Psychedelics Law Blog Archive - Harris Sliwoski LLP https://harris-sliwoski.com/psychlawblog/ Tough Markets, Bold Lawyers Mon, 11 Mar 2024 15:17:18 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://harris-sliwoski.com/wp-content/uploads/cropped-Harris-Sliwoski-Logo-FinalIcon-White-1-32x32.png Psychedelics Law Blog Archive - Harris Sliwoski LLP https://harris-sliwoski.com/psychlawblog/ 32 32 Oregon Ketamine Clinics: New Potential Restrictions on Corporate Practice of Medicine https://harris-sliwoski.com/psychlawblog/oregon-ketamine-clinics-new-potential-restrictions-on-corporate-practice-of-medicine/ Tue, 27 Feb 2024 15:00:18 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=135042 Should private equity be involved in health care? If so, in what types of settings? And to what extent? These are baseline considerations around a broad concept referred to as “corporate practice of medicine” (“CPOM”) that state legislatures, agencies, medical licensing boards, courts and attorneys general and grappled with for over a century. The Oregon

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Should private equity be involved in health care? If so, in what types of settings? And to what extent? These are baseline considerations around a broad concept referred to as “corporate practice of medicine” (“CPOM”) that state legislatures, agencies, medical licensing boards, courts and attorneys general and grappled with for over a century. The Oregon legislature is taking a hard look at CPOM today, under proposed House Bill 4130.

Why does this matter to readers of the Psychedelics Law Blog? If this new law passes, it could drastically change the landscape for ketamine clinics and their management services organizations (“MSOs”) across the state.

CPOM and Oregon

According to the American Medical Association, the CPOM doctrine prohibits corporations from practicing medicine, or employing a physician to provide professional medical services. CPOM rules are based on the policy that allowing corporations to practice medicine would result in the commercialization of health care. A corporation’s duties and obligations are to its shareholders, not individuals seeking health care, and those duties could conflict with the interests of patients and providers.

Over 30 states prohibit CPOM with broad exceptions, such as for professional corporations (“PCs”), and for employment of physicians by certain health care entities. HB 4130 would make Oregon one of the most restrictive CPOM states. Still, HB 4130’s strictest ownership and control provisions would not apply to hospitals, health systems and nursing homes, which have been largely exempt from Oregon CPOM rules since 1974.

Health care administration has changed considerably in the past 50 years, including with the advent of MSOs. Those organizations are addressed throughout HB 4130, in conjunction with restrictions on ownership and control of health care providers by non-physicians. HB 4130 also focuses on removing competition strictures from physicians and doctors– including in hospitals, health systems and nursing homes.

Before diving into this bill, it’s important to understand that currently, Oregon law requires that locally licensed physicians hold a majority ownership stake in a PC organized to practice medicine (these PCs are generally clinics, or private practices providing medical care). Oregon law also requires that locally licensed physicians compromise a majority of the directors of any such business. HB 4121 would apply these same standards to LLCs and LLPs that are organized for a medical purpose, or as holding entities.

CPOM under HB 4130

Here are some of the bill’s other provisions, condensed in parts but pulled directly from a Staff Measure Summary:

Requires all officers of a PC, except the secretary and treasurer, to be licensees of the Oregon Medical Board or Oregon State Board of Nursing. Defines “MSO”. Prohibits a shareholder, director, or officer of a corporation organized for the purpose of practicing medicine (“PC”) from taking specified actions in relation to an MSO that the PC has a contract with, including:

  • Owning or controlling shares in both the professional corporation and MSO
  • Setting the terms of employment of a physician the PC employs
  • Removing a director or officer except by majority vote of shareholders with specified exceptions for fiduciary duty violations, Oregon Medical Board disciplinary actions, and fraud
  • Relinquishing control over assets, business operation, or clinical practices or decisions
  • Giving a proxy to vote the shares of the PC

Exempts shareholders who have control over less than five percent of shares or whose share ownership is incidental. Exempts specified professional corporations, including:

  • Corporations solely and exclusively engaged in telemedicine
  • PACE organizations
  • Mental health or substance use disorder crisis line providers
  • Urban Indian health programs
  • Recipients of a Tribal Behavioral Health or Native Connections program grant
  • Specified behavioral health care providers
  • Hospitals

Permits the Oregon Health Authority (“OHA”) to submit to the Secretary of State (“SOS”) a complaint regarding violation of corporate practice of medicine laws. Specifies SOS disciplinary authority for violations of corporate practice of medicine laws. Allows a PC up to seven years to remove grounds for SOS discipline. Permits OHA to apply to circuit court for order to stay a merger or acquisition that OHA determines will violate corporate practice of medicine standards. Requires company organized for a medical purpose and holding entity to comply with CPOM requirements for professional corporations. Makes noncompetition, nondisclosure, and nondisparagement agreements void and unenforceable with specified exceptions.

What’s next? And what about ketamine and psilocybin providers?

Obviously, there is a lot going on here, and the bill could still evolve. To date, HB 4130 is moving very quickly– as it must in this short legislative session. As of February 26, the bill has passed through the House and sits in the Senate Committee on Health Care. If HB 4130 clears the Senate on or before March 10, it would become law unless vetoed by Governor Kotek within 30 days. Businesses would then have a seven-year runway to come into compliance.

So, why am I writing about this today? As a law firm with a longstanding ketamine practice group, we have worked through CPOM issues for physicians, clinic operators, managers, investors and others in various states. See e.g.:

Ketamine clinics are subject to many complex federal and state-level rules. CPOM guardrails are primary among them, and inform the fundamental viability of many proposed ketamine clinic structures. This keeps coming up for us, especially with broad interest from alternative health care providers, MSOs and private equity in the ketamine space.

We also work with quite a few Oregon psilocybin businesses. Like medical practices, these OHA licensees are also subject to “majority ownership” requirements. But the psilocybin ownership strictures center on Oregon “residents” and not physicians, and they expire in 2025. Moreover, the psilocybin program is a decidedly non-medical model, despite common misconceptions. In all, psilocybin licensees should not be affected if HB 4130 passes.

We will continue to track HB 4130 closely, and update this blog post with information as to whether the bill passes or fails. For now, let’s hope Oregon is able to strike the right balance with putting patient interests first, protecting independent clinics, and accommodating the need for investment and innovation that comes with a non-single-payer health care system.

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The Dangers of Ketamine Revisited https://harris-sliwoski.com/psychlawblog/the-dangers-of-ketamine-revisited/ Thu, 11 Jan 2024 15:00:34 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=134338 As most people know by now, ketamine clinics are prevalent in the United States. These clinics offer ketamine as a treatment for a variety of disorders, including pain relief, behavioral health disorders, opiate addiction, and many other ailments. Unfortunately, there are not many studies that demonstrate whether ketamine is efficacious for these various ailments because,

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As most people know by now, ketamine clinics are prevalent in the United States. These clinics offer ketamine as a treatment for a variety of disorders, including pain relief, behavioral health disorders, opiate addiction, and many other ailments. Unfortunately, there are not many studies that demonstrate whether ketamine is efficacious for these various ailments because, to my knowledge, there are no randomized double-blinded clinical trials for off-label use of ketamine. Because ketamine is an FDA-approved drug, physicians and other appropriately trained healthcare providers can prescribe ketamine for off-label uses. Ketamine was approved by the FDA approximately 60 years ago for use as a general anesthetic. It is not FDA-approved for any other condition.

