilocybin Licenses

Understanding Colorado’s New Draft Rules on Natural Medicine Business Licensing

Colorado’s Natural Medicine Division released new draft rules detailing the requirements for obtaining Natural Medicine Business Licenses, which allow for the cultivation, manufacture, provision, and testing of “psilocybe cubensis”—a species of psilocybin mushroom whose principal active compounds are psilocybin and psilocin.

These new regulatory guidelines are crucial for businesses intending to operate within this emerging Colorado psilocybin space and around the country. As the leading state in progressing the psilocybin movement, Colorado’s new legal framework can give some insight into what other states might expect in the future.

 

Natural Medicine License Types

Per the Natural Medicine Code, “Natural Medicine Business” means any of the following four (4) licensed entities:

1) Healing Center

A facility, where an entity is licensed by the State Licensing Authority, that permits a Facilitator to provide and supervise natural medicine services for a participant.

2) Natural Medicine Cultivation Facility

A location where Regulated Natural Medicine is grown, harvested, and prepared in order to be transferred and distributed to either a Healing Center, Facilitator, a Natural Medicine Products Manufacturer, or to another Natural Medicine Cultivation Facility.

3) Natural Medicine Products Manufacturer

A person who manufactures Regulated Natural Medicine Products for transfer to a Healing Center, Facilitator, or to another Natural Medicine Products Manufacturer.

4) Natural Medicine Testing Facility

A public or private laboratory licensed, or approved by the Division, to perform testing and research on Regulated Natural Medicine and Regulated Natural Medicine Product. (Note that owners of a Natural Medicine Testing Facility cannot hold any financial interest in a Healing Center, Cultivation Facility, or Product Manufacturer.)

 

Natural Medicine Application Information

As of now, prospective business details surrounding three (3) distinct topics are required for applications:

1) Business Ownership Information

Applicants must provide comprehensive details about each proposed business owner. This includes:

1. Names and residency information for all proposed owners.
2. For entities, a certificate of good standing from the formation jurisdiction, the identity and address of the registered agent in Colorado, and organizational documents such as articles of incorporation and operating agreements.
3. Identification of every owner and entity with a financial interest, ensuring no proposed owner holds more than five licenses.

While duplicate tax documentation is not mandatory, applicants must cooperate with the Division to confirm timely tax return filing, payment, and resolution of any deficiencies related to the business.

2) Business Premise Information

The application must detail the proposed licensed premises, including:

1. Documents proving entitlement to the premises via a deed, lease, or rental agreement.
2. Documentation showing the premises comply with local zoning laws for natural medicine activities.
3. A map or diagram proving the location meets distance requirements from childcare centers, schools, and residential childcare facilities.
4. A security plan in .pdf format, detailing surveillance and secure storage plans, required prior to operation.
5. Confirmation that the premises do not overlap with other licensed premises, except for specific testing facilities.

3) Environmental, Social, and Governance (ESG) Criteria

Applicants must provide written plans that demonstrate adherence to minimum environmental and social impact criteria, including:

1) Environmental, Social, and Governance (ESG) Criteria

• Propose a measurable, achievable, and time-bound plan for environmental resiliency or sustainability.
• Examples include sustainable agricultural practices, renewable energy usage, pollution reduction efforts, and community clean-up activities.

2) Social Impact Plans

• Propose a plan for promoting beneficial outcomes for Colorado and the Natural Medicine Program.
• Examples include inclusive hiring practices, livable wage plans, support for indigenous and minority-owned businesses, and community service initiatives.

3) Governance Plans

• If applicable, demonstrate plans addressing corporate governance, such as having a diverse and transparent board of directors and registering as a non-profit or benefit corporation.

 

Natural Medicine Specific License Type Requirements

Individual license types for Natural Medicine also come with a handful of specific requirements within each application:

Healing Center License Applications

Applications for a Healing Center License must include:

1. Proof of employing or contracting at least one licensed facilitator.
2. For centers with outdoor areas, detailed descriptions and verification that these areas are secure and hazard-free as per the security plan.

Natural Medicine Cultivation Facility License Applications

Applicants must indicate their cultivation tier selection, choosing between micro-cultivation and standard cultivation tiers.

Natural Medicine Product Manufacturer License Applications

Those seeking an extraction endorsement must include:

1. The extraction endorsement fee.
2. Documentation showing compliance with Part 6 (“Regulated Natural Medicine Products Manufacturer License Requirements”) of the rules.

 

Natural Medicine Licensing Priority

Lastly, we know there will be an aspect of priority in the licensing process. Under the statute, the licensing authority must prioritize the review of applications from applicants who have established residency in Colorado. In addition, the Division may now prioritize Natural Medicine Business License applications that:

1. Identify one or more proposed Owners with at least 51% ownership in the License who have a traditional, tribal, or indigenous history with Natural Medicine, verified by at least three community references;
2. Identify one or more Owners who are veterans; or
3. Indicate the Natural Medicine Business will be located in a county other than Adams, Arapahoe, Boulder, Denver, Douglas, El Paso, Jefferson, Larimer, Pueblo, or Weld.

 

Learn More From Our Licensing Experts

These new draft rules provide a comprehensive framework for businesses seeking to operate within Colorado’s natural medicine industry. Ensuring compliance with these detailed requirements is crucial for securing a license and contributing to a sustainable, socially responsible, and well-governed natural medicine market.

Additionally, navigating this new market will require significantexpertise. For more information on the rule-making process, visit the state Natural Medicine Rulemaking webpage.

To get started on your business planning and application preparation, contact the licensing consultants at Canna Advisors.