Psilocybin mushrooms have been sold in dutch "smartshops" since the mid 1990s. In 1997, a police raid looking for cannabis cultivation found a large psilocybin mushroom growing operation and the growers and smart shop owners involved with the production and sale of the mushrooms were charged with violating the hard drugs law which includes the chemical psilocybin. After 5 years in court, the highest Court of the Netherlands (Hoge Raad) ruled in November, 2002, that fresh mushrooms could not be considered "containers" of the controlled chemicals psilocybin or psilocin unless they are prepared for ingestion by drying. Possession and sale of fresh mushrooms under this decision are legal as long as they are not for the explicit intent of ingesting them.

The determination that fresh mushrooms were not strictly illegal has changed the market in the Netherlands and now the psilocybin mushrooms sold in stores are fresh only and are not accompanied by smartshop-produced information about how to ingest them safely, because that information would suggest that they should be eaten and thus make their sale and posession illegal.

The mushrooms now occupy a strange and unique position in the law, because the active chemical in them are listed as "hard drugs", but they have been officially OK'd as saleable products with certain restrictions. The mushrooms are now monitored by the Keuringsdienst van Waren (KvW : 'Inspection Agency for Goods' the Dutch equivalent of the US FDA). For more information about this, see A New Psilocybin World Record : Psilocybin Mushrooms Monitored as Food Products in the Netherlands.

The Trimble Institute of the Dutch Ministry of Health has published a flyer about the effects of psilocybin and of paddo consumption, the flyer is included with the paddo purchase at smartshops, just in case that the customer intends to ingest them. Officially, whoever sells psilocybin mushrooms must include a label which states that they are illegal to sell the mushrooms for the purpose of ingestion. It is a strange interplay of regulations which result in a smartshop owner not being allowed to sell the mushrooms for consumption (by the Ministry of Justice), but strongly encouraged to include details about consuming them by the Ministry of Health. But the KvW is licenced, even obliged, to monitor the quality of 'goods'. In daily practice, the KvW concentrates on consumable goods which could impact public health.

Its useful to keep in mind how psilocybin ended up on the hard drug list in the first place. It was placed into the list of "Hard Drugs" on February 11th 1966, not because of nationwide health problems, but because the anarchist "Provo" group from Amsterdam published a (not very serious) pamphlet in which they announced that they wanted to feed LSD laced sugar cubes to the horses which were to pull the golden wedding carriage of princess (now queen) Beatrix during the wedding. The BVD (Dutch NSA) didn't see the humor of it, organized an emergency meeting of the government and placed all known psychedelic compounds on the hard drug list. The parliament did not pass or approve the change in law, which is of questionable legal validity, but with that order LSD, mescaline, psilocin, and psilocybin were outlawed in the Netherlands. In February 1966, the Dutch government's concern was to get psychedelics illegal as fast as possible. The drug laws simply provided the most easy way to do that. But it was to protect the sanity of a few horses, not of the public health. (references)