A few years ago, the FDA approved Esketamine (sold under the name Spravato), which is a nasal spray. Esketamine is approved by the FDA for treatment-resistant depression but with strict controls about how it can be used. In addition to the foregoing, compound pharmacies are now creating their formulations of ketamine – whether it is a lozenge, sublingual tablet, or another form. The FDA has issued two warnings about the use of compounded ketamine, which I wrote about recently. See: A Closer Look at the FDA Warnings on Compounded Ketamine.

In a recent article published by the Yale School of Medicine (“YSM”), the author discusses some of the various issues with the use of ketamine for treating various disorders. The author echoes many of the concerns I have written about before. See: Ketamine Clinics and Malpractice: Recent New York Litigation.

One passage of the YSM article is instructive:

There are two other risks that are a little bit more complicated. One is related to the real care of people with serious mental illness. Ketamine is not a miracle cure. This is not a treatment to be given in isolation. All of the studies presented for consideration of FDA-approval were done with very close psychiatric follow up. It is incredibly naïve and uninformed to think ketamine alone will make your depression go away. It’s a part of a treatment plan, not the treatment plan. It should be given as part of an overall treatment plan with a mental health professional. In fact, the FDA approval for ketamine also states that it has to be used along with an oral anti-depressant. It’s not even approved to be used alone. These ketamine clinics that provide the treatment without close follow-up of some type being provided by a mental health professional, in my mind, are a very dangerous thing, because they aren’t providing the comprehensive mental health care that these patients need.

This is particularly prescient for those providers who own and/or work for a ketamine clinic (or a telehealth clinic that prescribes ketamine). While the author focuses on the risks to patients, the same concerns are prevalent for providers. Even though any physician with a DEA license can order ketamine and start an IV, that does not mean that any physician is qualified to treat behavioral health disorders. Providers who are not properly trained and who are the sole source of behavioral health treatments assume tremendous risk.

This is why I have always advocated for a holistic approach to treating behavioral health disorders. Any ketamine provider should either (1) be trained in behavioral health issues, and/or (2) if they are not trained in this area, they should ensure that the patient is receiving the full panoply of behavioral health treatments. As the author of the YSM article points out, this would include seeing a behavioral health professional (in addition to receiving ketamine treatments). Alternatively, a provider should only see patients at a ketamine clinic when they have been referred by a behavioral healthcare provider who is overseeing their care. The author also correctly notes that any patient needs a treatment plan – and that treatment plan should be shared with all providers.

The author went on to note:

This idea of having ketamine clinics that stand alone are something that we must think really carefully about. This is because they’re not seeing patients and deciding what the best treatment is—they only have one treatment. They don’t provide comprehensive care. As I said before, this is not a treatment in and of itself. It’s part of the whole treatment plan. Let’s say somebody has diabetes and I have an insulin clinic. I’m going to give you insulin, but I’m not going to take care of any other part of your diabetes. We’re not going to talk about diet or lifestyle changes. We’re not going to talk about anything else. I’m just going to give you the insulin. That’s the real danger with ketamine clinics. If a patient has a crisis at two in the morning, they don’t have a way to contact a mental health professional. This is my biggest concern about ketamine treatment: It is critical for it to be a part of a comprehensive mental health plan, not in isolation.

The hypothetical about insulin drives the point home about the proper use of ketamine. Like any other disorder, a treatment plan is necessary. The notion of “one-stop shopping” for treating an ailment is a very dangerous precedent that can have cataclysmic results for the patient and the providers.

While psychedelic treatments hold a lot of promise for treating behavioral health disorders, they must be used carefully and in conjunction with a full treatment team. Otherwise, the results can lead to severe outcomes for everyone involved in the patient’s care.

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California Bill Proposes Psychedelic Assisted Therapy Workgroup https://harris-sliwoski.com/psychlawblog/california-bill-proposes-psychedelic-assisted-therapy-workgroup/ Fri, 05 Jan 2024 15:00:07 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=134270 California recently failed at least twice in passing sweeping statewide psychedelic decriminalization bills: a) SB-58, which Governor Gavin Newsom vetoed last year, and b) SB-519, which didn’t garner enough support in the assembly the year before. It’s now trying something much more modest – convening a workgroup to study psychedelic assisted therapy. The bill at

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California recently failed at least twice in passing sweeping statewide psychedelic decriminalization bills: a) SB-58, which Governor Gavin Newsom vetoed last year, and b) SB-519, which didn’t garner enough support in the assembly the year before. It’s now trying something much more modest – convening a workgroup to study psychedelic assisted therapy.

The bill at issue is AB-941. Assembly Member Marie Waldron originally proposed the bill last year as a bill to authorize licensed counselors to administer psychedelic assisted therapy. However, the bill was nearly completely rewritten in early January 2024 to both convene a workgroup, and to delay the original proposals until the legislature enacts a regulatory framework.

The parameters of the workgroup would be to study and make recommendations on creating a regulatory framework for psychedelic assisted therapy for psilocybin, ibogaine, and other controlled substances approved by the FDA. More specifically, the bill requires the workgroup to study at least the following subjects:

(1) Research on the safety and efficacy of using each of the controlled substances specified [above] in a therapeutic setting for treating post-traumatic stress disorder, depression, anxiety, addiction, and other mental health conditions.
(2) Long-term impact of supervised psychedelic or dissociative drug use with seeking and misusing other substances, including alcohol, cannabis, illicit substances, and unregulated psychedelic or dissociative drugs.
(3) Perceptions of harm of psychedelic or dissociative drugs following enactment of decriminalization both on a personal use and therapeutic use level.
(4) Impact of different regulatory frameworks on different health outcomes among vulnerable populations, including people with substance use disorders, and minority or disenfranchised groups.
(5) Regulated use models for the controlled substances specified [above] from other jurisdictions.
(6) Content and scope of educational campaigns that have proven effective in accurate public health approaches regarding use, effect, and risk reduction for the substances specified [above], including, but not limited to, public service announcements, educational curricula, appropriate crisis response, and appropriate training for first responders and multiresponders, including law enforcement, emergency medical services, fire service, and unarmed coresponder units.
(7) Policies for minimizing use-related risks, including information related to appropriate use and impacts of detrimental substance use.
(8) Appropriate frameworks to govern the therapeutic use of controlled substances, including qualifications and training for therapists or facilitators.
The workgroup will also need to develop policy recommendations for the legislature by January 1, 2026, which will include at least the following:
(1) Development of a statewide program or programs for the training of individuals providing psychedelic-assisted therapy.
(2) Development of a statewide credentialing process for individuals providing psychedelic-assisted therapy .
(3) The content and scope of educational campaigns and accurate public health approaches regarding use, effect, risk reduction, and safety for the substances specified [above].
(4) Policies for minimizing use-related risks, including information related to appropriate use and impacts of detrimental substance use.
(5) Policies for the regulation of controlled substances specified [above], including responsible marketing, product safety, and cultural responsibility.
(6) Policies for the safe and equitable production, access, use, and delivery of the controlled substances specified [above].
As mentioned above, the bill still contains some of the original provisions authorizing psychedelic assisted therapy, but those would not take effect until a regulatory framework is adopted.
That said, the bill does contain the following provision:
“Subsequent to the Legislature’s adoption of a framework governing psychedelic-assisted therapy using the substances described [above], it is the intent of the Legislature that the transfer of a substance described [above], without financial gain, in the context of psychedelic-assisted therapy, be decriminalized.”
In other words, while fully authorized psychedelic assisted therapy is not guaranteed to ever be authorized, certain psychedelic assisted therapy would be decriminalized. This is just a guess, but I don’t think this provision is likely to make it into the final version of the bill. Governor Newsom made clear in his 2023 veto of SB-58 that he would not sign off on full-scale decriminalization, but instead wanted a regulatory program. If this language does end up in the final bill, then it’s possible it gets vetoed just like SB-58.
It’s still far too early to tell what the bill will look like and if it will pass, but advocates will be happy that the legislature is picking up the baton so early into 2024. Stay tuned to the Psychedelics Law Blog for more updates.

