From Cannabis to Psychedelics: Why Oregon's Small Towns Are Rejecting Psilocybin Business Models

In recent years, Oregon has led the way in pioneering progressive drug policies. After making history with the decriminalization of cannabis in 2014, the state became the first in the U.S. to legalize psilocybin, or “magic mushrooms,” for therapeutic use. However, as psilocybin businesses have begun setting up shop, many small towns are showing signs of hesitation. In the latest election, voters in over a dozen Oregon cities—including Oregon City, Lake Oswego, and Sheridan—overwhelmingly chose to ban psilocybin shops, mirroring early resistance to cannabis in the state’s rural and suburban communities.

This wave of local bans suggests that Oregon’s past experiences with cannabis legalization may be influencing attitudes toward psilocybin, particularly in smaller towns concerned with over-saturation, social impact, and reputation. As Oregon dives into uncharted territory with psilocybin, the divided response may signal a broader pattern that highlights the growing pains of integrating new industries into local communities.

For many Oregon towns, the rollout of cannabis shops brought unexpected challenges. While legal marijuana businesses contributed to local economies, they also altered the landscape in ways that some communities now view as problematic. Denyse McGiff, the mayor of Oregon City, explained that while her city initially welcomed cannabis shops and the tax revenue they brought, some residents have since expressed concerns about their prevalence. “I’m hearing we have too many shops in town, and the comment I got last week was, ‘Why don’t we get rid of them?’” McGiff said, noting that reducing the number of cannabis businesses is a complicated task.

The perceived oversaturation of cannabis shops in some communities has left a mark, and many residents are cautious about welcoming another controversial industry. This time, towns like Oregon City are taking a preventive approach by voting to keep psilocybin businesses out before they even gain a foothold. The experience with cannabis appears to have made local leaders and voters more skeptical about the long-term impact of introducing yet another mind-altering substance into their communities.

Psilocybin advocates argue that magic mushrooms can be transformative for people struggling with mental health issues, and Oregon’s legalization of psilocybin therapy was largely driven by these potential benefits. Since the first regulated psilocybin centers opened in 2023, more than 6,500 people have reportedly participated in therapeutic sessions aimed at addressing conditions like depression and PTSD. For groups like veterans, who are often underserved by traditional mental health resources, psilocybin therapy represents a promising alternative.

Yet for many small-town voters, the stigma surrounding psychedelics persists, which has become a barrier to acceptance. In Sheridan, a small town with a large population of veterans, Mayor Cale George said he wanted residents to weigh in on whether to allow psilocybin businesses or continue the existing moratorium. Although psilocybin’s potential benefits were acknowledged, George noted that “it’s a tough issue because it can help some people, but there’s kind of a negative connotation.” Ultimately, a strong majority of Sheridan voters chose to ban psilocybin businesses, reflecting the power of these ingrained perceptions.

As more towns opt out of hosting psilocybin businesses, the trend suggests that Oregon’s rural and suburban areas may have a lasting reluctance toward industries that revolve around psychoactive substances. Even in Nehalem, where the vote was close, the community remains divided over whether psilocybin aligns with local values. This pattern of local resistance recalls the early stages of cannabis legalization, when many communities pushed back against dispensaries before gradually warming to the idea.

Advocates like Heidi Pendergast, state director of the Healing Advocacy Fund, see this resistance as part of the growing pains involved in rolling out a new therapeutic option. “It’s going to take some time,” Pendergast said, pointing to the steady growth in psilocybin use as a sign that perceptions may eventually shift. She highlighted the mental health breakthroughs psilocybin has enabled, calling it a “mental health revolution,” but acknowledged that change doesn’t happen overnight—especially when there’s little local precedent for these businesses.

If psilocybin follows a similar path to cannabis, some of Oregon’s smaller towns could reconsider their stance over time. When cannabis was first legalized, many communities resisted dispensaries, but over the years, as economic benefits and community outreach efforts became more apparent, some opposition faded. However, the concern of oversaturation remains fresh in the minds of many local leaders who now fear the same could happen with psilocybin if they open their doors too quickly.

For now, the local bans on psilocybin highlight a cautious, wait-and-see approach that prioritizes community comfort over immediate economic benefits. With cannabis, small towns have learned that introducing a new industry comes with trade-offs, and not all are willing to take on that risk again. Many leaders are urging a more deliberate pace, hoping that continued education and successful therapeutic outcomes might eventually shift public perception in favor of psilocybin.

As Oregon’s psilocybin experiment unfolds, local opposition serves as a reminder of the complex relationship between progressive drug policies and conservative community values. While urban centers may be quicker to embrace psilocybin’s potential for mental health, small towns are approaching with caution, shaped by past experiences with cannabis and a desire to control the character of their communities.

For the time being, it appears Oregon’s psilocybin industry will concentrate in larger cities and progressive enclaves, where public support and mental health advocacy are stronger. As small towns watch from the sidelines, they’ll be looking closely at the outcomes in these areas. Over time, Oregon’s small-town voters may come around to psilocybin, but if the lessons of cannabis legalization are any indication, that acceptance may be a slow and gradual process.

Will small towns eventually embrace psilocybin businesses as they did with cannabis?

• Yes, acceptance will grow with time.
• No, small towns will keep saying no
• It depends on the success stories that emerge