Colorado's Psychedelics Legal Scenario: Insurance & State Aid, Advisory Board And Local Regulations

Part three of three-part series. 

See previous stories: 

Colorado's New Psychedelics Regulations: Co-Author Of The Bill Replies To Concerns

Millennials Tipped The Scales In Colorado Voting, And Psychedelics Laws Are In Their Crosshairs

Expert lawyer and Prop.122’s drafter and co-writer Joshua Kappel explained how the state will address equitable access is yet to be determined. 

“One of the requirements of the expert take on the advisory board is around the health insurance policy. And there is a mandate that mental health services otherwise covered under Colorado’s health insurance programs would not be denied coverage if psilocybin were involved at some point in those services. So there is some idea that if your mental health services are covered, then the state insurance company won’t be required to repay for psilocybin,” Kappel said in an exclusive interview with Benzinga.

Besides the measure’s provision around equitable access, there is an additional mandate for the advisory board to put together a report analyzing the insurance coverage issue, characterized by the current reality’s fact that psychedelics are illegal under federal law, and that might remain that way.

As Kappel explained, the proposal supports the “all-paths” approach. For instance, companies like COMPASS Pathways CMPS are moving forward at the federal level with different psilocybin products, “and once those get FDA approval, then we’ll most likely see insurance coverage.” 

But there is yet another issue to unpack: Colorado’s state model isn’t a medicalized model but rather a therapeutic one. 

“I think at the state level we’re trying to create state-based solutions to address the costs of these services. This state-based therapeutic model doesn’t have the same benefits as insurance coverage at the federal level, but it has a lot of other benefits including outside of the pure medicalized model, like using psilocybin for personal growth and human optimization. And for several reasons you go to therapy and not necessarily get prescribed a drug,” Kappel siad.

The decriminalization model in the bill allows natural entheogens use under a spiritual, indigenous community modality of healing, as well as the personal use side of it.

We then see four paths forward to access: personal use and indigenous traditional community use, a state-regulated therapeutic model and a federal medicalized model.

As such, Kappel believes insurance coverage will come first in the federal medicalized model, while the state addresses access issues in the other three paths.

The New Advisory Board

Now that the measure has passed, attention is set on the implementation phase led by a soon-to-be-appointed 15-member Natural Medicine Advisory Board, which will be responsible for making recommendations to the healing center access program. The Department Of Regulatory Agencies (DORA) will be responsible for developing rules for that therapeutic psychedelics program.

More specifically, after working with DORA to develop the program, the board will make annual recommendations regarding public health approaches for natural medicine, educational campaigns, research on efficacy and regulation, training programs, equitable and culturally responsible access, and data collection and reporting, Kappel explained.

The new state advisory board will be chosen by the government. The proposal drafters are not aware of nor control the process the governor’s office will use.

Colorado Gov. Jared Polis (D) had been praising his support for psychedelics decriminalization just until the month prior to the latest ballot when he said he still had not made up his mind on whether he would support the measure or not.

After the election’s final results were made known, Polis said in an interview with Bill Maher that he was “excited” about the state’s historic vote on psilocybin healing centers as a promising health treatment.

Polis will appoint the new advisory council members before Jan. 31, 2023.

“We will follow the will of the voters and will be appointing a 15 member advisory board to oversee the regulatory process around this new voter-approved measure,” a government spokesperson said.

At least seven out of total 15 members should hold expertise and experience in topics including natural medicine therapy and research, emergency medical services, health care insurance and policy, or harm reduction, while at least eight should have experience with religious and traditional indigenous uses of natural medicines, issues impacting veterans, disparities in health care access, or criminal justice state reform.

Local Time, Place And Manner Regulations

While Prop. 122 did not include any opt-out provision such as Oregon’s Measure 109 did, it does give localities “wide latitude” to regulate Time, Place and Manner (TPM) stipulations. 

“They’re not allowed to re-criminalize natural psychedelics or ban the healing centers. And this was a key piece for us because we wanted more communities to have these centers which would make them a local-based healing model than large conglomerates. So having more access is a key piece of this puzzle,” Kappel noted.

The location of the healing centers will constitute a local decision.

Interestingly, Kappel recalled that the measure actually legalizes paraphernalia around psychedelics under federal law.

“Because federal law has a clause in it that if paraphernalia is authorized by a state or local law, then it’s exempt from the federal ban. So Prop. 122 authorizes paraphernalia around natural psychedelics which then effectively makes them legal under federal law,” Kappel concluded.

Photo courtesy of Hustvedt on Wikimedia Commons.

Market News and Data brought to you by Benzinga APIs
Posted In: CannabisNewsPsychedelicsSmall CapLegalMarketsColoradoHealth InsuranceJoshua KappelPsychedelics decriminalization
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

The Benzinga Cannabis Capital Conference is coming to Florida

The Benzinga Cannabis Capital Conference is returning to Florida, in a new venue in Hollywood, on April 16 and 17, 2024. The two-day event at The Diplomat Beach Resort will be a chance for entrepreneurs, both large and small, to network, learn and grow. Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars – this conference is the go-to event of the year for the cannabis world.

Get your tickets now on – Prices will increase very soon!