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A Closer Look at the FDA Warnings on Compounded Ketamine https://harris-sliwoski.com/psychlawblog/a-closer-look-at-the-fda-warnings-on-compounded-ketamine/ Tue, 02 Jan 2024 15:00:24 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=133983 On February 16, 2022 and October 10, 2023, the FDA issued two warnings about the use of compounded ketamine. The first warning is entitled, “FDA alerts health care professionals of potential risks associated with compounded ketamine nasal spray,” and the second warning is entitled, “FDA warns patients and health care providers about potential risks associated

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On February 16, 2022 and October 10, 2023, the FDA issued two warnings about the use of compounded ketamine. The first warning is entitled, “FDA alerts health care professionals of potential risks associated with compounded ketamine nasal spray,” and the second warning is entitled, “FDA warns patients and health care providers about potential risks associated with compounded ketamine products, including oral formulations, for the treatment of psychiatric disorders”. While there is a lot of overlap between the two warnings, it is apparent that the first warning did not have the intended effect.

Risks of using compounded ketamine

The FDA is clearly concerned about the use of compounded ketamine. Compounded ketamine is ketamine prepared by a pharmacy that has different dosage levels. As the FDA warned, ketamine is not approved for psychiatric disorders. However, esketamine (also known as Spravato), the nasal spray that contains ketamine, has been approved by the FDA for use under certain conditions. Eskatmine is part of the FDA’s Risk Evaluation and Mitigation Strategy (REMS) program. As noted by the FDA:

“The Spravato REMS program requires Spravato (esketamine) to be dispensed and administered in health care settings that are certified in the REMS. Spravato (esketamine) cannot be dispensed for use outside the certified healthcare setting. Patients must be monitored inside the healthcare setting after administration for a minimum of two hours until patients are safe to leave.”

A REMS program is used by the FDA when an approved medication has serious safety concerns to help ensure the benefits of the medication outweigh the risks.

Notwithstanding these concerns, compounded ketamine (whether in a pill form or used sublingually) is not part of the REMS program and is not approved by the FDA for any indication. Thus, there is no way to evaluate the risks attendant with compounded ketamine, nor is there a formal mechanism to track adverse events (unless they are otherwise reported to the FDA). Moreover, as the FDA stated, “Ketamine is not FDA-approved for the treatment of any psychiatric disorder.” Since ketamine is not FDA-approved for such disorders, clearly compounded ketamine lacks FDA clearance as well.

The FDA also noted that ketamine is a racemic mixture consisting of two mirror image molecules, which caused brain lesions during animal studies. Animal studies with esketamine did not show brain lesions. Moreover, there are other risks with using ketamine, including “hemodynamic instability, emergence reactions (vivid dreams, hallucinations, or delirium), respiratory depression, and drug-induced liver injury, among others.”

February 2022 FDA warning

The February 2022 FDA warning was caused, at least in part, after the FDA searched the FDA Adverse Event Reporting System from April 2011 through January 2022. The FDA identified five cases using compounded ketamine, reported between 2016 to 2021, with associated psychiatric events such as delusion, dissociation, visual hallucination, and panic attack as well as abuse and misuse following the use of compounded ketamine nasal spray. Moreover, the FDA reported:

The reported concentrations of compounded ketamine nasal spray ranged from 125 – 200 mg/mL. Frequency of use varied from three sprays three times a day to six sprays eight times a day. The amount of medication administered to the patients with each spray is unknown. In most case reports, the patients self-administered the product at home, and it is unknown whether they were observed or monitored by a healthcare professional.

October 2023 FDA warning

While the FDA warning from October 2023 contained some of the same information as the February 2022 warning, the October 2023 warning noted that there is more public interest in the use of sublingual and oral dosage forms of compounded ketamine for behavioral health disorders. Part of the advent of compounded ketamine is due to telehealth platforms that provide in-home ketamine services. The FDA specifically noted:

“[u]se of compounded ketamine products without monitoring by a health care provider for sedation (sleepiness), dissociation (disconnection between a person’s thoughts, feelings, and sense of space, time, and self), and changes in vital signs (such as blood pressure and heart rate) may put patients at risk for serious adverse events.”

The FDA was quite blunt by stating:

“FDA has not determined that ketamine is safe and effective” for the treatment of psychiatric disorders. The FDA is not aware of evidence to suggest that ketamine is safer, is more effective, or works faster than medications that are FDA-approved for the treatment of certain psychiatric disorders.”

The October 2023 FDA warning also noted several potential safety risks associated with compounded ketamine products. Such safety risks include:

• Patients who receive compounded ketamine products from compounders and telemedicine platforms for the treatment of psychiatric disorders may not receive important information about the potential risks associated with the product.

• At-home administration of compounded ketamine presents additional risks because a health care provider is not available onsite to monitor for serious adverse outcomes resulting from sedation and dissociation.

• In April 2023, FDA received an adverse event report of a patient who experienced respiratory depression after taking compounded oral ketamine outside of a health care setting for the treatment of PTSD. The patient’s ketamine blood level appeared to be twice the blood level typically obtained for anesthesia.

• In addition to the potential risks associated with compounded ketamine products, patients and health care providers should be aware that information about use of these products is lacking. For example, FDA has not established safe or effective dosing of ketamine for any psychiatric indication. Furthermore, the dosages of the sublingual and oral compounded ketamine products marketed by compounders and telemedicine platforms may vary, which makes it challenging to predict which potential risks may be associated with these products.

Conclusion

Ketamine is Schedule 3 drug for a reason, including the potential for misuse and abuse. There are potentially serious side effects when using ketamine. The risks associated with compound ketamine are unknown since each mixture can be different, and it has not been FDA-approved for any disorder. Moreover, the FDA clearly is concerned about telehealth and ketamine (something we’ve written about extensively).

Given some of the potential side effects, a healthcare provider should be with the patient during the administration of the drug and for a few hours afterward. Those providers who prescribe compounded ketamine for in-home administration assume a lot of risks, especially if a properly trained provider is not with the patient.

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Oregon Psilocybin: State of the State (2023) https://harris-sliwoski.com/psychlawblog/oregon-psilocybin-state-of-the-state-2023/ Fri, 22 Dec 2023 15:00:47 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=134098 It’s hard to believe that we are wrapping up the first year of the Oregon Psilocybin Services (OPS) program. Final rules were released at this time last year, following a protracted, two-year development period. The application window for licenses opened timely on January 2, 2023, and the Oregon Health Authority (OHA) continues to administer this

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It’s hard to believe that we are wrapping up the first year of the Oregon Psilocybin Services (OPS) program. Final rules were released at this time last year, following a protracted, two-year development period. The application window for licenses opened timely on January 2, 2023, and the Oregon Health Authority (OHA) continues to administer this novel program ably. Kudos to them for pulling it off.

