The use of a hallucinogenic drug derived from peyote in Indian religious ceremonies is protected by the Constitution's guarantee of religious freedom, the Oregon Supreme Court ruled today.

The decision involves two former Douglas County drug counselors who were dismissed and denied unemployment benefits for using peyote in Native American Church religious ceremonies.

In its ruling, the state's highest court expanded its 1986 decision in which it held that denying unemployment benefits to the two men, Alfred Smith and Galen Black, violated their constitutional rights to freely practice their religion.

The state had appealed the earlier ruling to the United States Supreme Court, which sent it back to the state court for a definitive ruling on whether peyote could legally be used in religious ceremonies in Oregon under state criminal law.