Psychedelics sometimes makes people wake up to the abuses of government, so they are pretty scary to governments.

But there's also the issue that not everyone should take psychedelics. They can have lasting negative effects on certain people that may already be experiencing issues with mental stability, or they may trigger such effects in people that don't necessarily know about their own mental wellbeing or how the psychedelic will affect them. These, like every drug, should be used with caution.