The program is small, but growing

Early this year, I published an article that received a lot of attention titled “Oregon Psilocybin: Slow Start.” In that piece, I reported that as of January 23, OHA had received:

  • 4 manufacturer license applications
  • 3 service center license applications
  • 1 testing lab license application
  • 0 facilitator license applications
  • 92 worker permit applications
  • 19+/- approved training programs

That was hardly the land rush many had expected, and a far cry from what Oregon experienced with cannabis licensing back in the day. Throughout the year, though, numbers ticked up gradually. Here are licensing stats from the December 18, 2023 OPS Applications report:

Submitted Approved
Manufacturer 21 7
Service Center 36 20
Testing Lab 3 2
Facilitator 260 201
Worker Permit 616 406
Training Program 26 24

 

Not too shabby. Most of the manufacturers, service centers and related economic activity are concentrated along the I-5 corridor, from Portland down to Eugene. There are pockets of limited activity in Jefferson County (down south), Deschutes County (central) and sparsely populated cities and counties that likewise decided not to shun the program.

The rules are changing, a bit

I’ve been somewhat critical of the OPS program structure going back to the advent of Measure 109, often calling the OPS program “cumbersome” and such. And it is. An unfortunate corollary of this has been high costs for clients (who are mostly out-of-staters), and related access issues. That said, the program is what it is at this point, and some service centers offer “sliding fee” schedules and such. OPS also makes license applicants create a social equity plan (yes, they actually read them). It’s a great aspiration, but ultimately a specious exercise for some of these folks. Finally, OHA is on record stating that expanding access to psilocybin services is a priority in 2024.

We have written exhaustively about the OPS rules on this blog, so I’m not going to rehash things here. We did see new rules proposed in late October on training, data collection and technical fixes to the OPS program. Emerge Law Group published helpful commentary on all of that here. For now, I’d say that technical fixes are always a thing in controlled substances programs; the draft training rules are straightforward; and the data collection rules stem from Senate Bill 303, a client data collection law I ragged on this summer. A series of public hearings on all of this commenced in November, and the permanent rules should land any day now.

We’ll see what happens, if anything, in the 2024 Oregon legislative session. Yesterday, I wrote on our sister Canna Law Blog that I expect much of the “controlled substances” oxygen to be sucked up by Measure 110 (drug decriminalization) considerations. For that reason alone, I don’t expect heavy tinkering with the OPS program in 2024. Let’s see.

Finally, it’s worth noting that 2024 will be the second and final year of the “50% or more residency requirement” for ownership of a licensed Oregon psilocybin business. Assuming the legislature doesn’t decide to mess with this, we would welcome this sunset. People who want in are getting in, regardless.

The Feds

It’s been nice and quiet with respect to federal law enforcement and the OPS program. I wrote a short piece on the VISIONS Act this fall, a prophylactic federal bill to constrain policing of OPS compliant actors. In that piece, noted that:

…the Oregon Health Authority (OHA) was scheduled to contact local U.S. Attorneys last year, to facilitate a conversation on this very topic. OHA informs me that they did, in fact, reach out, but the response was subdued– essentially just confirmation from DOJ that it is aware of the state’s psilocybin program. No developments since then.

I haven’t followed up with OHA on the topic since late September, but I assume if something were afoot, we’d hear about it. Let’s see what happens in the 2024 elections and everything else; but for now this program seems of little interest to the feds. That status quo would be supported by continued smooth sailing from a public health and safety perspective in the OPS program next year. So far, reports of adverse events are vanishingly few among the 700+ consenting adults who have tried this beta program.

Oregon psilocybin 2023: That’s a wrap

Let me know in the comments if you think I missed anything worth mentioning, or shoot me an email. I’m sure there’s something. And let’s hope for good things at OPS in 2024.

In the meantime, for more on all things Oregon and psilocybin, including expansive coverage of OHA rules and program developments, check out our 50 post archive here. For information relevant to starting a psilocybin business in Oregon, check out these specific posts:

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Can Ketamine Clinic MSOs Succeed? https://harris-sliwoski.com/psychlawblog/can-ketamine-clinic-msos-succeed/ Wed, 06 Dec 2023 15:00:28 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=133923 A few months ago, I wrote a post entitled “Making Money in the Psychedelics Industry Will be Harder than Cannabis.” The post was focused mostly on hardships that state-legal psilocybin businesses will face in places like Oregon and Colorado, where I think the deck is heavily stacked against them. Today I want to examine a

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A few months ago, I wrote a post entitled “Making Money in the Psychedelics Industry Will be Harder than Cannabis.” The post was focused mostly on hardships that state-legal psilocybin businesses will face in places like Oregon and Colorado, where I think the deck is heavily stacked against them. Today I want to examine a business model that, in some senses, faces even more hurdles than psilocybin businesses: ketamine clinic management services organizations (MSOs).

Before getting into why MSOs face so many obstacles, it’s important to recognize that the ketamine industry is really nothing like the regulated cannabis industry or the emerging psilocybin industry. Ketamine is a schedule III drug under the Controlled Substances Act (CSA), meaning it is prescribed and/or administered by licensed healthcare professionals. If these processes are followed correctly, then ketamine administration is legal at both the federal and state level. BUT the problem is that healthcare regulations are exponentially more complicated than cannabis or psilocybin state-level regulations.
One way that ketamine clinics are hyper-regulated is through what’s known as the corporate practice of medicine (CPOM) doctrine. CPOM limits ownership of medical practices to certain licensed professionals. Some states don’t have CPOM requirements, but many do, and some are extremely restrictive. A layperson in California, for example, is categorically forbidden from owning an interest in a professional medical corporation.
That’s where MSOs come in. MSOs are organizations that provide discrete management services to ketamine clinics. Think of a management company for a cannabis business (or really anything else). MSOs generally are not regulated like medical practices are, meaning lay person ownership may not be an issue. But that’s essentially where the easy part ends. MSOs are highly regulated in a few key areas that make success difficult, if not nearly impossible. Here are some of them:
  • MSOs make their money in exchange for providing management services to ketamine clinics. But many states severely restrict what kinds of services MSOs can even provide to medical practices. See here for a description of Washington’s restrictive laws. By limiting the amounts of services an MSO can provide, states definitionally limit the amount of money an MSO can make.
  • MSOs may be restricted or even prohibited from any kind of fee-splitting or revenue sharing with a ketamine clinic. An MSO may want a percentage of revenues or some split of fees, but if a state says no to that, it’s not going to happen without massive consequences.
  • There can be massive liability under federal laws and even state laws for referrals, including under the federal Stark Law. There can also be liability under state and federal anti-kickback laws (see here and here). It’s very easy to implicate these laws when ketamine clinics farm out services to MSOs, and can in some cases lead to criminal liability.
  • State laws impose many restrictions on how physicians market or advertise their services. Physicians will often be responsible for the misdeeds of their agents, including MSOs. MSOs will therefore have their hands tied when it comes to advertising (assuming they follow the law) and may not be able to advertise in a way that is likely to bring in more patients.
  • Insurance reimbursement is often not available for ketamine infusions, which can be notoriously costly. Many providers don’t even consider insurance and operate solely on a cash-pay basis. Because of the potential high cost of infusions, this naturally limits the scope of patients who would otherwise undergo treatment if they could afford it. And the limitation on business for the practice means that MSOs will be limited in their own service payments.
  • MSOs usually do not have a great deal (or any) control over the physician practice. A physician may decide to close up shop, sell its business, or terminate an MSO agreement, leaving the MSO to hold the bag. There are some ways to deal with this in certain states, but it’s less than ideal and far from an ironclad way for an MSO to protect its relationship.

