Initiative 301 will decriminalize the possession or use of the mushrooms by locals who are at least 21 years old. Results will be certified May 16.
The citizen initiative on the ballot followed the same tack taken by marijuana activists to decriminalize pot possession in 2005 in the city.
While research has reported that mushrooms actually help treat anxiety and depression in cancer patients, with users describing powerful and positive spiritual experiences, the federal government still classifies psilocybin as a Schedule 1 drug, and considers them to have no medical objective with a high potential for abuse.
Adoption of the new law once again puts Colorado at the forefront of American drug legalisation after it became one of the first two states to legalise marijuana in 2012.
According to the European Monitoring Centre for Drugs, hallucinogenic mushrooms are "psychoactive fungi containing hallucinogenic compounds, most commonly psilocybin and psilocin".
Denver's mayor and top prosecutor opposed the initiative, but there was no organized campaign against decriminalization. It is classified as Schedule 1 substance by the US Drug Enforcement Administration along with drugs like heroin, marijuana and LSD. He suggested it would move Denver closer toward becoming "the illicit drug capital of the world". But recent research has suggested psilocybin could be potentially used to treat anxiety, obsessive-compulsive disorder, depression, and alcoholism.
After years of suffering and not finding a solution, Matthews said friends introduced him to psilocybin mushrooms.
The group also argues that "One arrest is too many for something with such low and manageable risks for most people, relative to its potential benefits".