Nov 28, 2023 - News

Fix may be needed so psilocybin research grant recipients don't lose cash before deadline

A large ziplock bag full of long stemmed mushrooms with laboratory equipment in the background.

Hallucinogenic mushrooms in a Portland, Oregon, lab. Photo: Moriah Ratner/Bloomberg via Getty Images

The Arizona Department of Health Services (ADHS) believes recipients of grants under a new program for psilocybin research in this year's state budget could have mere months to use it if lawmakers don't act quickly.

Context: The budget gave $5 million to ADHS for researchers to do clinical studies on the hallucinogenic mushrooms for medicinal purposes.

  • Grant recipients will study the effects of "whole mushroom psilocybin" on post-traumatic stress disorder, long COVID symptoms, depression, anxiety, chronic pain and other afflictions.
  • The Psilocybin Research Advisory Council that lawmakers created will begin accepting applications on Dec. 26, and ADHS must award grants by Feb. 1.

Yes, but: The department's top procurement official told the council during its inaugural meeting Tuesday that it was her understanding that recipients must spend the money by June 30, the end of the 2024 fiscal year.

  • Because the Legislature didn't include language in the budget that makes the appropriation non-lapsing, ADHS can't reimburse grant recipients for expenses incurred after the fiscal year's end, the agency told Axios Phoenix. Lapsing appropriations typically revert to the general fund at the end of each fiscal year.
  • One council member said spending the grant money by June 30 isn't feasible because it probably would take recipients much longer to screen subjects and conduct clinical trials.

The other side: Legislative budget analysts believe the money is considered spent once it's awarded, and therefore won't revert to the general fund on June 30.

  • However, ADHS spokesperson Siman Qaasim said the grants are for cost reimbursements and recipients don't get money from the agency until they seek repayment for specific expenditures, so unused money would revert to the general fund at the end of the fiscal year unless the services were already rendered.

Why it matters: An emerging body of research indicates that psilocybin is an effective treatment for a variety of medical problems.

State of play: Rep. Kevin Payne, a Peoria Republican who asked that the grant program be included in the budget, said he wants to run legislation that would extend the deadline to use the money.

  • Payne said he learned of the issue in August, after the Legislature adjourned sine die, so it was too late for lawmakers to address it.
  • House Speaker Ben Toma and a spokesperson for Gov. Katie Hobbs did not respond to Axios' requests for comment.

Reality check: The state faces a projected $400 million budget deficit, and Payne worries the $5 million could be clawed back as lawmakers try to resolve the crisis.

  • He also questions whether he'll have enough support from legislative colleagues to make the change, though suspects he'll be fine if he gets enough votes from Democrats.
  • The bill will almost certainly need a two-thirds supermajority in each chamber to go into effect before the fiscal year ends.
  • Payne is hoping support from the veterans community will help push his bill over the top, noting, "That's who this is for."

What they're saying: Sue Sisley, a researcher who studies the drug's effects and is federally licensed to cultivate whole mushrooms, called the situation a "nightmare."

  • She questioned whether researchers will spend hundreds of hours putting together a hundred-page application for funding that might evaporate next June.

The intrigue: Melissa Tew, of the nonprofit Balanced Veterans Network, is skeptical the Legislature can muster the votes to make the needed change, and she questioned whether there's a way for the council to "get creative" in terms of where the money is stored.

  • One member of the public who spoke at the meeting wondered whether it could be placed into an escrow account to ensure it's available for recipients as needed.

What's next: The council is expected to convene next on Feb. 8, though some meeting attendees urged members to meet again before the opening of the application period on Dec. 26.


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