It should be clear that operating an MSO is tough. Making money is even harder. Folks who rush into the space with little background in this highly regulated field can expect to spend a LOT of money with an uphill battle just to recoup their investment. This isn’t to say that ketamine clinics and MSOs can’t succeed, but just that doing so will be tough.

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Ketamine Clinics and Malpractice: Recent New York Litigation https://harris-sliwoski.com/psychlawblog/ketamine-clinics-and-malpractice-recent-new-york-litigation/ Wed, 18 Oct 2023 14:00:32 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=133065 Many ketamine clinics in the United States offer treatments for various behavioral health conditions, including depression. However, many healthcare providers who work for these clinics are not trained in psychiatry and/or counseling. There are various legal issues with this type of fact pattern. Among other things, are healthcare providers who are not trained in psychiatry

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Many ketamine clinics in the United States offer treatments for various behavioral health conditions, including depression. However, many healthcare providers who work for these clinics are not trained in psychiatry and/or counseling. There are various legal issues with this type of fact pattern. Among other things, are healthcare providers who are not trained in psychiatry and/or counseling competent to treat behavioral health disorders with ketamine? The answer is not always clear.

In a recent decision by the United States District Court for the Southern District of New York, the Court was faced with deciding medical malpractice claims against a physician and his practice that resulted from the death of a patient. Ricard Valdes v. Glen Z. Brooks, M.D. et al., 19-cv-617 (JGK) (2019) (Memorandum Opinion and Order). While the Court found that Dr. Brooks and his practice were not liable for malpractice, there are several lessons that can be learned from this case.

Facts

Dr. Kloda, the decedent in this case, was a physician who suffered from depression. For many years, Dr. Kloda saw Dr. Brendel, who is a psychiatrist. While Dr. Kloda was prescribed antidepressants in the past, they had little effect on Dr. Kloda.

Dr. Brooks, who is the founder and sole physician at Ketamine Infusions, provided ketamine infusions to patients who suffered from treatment-resistant depression. Ketamine is approved in the United States as a general anesthetic, but it has not gone through rigorous FDA trials for other indications (like depression). While studies exist about the use of ketamine for various disorders, none of the studies are as rigorous as a randomized controlled clinical trial.

In July 2016, Dr. Kloda approached Dr. Brooks about receiving ketamine treatments. Dr. Kloda informed Dr. Brooks that he had suicidal ideation in the past, even though such ideations were not present when Dr. Kloda commenced treatment with Dr. Brooks. Dr. Kloda sought treatment from Dr. Brooks to forestall future suicidal ideations. However, importantly for this case, Dr. Kloda “expressly prohibited Dr. Brooks from contacting Dr. Brendel.”

While Dr. Kloda reported that his immediate response to ketamine infusions was “equivocal” at best, by the end of the first treatment series, Dr. Kloda noticed a significant improvement in his mood. Dr. Brooks recommended that Dr. Kloda return for booster treatments if the improvement faded over time.

In January 2017, Dr. Kloda saw Dr. Brendel. According to Dr. Brendel’s treatment notes, Dr. Kloda was “back to [his] chronic baseline” despite his “new medication regime.” However, Dr. Brendel concluded that Dr. Kloda was “[s]table” and presented “no acute risk.” Dr. Brendel also reported to Dr. Kloda’s husband that Dr. Kloda seemed happy.

A few days after the appointment with Dr. Brendel, Dr. Kloda called Dr. Brooks several times, and Dr. Brooks saw Dr. Kloda the same day. Dr. Brooks testified at his deposition that Dr. Kloda had said on the phone that “he had had a couple of difficult days. Things were better but he wanted to come in to make sure he got it under control.” When Dr. Kloda saw Dr. Brooks, he told Dr. Brooks that he had suicidal ideations over the weekend, although they had since subsided. Dr. Kloda hoped to stop any future suicidal ideations. During this visit, Dr. Brooks inquired about whether Dr. Kloda had any concrete plans to commit suicide or whether Dr. Kloda had weapons at home. Dr. Kloda denied both questions. However, Dr. Kloda admitted that he had started preparing prescriptions and transfer notes for his patients. During the appointment, Dr. Brooks became “convinced that Dr. Kloda was not in imminent danger of any self-harm.” Dr. Kloda’s husband did not notice anything amiss on the day of Dr. Brooks’ appointment and the day following the appointment.

Unfortunately, on February 2, 2017, Dr. Kloda took his own life. Thereafter, Dr. Kloda’s husband filed a lawsuit against Dr. Brooks and his practice, alleging negligence, failure to obtain informed consent, failure to report suicidal ideation, wrongful death, and loss of consortium. Following discovery, Dr. Brooks and his practice moved for summary judgment on the outstanding claims. The Court granted Dr. Brooks’ motion for summary judgment which disposed of the case.

The law

As the Valdes court noted, to establish a malpractice claim in New York, a plaintiff must prove:

“… (1) the standard of care in the locality where the treatment occurred, (2) that the defendant breached that standard of care, and (3) that the breach of the standard was the proximate cause of injury.” Nichols v. Stamer, 854 N.Y.S.2d 220, 221-22 (App. Div. 2008) (citations omitted). The plaintiff alleges three departures from the standard of care: (a) failure to communicate and coordinate treatment with Dr. Brendel; (b) failure to develop a safety plan of action; and (c) failure to report Dr. Kloda’s suicidal ideations to the authorities.

Regarding the first claim – failure to communicate with Dr. Brendel – the Court quickly disposed of this claim on two grounds. First, under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Dr. Brooks was not authorized to speak to Dr. Brendel. The HIPAA regulations allow a provider to communicate with third parties without the patient’s consent only under limited circumstances, which did not apply here. Second, the plaintiff could not establish causation, which is an essential element of a medical malpractice claim. New York law requires a plaintiff to present expert testimony. As the Court noted, “…the plaintiff’s expert, Dr. Reitman, conceded that even if the defendant had communicated with Dr. Brendel, it is ‘unknowable’ whether this would have prevented the suicide.”

The Valdes court next analyzed the claim for the failure to develop a care plan for Dr. Kloda. The plaintiff argued that if Dr. Brooks developed a more involved care plan following Dr. Kloda’s last visit to Dr. Brooks, the suicide may have been averted. The Court started its analysis by reviewing the basic standards for this claim.

New York law gives physicians leeway in making care decisions. A physician “‘may not be held liable for a mere error in professional judgment.’ This rule is particularly relevant to cases involving mental health treatment, given that psychiatry is not an exact science and, therefore, decisions related to mental health treatment and discharge often involve a measure of calculated risk.” Gallagher v. Cayuga Med. Ctr., 57 N.Y.S.3d 544, 547 (App. Div. 2017). This insulation extends to a determination that a patient is unlikely to harm himself. Park v. Kovachevich, 982 N.Y.S.2d 75, 81 (App. Div. 2014). The mere fact that “a plaintiff’s expert may have chosen a different course of treatment …is not sufficient to sustain a prima facie case of malpractice.” Id.

