I think the quote is wrong, because most people who make laws do not have experience with psychedelics, so they wouldn't know or fear the power of psychedelics. Instead, they believe that quotes like the one above are a bunch of hooey that druggies throw out to justify taking drugs.

I would argue that the reality is that the people who make the laws are paternalistic and view drug use (including psychedelics) as a moral failing. Since they are paternalistic, they believe it is the role of government to fight moral failings, and outlaw drug use. This is the same mindset that opposes goverment funding for birth control or sex education.