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California

PSYCHEDELIC REGULATIONS FOR BUSINESSES IN CALIFORNIA

California does not currently authorize a commercial market for psilocybin or other psychedelics. Under California Health and Safety Code Section 11054, psilocybin and psilocin are classified as Schedule I controlled substances.

Outside limited federally authorized research and other narrow legal exemptions, California prohibits the possession, cultivation, manufacturing, distribution, and sale of psilocybin-containing substances.

There is no statewide licensing pathway for psychedelic service centers, facilitators, manufacturers, retailers, or commercial cultivators. California has not established a regulated psychedelic-services framework comparable to those operating in Oregon and Colorado.

Statewide Business Restrictions

Because California has not authorized commercial psychedelic activity:

  • Businesses cannot obtain state licenses to sell psilocybin products
  • Psychedelic service centers are not authorized
  • California does not license psychedelic facilitators
  • Commercial cultivation and manufacturing remain prohibited
  • Psychedelic products cannot be sold through ordinary retail or ecommerce channels
  • Local policy changes do not override state or federal law

Violations can result in misdemeanor or felony charges depending on the substance, quantity, conduct, intent, and circumstances. Manufacturing, distribution, and possession for sale generally carry more serious consequences than personal possession.

Businesses and individuals should consult qualified legal counsel before participating in any activity involving controlled substances.

Local Enforcement-Priority Measures

Several California cities have adopted resolutions making the investigation or arrest of adults for certain personal activities involving naturally occurring psychedelics a low law-enforcement priority.

Local actions have been adopted in cities including Oakland, Santa Cruz, San Francisco, and Berkeley. The precise substances and activities covered vary by jurisdiction.

For example:

These policies are commonly described as local decriminalization, but they do not legalize psychedelic commerce.

Local resolutions generally do not:

  • Create business licenses
  • Authorize commercial sales
  • Permit unlicensed service centers
  • Protect businesses from state or federal enforcement
  • Eliminate all criminal exposure
  • Apply uniformly to every psychedelic substance or activity

A city’s decision to deprioritize certain enforcement actions should not be treated as authorization to operate a psychedelic business.

Research and Federally Authorized Activity

California is home to universities, hospitals, and research institutions participating in federally authorized studies involving psychedelic substances.

Clinical research operates under federal and institutional requirements that are separate from ordinary commercial activity. Participation in an authorized clinical trial does not create a general right to possess, manufacture, administer, or sell psychedelic substances outside the approved research protocol.

In 2026, California lawmakers introduced Senate Bill 1224, the California Emerging Therapies Research Partnership Act. As of September 2, 2026, the bill remained active in the legislative process after being held in committee.

The proposal focuses on research infrastructure and potential funding for federally registered clinical trials involving substances such as psilocybin, ibogaine, MDMA, DMT, and ketamine.

Importantly, the bill expressly states that it would not:

  • Create a therapeutic-access program
  • Authorize personal psychedelic use
  • Establish commercial psychedelic licensing
  • Amend California’s controlled-substance prohibitions
  • Permit administration outside federally registered clinical trials

Unless legislation is enacted that specifically changes California law, the state will continue to lack a legal commercial psychedelic market.

Business and Financial Considerations

Businesses should distinguish among commercial psychedelic activity, federally authorized research, legal ketamine healthcare services, and ancillary operations that do not handle controlled substances. Each category can involve different laws, licensing requirements, banking considerations, and underwriting standards.

A local decriminalization resolution does not make an otherwise prohibited business eligible for banking or payment processing. Financial institutions and payment providers evaluate the underlying activity, the substances involved, applicable licenses, federal authorization, ownership, marketing practices, and other compliance factors.

Organizations preparing for a possible future California market should focus on:

  • Monitoring state legislation and agency rulemaking
  • Separating proposed psychedelic activity from legal ancillary operations
  • Avoiding commercial claims that imply unlicensed psychedelic services
  • Documenting ownership and anticipated business activities
  • Obtaining legal guidance before accepting payments or customer deposits
  • Building financial projections that account for licensing delays and regulatory uncertainty

PayRio does not support transactions for activity prohibited under applicable law. Businesses operating in a lawful category may contact PayRio to discuss their regulatory status and determine whether an appropriate payment pathway may be available.

PSYCHEDELIC LEGALIZATION HISTORY IN CALIFORNIA

California’s recent psychedelic-policy history combines local enforcement changes, unsuccessful statewide reform proposals, and growing interest in clinical research.

Local Policy Changes

In June 2019, Oakland became one of the first U.S. cities to make enforcement against certain adult activities involving entheogenic plants and fungi a low priority.

Santa Cruz followed with a local resolution in 2020 and later revised its policy. San Francisco and Berkeley subsequently adopted their own enforcement-priority measures.

These actions reflected changing local attitudes but did not amend California’s controlled-substance laws.

Senate Bill 58

California lawmakers passed Senate Bill 58 in 2023. The bill would have decriminalized limited adult possession and personal use of certain naturally occurring psychedelics.

Governor Gavin Newsom vetoed Senate Bill 58, citing the need for regulated therapeutic guidelines, safeguards, and treatment protocols before expanding access.

The veto left California’s statewide prohibitions in place.

Senate Bill 1012

Senate Bill 1012 was introduced in 2024 as the Regulated Psychedelic Facilitators Act and Regulated Psychedelic-Assisted Therapy Act. It proposed a supervised therapeutic framework rather than unrestricted retail sales.

The bill was held in the Senate Appropriations Committee and died without further action at the end of the 2023–2024 legislative session.

Research Legislation in 2026

Senate Bill 1224 represents a narrower, research-focused approach. Rather than establishing public access or commercial services, it would support California’s participation in federally registered emerging-therapy research.

The proposal does not change the present legality of commercial psychedelic activity.

PSYCHEDELIC LEGALIZATION STATUS IN CALIFORNIA

Current status: Illegal statewide, with limited local enforcement-priority measures

California currently:

  • Classifies psilocybin and psilocin as Schedule I controlled substances
  • Prohibits unauthorized possession, cultivation, manufacturing, distribution, and sale
  • Does not license psychedelic service centers or facilitators
  • Does not authorize retail or take-home psychedelic products
  • Permits federally authorized research under applicable requirements
  • Allows some municipalities to establish local enforcement priorities without changing state law

California therefore does not currently offer a lawful pathway for opening a commercial psilocybin business or psychedelic service center.

Explore PayRio’s psychedelic and cannabis market directory or compare California’s current status with regulated psychedelic-service markets in Oregon and Colorado.

LAST UPDATED 9/2/2026. Laws, local policies, legislative proposals, and federal research requirements can change. Consult official government sources and qualified legal counsel for current guidance.