The Court went on to note that in New York doctors must properly examine the patient and exercise their medical judgment. “In other words, a physician may be held liable if a mental health treatment decision was ‘something less than a professional medical determination’ or was ‘not the product of a careful evaluation.’” Gallagher, 57 N.Y.S.3d at 547 (quoting Ballek v. Aldana-Bernier, 957 N.Y.S.2d 108, 110 (App. Div. 2012)).

The Court noted that a reasonable jury could not find that Dr. Brook’s treatment plan was so errant that it was tantamount to the failure to exercise medical judgment. As the plaintiff’s expert conceded, where there is no current suicidal ideation, such an action plan was unnecessary. There was also uncontroverted evidence that the decedent told Dr. Brooks that his suicidal ideations subsided. The Court went on to note that even though Dr. Brooks’s notes were sparse, that alone was not enough to infer that Dr. Brooks did not undertake an examination he claims to have undertaken. Last, the Court stated that the plaintiff failed to provide expert opinions that a care plan would have been enough to prevent Dr. Kloda’s suicide.

Finally, the Court disposed of the plaintiff’s claim that Dr. Brooks failed to notify the authorities. The Court noted as it did with the first claim, that HIPAA prevented Dr. Brooks from notifying the authorities. Among other things, Dr. Brooks made a good-faith determination that there was no imminent threat to Dr. Kloda’s life – and if there had been an imminent threat, HIPAA would have allowed Dr. Brooks to notify the authorities. 42 CFR § 164.512(j)(i) (“A covered entity may, consistent with applicable law and standards of ethical conduct, use or disclose protected health information, if the covered entity, in good faith, believes the use or disclosure: …[i]s necessary to prevent or lessen a serious and imminent threat to the health or safety of a person or the public; and [i]s to a person or persons reasonably able to prevent or lessen the threat, including the target of the threat.”). Moreover, the plaintiff failed to present expert evidence as to causation.

Lessons learned

This case is a cautionary tale for ketamine providers who treat behavioral health disorders. If just one or two facts were changed, the outcome may have been much different. So, what can we learn from the Valdes case? There are several lessons.

The first lesson is to look for red flags for a patient. The first red flag occurred when Dr. Kloda would not allow Dr. Brooks to communicate with Dr. Brendel. Behavioral health treatment is not like medical ailments, where a patient can often see one doctor and receive all the treatments they need to cure an ailment. In behavioral health, it is common for patients to receive counseling in addition to drug treatments – psychiatrists prescribe medicines and psychologists provide counseling. It is vitally important that all behavioral healthcare providers communicate with one another to ensure the patient is receiving optimal care. In the Valdes case, Dr. Brooks could have declined treatment when Dr. Kloda refused to allow Dr. Brooks to communicate with Dr. Brendel.

The second lesson relates to good record-keeping for providers. The Court in Valdes specifically noted that Dr. Brooks’ “notes were sparse.” While this did not adversely affect Dr. Brooks’ defenses, it is easy to see how, in other situations, this could be extremely detrimental to a provider.

The third lesson relates to the competency of a provider to treat behavioral health disorders. In New York, the first element of a medical malpractice claim is the plaintiff must prove the “standard of care in the locality where the treatment occurred.” To meet this standard, a provider should know the “standard of care” for treating behavioral health disorders in the locality where they practice. Dr. Brooks was able to meet this standard in defeating the claims made by the plaintiff. Among other things, he inquired about self-harm and suicidal ideation. Dr. Brooks was also fortunate that the plaintiff’s medical expert could not opine that Dr. Brooks’ treatments fell below the standard of care.

The fourth lesson is applicable to providers who prescribe ketamine via telehealth. While there are specific laws about telehealth for Schedule 3 drugs, like ketamine, the Valdes Court noted that under New York law, a physician must properly examine their patients. As the Court stated, “… a physician may be held liable if a mental health treatment decision was ‘something less than a professional medical determination’ or was ‘not the product of a careful evaluation.’” (internal citations omitted). Given the subjective nature of behavioral health treatments, it is imperative that a provider undertake a “careful evaluation” of the patient (and, as noted above, take clear notes about that evaluation). This obviously requires that a provider be knowledgeable about the treatment of behavioral health disorders.

The final lesson relates to the “duty to warn.” One of the plaintiff’s claims was that Dr. Brooks did not notify the authorities about Dr. Kloda. While, in this case, the Court determined it was unnecessary, that will not always be the case with behavioral health patients. In those instances where a provider determines that someone is a potential harm to themself or others, what should a provider do? HIPAA allows notification to authorities in certain circumstances (as noted above). And even if it is a close call under HIPAA, would a provider rather be sued for breach of confidentiality or negligent manslaughter? Certainly, good legal advice is often needed in these situations.

Conclusion

The Valdes case is an unfortunate situation that helps illuminate the risks for providers who treat behavioral health disorders with ketamine. Any provider who provides such treatments needs to understand behavioral health disorders and proper treatment protocols. Ideally, such patients would receive the full spectrum of behavioral health treatments where the providers communicate with one another about the patient’s condition. Otherwise, it is not difficult to see how a provider can get trapped in a malpractice lawsuit.

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The VISIONS Act, Psilocybin and Federal Enforcement https://harris-sliwoski.com/psychlawblog/the-visions-act-psilocybin-and-federal-enforcement/ Tue, 26 Sep 2023 14:00:12 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=132974 Perhaps inevitably, lawmakers introduced a very skinny bill last week to protect states that legalize psilocybin from federal intervention. Specifically, it requires that: [n]o Federal funds may be used to prevent any State or unit of local government from implementing such State’s or unit of local government’s own laws that authorize the use, distribution, sale,

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Perhaps inevitably, lawmakers introduced a very skinny bill last week to protect states that legalize psilocybin from federal intervention. Specifically, it requires that:

[n]o Federal funds may be used to prevent any State or unit of local government from implementing such State’s or unit of local government’s own laws that authorize the use, distribution, sale, possession, research or cultivation of psilocybin.

So it’s a spending bill prohibition, like the Rohrabacher-Blumenauer amendment for medical cannabis. And Earl Blumenauer (D-OR) is in fact sponsoring this new law, along with Robert Garcia (D-CA). That’s it for now, though we expect the bill to pick up some support in the coming weeks and months.

This new psilocybin safe harbor bill is embarrassingly named the “VISIONS Act of 2023.” The “VISIONS” expansion is: Validating Independence for State Initiatives on Organic Natural Substances. We do like that part. Below are some other things I like and don’t like about the bill.

The VISIONS Act gives states a safe harbor on psilocybin, only

It seems shortsighted that the bill is drawn so narrowly, when other “organic natural substances” are already coming online through state initiatives, including substances of the psychedelic variety. Yes, I’m talking about Colorado’s Proposition 122. In addition to psilocybin, Proposition 122 allows Colorado to license the sale of dimethyltryptamine (DMT), ibogaine and mescaline by 2026. Protection for those substances wouldn’t be covered under the VISIONS Act as submitted.

