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Current federal law still classifies many natural medicines to be illegal drugs, despite research and centuries of evidence of therapeutic use by cultures around the globe. In recent years, Colorado has taken bold steps to reframe its laws on natural medicine, including psychedelics, setting a precedent for how these substances are regulated for personal use.
Colorado’s Proposition 122, Senate Bill 23-290, and regulations created in 2024 by state agencies (Division of Regulated Agencies and Department of Revenue) provide the framework for the state’s novel approach to natural medicine, making Colorado one of two states at the forefront of such legislation next to Oregon. Let’s break down what these laws entail as it relates to Personal Use, and how they impact individuals and businesses in Colorado.
Proposition 122: The Path to Legalization
In November 2022, Colorado voters approved Proposition 122, also known as the Natural Medicine Health Act. This initiative legalized the personal use, possession, and growth of certain natural psychedelics for adults over the age of 21. These substances, derived from plants and fungi only, include psilocybin (found in "magic mushrooms"), ibogaine, mescaline (excluding peyote), and dimethyltryptamine (DMT).
Under Proposition 122, it’s legal for individuals to:
Possess, grow, and share these natural medicines for personal use (but not to sell them),
Use these substances in private settings without criminal repercussions, and
Participate in licensed healing centers, where trained facilitators can administer these substances in a controlled, supportive environment.
The passage of Proposition 122 marked a significant cultural and legal shift. Rather than treating psychedelics as controlled substances subject to severe criminal penalties, Colorado now views them as potential tools for health and wellness. However, the law is not without restrictions and requirements, which were further clarified by subsequent legislation.
Senate Bill SB23-290: Establishing the Framework for Regulation
Following Proposition 122, the Colorado Legislature passed Senate Bill 23-290 in 2023, a measure designed to implement and regulate the natural medicine framework established by Proposition 122. SB23-290 set guidelines for creating the regulated natural medicine program and established the Natural Medicine Advisory Board to oversee regulatory and safety issues.
While SB23-290 allowed the establishment of healing centers and directed regulations be created for commercial cultivation, manufacture, and testing, it doesn’t allow for the commercial sale of psychedelics outside of these licensed settings. This new regulatory framework could offer opportunities for entrepreneurs in the wellness and healthcare industries while adding compliance challenges typical for highly-regulated fields.
Read on for more on rules surrounding unlicensed business opportunities that support the personal use rights provided under Colorado law.
Personal Use Implications for Individuals and Businesses
For Colorado residents interested in personal growth or therapeutic use, these laws provide unprecedented access to natural medicine, but it's essential to understand the rules to avoid legal issues. The definition of personal use is multifaceted and not at all what you would expect –
Under Colorado law, Personal Use is defined as:
The consumption or use of natural medicine; OR
The amount of natural medicine a person may lawfully possess, cultivate, or manufacture that is necessary to:
Share with another person who is 21 years of age or older; AND
Within the context of counseling, spiritual guidance, beneficial community-based use and healing, supported use, or related services.
Under Colorado law, Personal Use does NOT mean:
The sale of natural medicine for remuneration;
The possession, cultivation, or manufacture of natural medicine with intent to sell; or
The possession, cultivation, manufacture, or distribution of natural medicine for business or commercial purposes, except if you are a licensed natural medicine business or facilitator.
The law goes on to say that these definitions do not prohibit receiving remuneration for bona fide harm reduction services or bona fide support services used concurrently with the sharing of natural medicine, provided that there is (1) no advertisement related to the sharing of natural medicine or the services provided, and (2) the individual providing the services informs an individual engaging in the services that the provider is not a licensed facilitator.
While Proposition 122 legalized natural medicines for personal use, in doing so it created a number of criminal laws as guardrails – in other words, it’s not just ANYTHING GOES with regard to the personal use of natural medicines. Colorado Revised Statute 18-18-434 lays out offenses relating to natural medicines, including the limitations on how and where natural medicine can be grown or processed for personal use. It also provides certain protections under the law, for example, it states that a local government shall not adopt, enact, or enforce any ordinance, rule, or resolution imposing any greater criminal or civil penalty than provided by state law or pass a law that is otherwise in conflict with state law.
“Unless expressly limited by this section, article 170 of title 12, or article 50 of title 44, a person who, for the purpose of personal use and without remuneration, possesses, consumes, shares, cultivates, or manufactures natural medicine or natural medicine product, does not violate state law, or county, municipality, or city and county ordinance, rule, or resolution.” C.R.S. 18-18-434(5)(a).
