It is found in the northwestern North America from British Columbia, Canada to Los Angeles, California, most commonly within 10 miles (16 km) of the Pacific coast.

Borovička received material collected from Seattle, Washington, which he noted was microscopically similar to Psilocybe cyanescens, but lacked the wavy cap margins characteristic of that species.

[1] In previous publications,[4][5] Borovička had noted that both macro- and microscopic characters of certain Psilocybe species were highly variable, which could also account for the differences observed in the Seattle material.

However, DNA sequencing revealed a 5-base pair change in the internal transcribed spacer regions (a segment of RNA often used in molecular phylogenetics to identify or distinguish fungal species) between P. cyanescens and the Seattle collections.

[1] Additional molecular studies published by Borovička and colleagues in 2015 identified P. azurescens, P. cyanescens, P. weraroa, P. cubensis, and P. serbica as closely related to P. allenii.

[6] It is commonly called "Psilocybe cyanofriscosa" in the online mycological community, but this name is grammatically incorrect Latin and has never been validly published in scientific literature.

Some of these collections he sent to Mexican Psilocybe specialist Gastón Guzmán, who initially thought them to be P. cyanescens because of their overlapping spore size ranges.

Gills have an adnate to sinuate attachment to the stipe, and are initially cream to pale gray brown, but become dark purple as the spores mature.

The pleurocystidia (found on the gill face) are common; they are broadly club-shaped but taper to a point (sometimes with a rounded tip at the end), and measure 25–35 by 9–14 μm.

The closely related P. cyanescens is indistinguishable by microscopic characteristics, but features a wavy cap in maturity, a longer fruiting season (from late September through April), and lacks a ring zone on the stipe often seen in P. allenii.

The authors also note that the Australian P. subaeruginosa is similar (including two taxa that have since been synonymized: P. australiana and P. eucalypta) but suggest that further research is required to better understand the delimitation of this species complex.

[1] Psilocybe allenii is found in the northwestern North America, with a range extending from British Columbia[7] south to Los Angeles, California.