You get into broader questions here too. The federal government has been half-in and half-out on other “organic natural substances” over the years. Kratom is a great example of this. Many states’ laws “authorize the use, distribution, sale, possession, [etc.]” of kratom. Unlike psilocybin, kratom isn’t scheduled on the federal Controlled Substances Act. It is, however, identified by the Drug Enforcement Administration as a “drug of concern”; and we’ve seen U.S. marshals seize large shipments of kratom, including very recently.

In all, the VISIONS Act is probably drawn too narrowly by covering only psilocybin, and by focusing only on substances legalized through “state initiatives.”

The VISIONS Act is appropriations legislation

This is good and bad. Pushing a bill like the VISIONS Act through as a spending rider is easier than rallying Congress to de- or reschedule a substance. Just ask the cannabis folks. That said, appropriations legislation must be renewed annually. This means the VISIONS Act could move through one year, only to be cut the year following. Another issue is that Congress consistently struggles to pass spending bills on time. Medical cannabis people used to fret during such intervals that the feds could swoop in and enforce their terrible laws. Those fears were overstated, but still.

On the other hand, you could argue that introducing the VISIONS Act as spending legislation is probably the best way to posture it. Under U.S. v. McIntosh, we have good precedent upholding the power of Congress to restrain the U.S. Department of Justice (DOJ) from interfering with state programs as to Schedule I controlled substances (cannabis, in that case). It’s also arguably better than a “Cole Memo for psilocybin”, in that the VISIONS Act would be a law, however “sticky”, and not a policy. That said, some colleagues whom I respect a good deal would also like to see a tolerance memo.

The VISIONS Act would help with “crack house statute” concerns

The CSA at 21 USC § 856 is often referred to, grossly, as “the crack house statute.” This law provides that it is unlawful to:

knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing, distributing, or using any controlled substance; [and to]

manage or control any place, whether permanently or temporarily, either as an owner, lessee, agent, employee, occupant, or mortgagee, and knowingly and intentionally rent, lease, profit from, or make available for use, with or without compensation, the place for the purpose of unlawfully manufacturing, storing, distributing, or using a controlled substance.

In other words, federal law prohibits people from doing exactly what they’re doing in the Oregon psilocybin program. And what they will soon be doing in Colorado and elsewhere.

The crack house statute was recently at issue in the context of safe injection sites, in some high-visibility litigation with the federal government. In short, the Third Circuit held that facilitating a supervised injection site is unlawful, even if you’re not providing the drugs. Per this reading of the CSA, the feds could certainly come after any state-sanctioned psilocybin program participants, absent prophylactic legislation such as the VISIONS Act.

Conclusion

The impetus behind the VISIONS Act is the following, fundamental question: will federal law enforcement step in? A related question might be: how can Congress best respect the democratic experiment of state-sanctioned psychedelics programs?

I previously explained that the Oregon Health Authority (OHA) was scheduled to contact local U.S. Attorneys last year, to facilitate a conversation on this very topic. OHA informs me that they did, in fact, reach out, but the response was subdued– essentially just confirmation from DOJ that it is aware of the state’s psilocybin program. No developments since then.

Today, Oregon’s program is well underway and Colorado’s is coming fast. We don’t have federal protections or guidance– just this skinny little bill. And that will have to be enough.

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Common Misconceptions About California’s New Psychedelics Bill https://harris-sliwoski.com/psychlawblog/common-misconceptions-about-californias-new-psychedelics-bill/ Thu, 21 Sep 2023 14:00:27 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=132797 There is a lot of misinformation floating around online about SB-58, California’s newest psychedelics bill. Unlike the state’s last attempt, SB-58 went through both the state Senate and Assembly and is heading to Governor Newsom’s desk. So it makes sense to discuss what the bill does and doesn’t do. And no, it doesn’t legalize psychedelics.

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There is a lot of misinformation floating around online about SB-58, California’s newest psychedelics bill. Unlike the state’s last attempt, SB-58 went through both the state Senate and Assembly and is heading to Governor Newsom’s desk. So it makes sense to discuss what the bill does and doesn’t do. And no, it doesn’t legalize psychedelics. At least not in the way a lot of people think it does.

#1 California won’t be Oregon or Colorado anytime soon

In 2020, Oregon passed Measure 109, creating a regulated market for psilocybin. Oregon opted for a service center model, which means that people must take it at a licensed facility under the care of a licensed facilitator. We write about Oregon’s program a lot. Colorado is doing something similar, though with more psychedelics.

This isn’t happening in California. The Golden State’s psychedelic bill won’t create licensed service centers. In fact, it won’t create a regulated market at all – the closest it comes is to calling for a “workgroup” to study, among many other things, how to regulate psychedelics. This could take a long time to wrap up. SB-58 sets a January 1, 2025 deadline, but let’s get real, that’s probably not going to happen. As I pointed out more than a year ago, FDA approved psychedelics may beat states to the punch if they don’t act more quickly here.

All of this means that for now, drugs like LSD, DMT, psilocybin, and more will remain on schedule I of the state’s controlled substances law. So what will change? That brings me to my next point.

#2 The psychedelics bill doesn’t really legalize psychedelics

California’s psychedelics bill is somewhere between legalization and decriminalization. The closest it gets to legalization is setting legally allowable limits for possession, preparation, obtaining, or transportation of small amounts of certain psychedelics (not including peyote). These are mescaline (4 grams per person), DMT (one gram), psilocybin (1 gram), psilocyn (1 gram), and spores/mycelium that can produce allowable amounts of psilocybin. These provisions will only apply to persons over 21 and only after January 1, 2025. In any other circumstances, these substances are illegal. Giving these substances to minors can range from an infraction to a felony.

Notably too, the state won’t deem the following items to be paraphernalia: “any paraphernalia that is intended to be used to plant, propagate, cultivate, grow, harvest, compound, convert, produce, process, prepare, pack, repack, store, contain, conceal, inject, ingest, inhale, or otherwise introduce into the human body, any of the following substances: (A) Dimethyltryptamine (DMT). (B) Mescaline. (C) Psilocybin. (D) Psilocyn.”

So the state is kind of legalizing small amounts of these psychedelics for adults. How do adults get them?

#3 California won’t allow commercial sales of psychedelics

Unless another psychedelics bill is passed, SB-58 isn’t going to create a legal market to buy and sell psychedelics. The closest the bill gets is as follows:

Subsequent to the Legislature’s adoption of a framework governing therapeutic use of the substances described in subdivision (a), it is the intent of the Legislature that the transfer [DMT, mescaline, ibogaine, psilocybin, or psilocyn], without financial gain, in the context of therapeutic use, which includes facilitated or supported use, be decriminalized.

A few other definitions are key:

As used in this section, “facilitated or supported use” means the supervised or assisted personal use of [DMT, mescaline, ibogaine, psilocybin, or psilocyn] by an individual or group of persons 21 years of age or older, or the assisting or supervising of such persons in such use, within the context of spiritual guidance, community-based healing, or related services.

. . .

“Financial gain” means the receipt of money or other valuable consideration in exchange for the item being transferred.

. . .

“Personal use” means for the personal ingestion or other personal and noncommercial use by the person in possession.

To translate, there will be no service centers, and no retail opportunities. Instead, in the context of certain spiritual guidance or community-based healing (which likely would include religious practices), giving away the above substances could be deemed “decriminalized” even though they are still illegal. I say “could be” because, for reasons that don’t make any sense, the legislature decided to use the words “it is the intent . . . .” Why not just say “it is decriminalized?” Who knows.