Remuneration means “anything of value, including money, real property, tangible and intangible personal property, contract rights, choses in action, services, and any rights of use or employment or promises or agreements connected therewith.” C.R.S. 18-18-102(31).
While Proposition 122 and SB23-290 don’t permit the direct sale of natural medicine outside of licensed healing centers, they create avenues for ancillary businesses to offer complementary services that don’t involve the actual sale or distribution of natural medicines. Remember, the above definitions and guardrails around the personal use of natural medicine are found in Colorado’s criminal law statutes. That said, there are ample opportunities for other bona fide harm reduction or support services to support person use. Some potential business ideas include educational and community resources; selling materials to support home cultivation of natural medicines like spores and substrate; wellness retreats and safe spaces; event planning; and consulting on regulatory compliance, cultivation and manufacturing natural medicine products.
Compliance and Legal Considerations
Colorado’s regulatory framework emphasizes health, safety, and education, which are essential for any ancillary business to consider. Here are some key compliance areas to keep in mind:
Adhering to Licensing Boundaries: Businesses that do not hold a license as a healing center or facilitator must be cautious not to engage in any activities that could be interpreted as dispensing, facilitating, or otherwise administering natural medicines. The Natural Medicine Code does not permit the retail sale of natural medicine under any circumstances. Providing supportive services rather than substance access is crucial to staying within legal parameters.
The Natural Medicine Division has statutory authority to enforce the Natural Medicine Code. If they receive reports of alleged natural medicine sales, they will take measures to investigate. This could result in a cease and desist letter, administrative censure to be banned from holding a natural medicine license in the future, civil lawsuit by the Attorney General of Colorado that could result in significant fines, or even criminal prosecution.
At RZA Legal, we are trailblazing business, regulatory compliance, licensing and policy attorneys. If you have an idea for an ancillary business and want to discuss lawful strategies, you can rely on us to give informed and ethical representation. If you want to seek a licensed healing center, we are an excellent resource to help with many steps along the way including:
business entity formation
compliant financing and ownership structures
commercial real estate needs
business licensing
regulatory compliance & SOPs
vendor and intellectual property licensing contracts
employee issues, and more.
BUT - We do not represent clients facing criminal charges of any kind, including those stemming from commercial activities involving natural medicine.
Health and Safety Protocols: Businesses offering services like natural medicine use education or wellness retreats should establish clear health and safety protocols. Utilizing industry best practices for participant safety can help prevent liability issues and help create a positive reputation.
Educational and Ethical Standards: Ancillary businesses have a responsibility to promote the safe, respectful, and informed use of natural medicine. Education programs, for example, should emphasize ethics, cultural sensitivity to the historical and indigenous uses of natural medicines, and awareness of potential psychological effects to ensure participants are prepared and informed.
Data Privacy and Confidentiality: For services involving personal health information, such as integration counseling or coaching, strict privacy practices must be in place to protect clients’ confidentiality, including compliance with applicable health privacy laws like HIPAA, when relevant.
Next Steps for Interested Entrepreneurs
Stay Informed: Colorado’s regulations around natural medicine will likely continue to evolve as more research emerges and the industry matures. We are already seeing proposed legislation attempting to impact the laws and rules that were adopted surrounding natural medicine just last year, and we don't even have any healing centers open yet (as of the date of publication in January 2025) Regularly reviewing state guidelines, attending industry events, and staying abreast of the latest research on the use of natural medicines can help you stay informed and compliant.
Establish Clear Policies: Create detailed, compliant operating policies tailored to your business model, covering areas like staff training, client screening, inventory management, if applicable, and incident management. A strong internal policy framework will support safety, reduce liability, and help clients feel secure utilizing your services.
Network with Established Practitioners: Connecting with existing healing centers in Oregon, therapists, and industry associations can provide insight into best practices and ethical standards, as well as facilitate referrals and partnerships as your business grows.
Seek Legal Guidance: Before launching a business in this field, consult with a legal expert familiar with Colorado’s natural medicine laws and regulations (including Proposition 122 and SB23-290). We can clarify specific requirements and potential liabilities. This step can help you structure your services to remain compliant and prepared. Consider teaming up with RZA Legal to have your questions answered.
By focusing on education, compliance, and participant well-being, ancillary businesses can serve valuable roles in Colorado’s evolving natural medicine space. With thoughtful planning, businesses can remain within legal boundaries while helping to meet the growing demand for natural medicine experiences in a safe and responsible way. Schedule a consultation with us if you are mulling over ideas for an ancillary business in the natural medicine ecosystem or you have questions about your rights to personal use of natural medicine under Colorado law.
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