It remains to be seen what position the medical board or equivalents for various therapists or other clinicians will take. They could easily just sit back and say that licensees cannot participate in this process, leaving this only to non-licensed persons. Only time will tell.

#4 Personal cultivation may be okay, but risky

While there is not going to be a broad commercial market, the law allows for cultivation of plants capable of producing DMT, psilocybin, or psilocyn. The problem for anyone willing to try this is that the “allowable amounts” of each substance are relatively low. It’s hard to preemptively predict the weight of psilocybin mushrooms produced by a spore kit, let alone the weight of the psilocybin itself. This is likely to lead to lots of legal quagmires.

#5 Nothing else is changing

This bill will not have any effect on federal law. It will not allow interstate transport to or from Oregon or Colorado. Basically think of any problem cannabis had in the early days, and this is what the status quo will be here.


For psychedelics advocates, California’s new psychedelics bill is a huge step in the right direction. But it certainly doesn’t go as far as those same advocates will like. Many things remain to be seen, like the effects on licensed professionals (as noted) and religious groups, among many other things. Stay tuned to the Psychedelics Law Blog for more updates.

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Ketamine Telehealth: Some More Updates https://harris-sliwoski.com/psychlawblog/ketamine-telehealth-some-more-updates/ Thu, 10 Aug 2023 14:00:13 +0000 https://harris-sliwoski.com/?post_type=psychlawblog&p=132293 Ketamine telehealth has been a wild ride these last few years. Every few months I give an update, and every time I do, things seem to change dramatically. For example, in just a few short weeks in February 2023, the situation went from “bad” to “good” (at least sort of) as it became clear that

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Ketamine telehealth has been a wild ride these last few years. Every few months I give an update, and every time I do, things seem to change dramatically. For example, in just a few short weeks in February 2023, the situation went from “bad” to “good” (at least sort of) as it became clear that DEA would extend certain telehealth flexibilities beyond the COVID-19 pandemic. Today, I want to talk about a few of the more recent developments.

First though, a quick summary of the current law is in order. As I explained in my last summary in May 2023:

For some background, ketamine is a schedule III controlled substance under the federal Controlled Substances Act (CSA). The federal Ryan Haight Act (RHA) requires physicians to have an in-person consultation with a patient prior to prescribing controlled substances such as ketamine. During the COVID-19 public health emergency (PHE), this provision was suspended, leading to an explosion of ketamine telehealth services.

The PHE officially ended yesterday, May 11, 2023. The long-time anticipation was that the RHA requirements would kick back in. A few months ago however, DEA dropped a proposed rule that would have created a middle ground for prescription of certain controlled substances. I wrote about that proposed rule at length here, so I won’t recount it.

While the proposed rule would have been more expansive than the RHA, a lot of people weren’t exactly happy about it. DEA apparently received 38,369 comments. In a surprising turn of events, DEA decided to put things on ice and adopt a temporary rule that keeps the status quo for a period of six months. So DEA will essentially allow current flexibilities (there are some nuances I won’t get into here) until November 11, 2023. And for relationships established during the PHE or before November 11, 2023 per the rule, prescriptions may continue through November 11, 2024.

As you can probably guess based on the above, DEA’s temporary rule is still in place. But that doesn’t mean there haven’t been some noteworthy milestones or developments. So let’s dive in:

1. HIPAA is back

Back in April, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) announced that certain COVID-19 flexibilities would expire with respect to Health Insurance Portability and Accountability Act of 1996 (HIPAA). That didn’t all happen at once, and as OCR said:

OCR is providing a 90-calendar day transition period for covered health care providers to come into compliance with the HIPAA Rules with respect to their provision of telehealth. The transition period will be in effect beginning on May 12, 2023 and will expire at 11:59 p.m. on August 9, 2023. OCR will continue to exercise its enforcement discretion and will not impose penalties on covered health care providers for noncompliance with the HIPAA Rules that occurs in connection with the good faith provision of telehealth during the 90-calendar day transition period.

To be clear, HIPAA itself wasn’t waived during the COVID-19 PHE – but certain flexibilities were granted. The bottom line is that as of August 10, they will be gone. The effects of this are too complex to get into in this short post, but I will note that covered providers will need to ensure that they use HIPAA-compliant technology for ketamine telehealth sessions. This could be a big change for a lot of ketamine telehealth who may have used otherwise non-compliant tech.

2. DEA wants your thoughts on ketamine telehealth

On August 7, 2023, DEA published a notice of meeting for “public listening sessions.” The purpose of these sessions is for DEA:

to receive additional input concerning the practice of telemedicine with regards to controlled substances and potential safeguards that could effectively prevent and detect diversion of controlled substances prescribed via telemedicine. Specifically, DEA is inviting all interested persons, including medical practitioners, patients, pharmacy professionals, industry members, law enforcement, and other third parties to express their views at the listening sessions concerning the advisability of permitting telemedicine prescribing of certain controlled substances without any in-person medical evaluation at all, the availability and types of data that would be useful in detecting diversion of controlled substances via telemedicine that are either already reported or could be reported, and specific additional safeguards that could be placed around the prescribing of schedule II controlled substances via telemedicine.

The last clause is kind of important here, and we expect a lot of the discussion to focus on schedule II opioids that present much different risks from ketamine telehealth.

The listening sessions will take place on Tuesday, September 12, 2023, and Wednesday, September 13, 2023, from 9 a.m. to 5:30 p.m. They will be at DEA’s HQ in Arlington, VA, and importantly:

MEETING ATTENDANCE: Persons wishing to attend the listening sessions in person, space permitting, must complete and submit the attendance form available at DEA’s Diversion Control Division website, https://apps.deadiversion.usdoj.gov/ListeningSession, no later than August 21, 2023. There is no fee to submit the attendance form or to attend the listening sessions. In-person This document is scheduled to be published in the Federal Register on 08/07/2023 and available online at federalregister.gov/d/2023-16889, and ongovinfo.gov. Attendance requests will be granted via random lottery among those who have submitted timely attendance forms. The listening sessions will also be livestreamed online.

This is just a shorthand summary of the notice, so if you’re interested in attending or commenting, be sure to give it a good read and mark your calendars!

3. DEA special registry???

In the above notice, DEA further states that:

In addition, several hundred comments specifically raised the possibility of a separate Special Registration for those practitioners who seek to prescribe controlled substances without conducting an in-person medical evaluation of patients at all.

DEA is open to considering—for some controlled substances—implementation of a separate Special Registration for telemedicine prescribing for patients without requiring the patient to ever have had an in-person medical evaluation at all. DEA also observes that making permanent some telemedicine flexibilities on a routine and large-scale basis would potentially create a new framework for medicine that fundamentally expands access to controlled substances in a way that warrants a new framework for accountability based, in part, on increased data collection and visibility into prescription practices in order to ensure patient safety and prevent diversion in near-real-time.

To that end, DEA issued a series of open-ended questions that it may use to evaluate the need for such a registry. If such a registry were created, it may allow registered physicians may be able to prescribe some controlled substances solely via telehealth. This is obviously a big deal, and though it’s a ways away, could spell some major changes for the ketamine telehealth industry.


Stay tuned to the Psychedelics Law Blog for more updates on the ketamine telehealth industry.

The post Ketamine Telehealth: Some More Updates appeared first on Harris Sliwoski LLP.

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