Absinthe

Absinthe is a spirit derived from several plants and herbs, one of which is wormwood. This results in trace amounts of a chemical called “thujone.”

This chemical has historically been blamed for psychosis and hallucinations. However, over the years, its effects were determined to be largely exaggerated.

This 2010 study stated:

The interdisciplinary research presented in this paper shows that (1) absinthism cannot be distinguished from common alcoholism in the medical research literature of the time, and that (2) due to the physical chemistry of the distillation process, the thujone content of vintage absinthe was considerably lower than previously estimated and corresponds to levels generally recognized as safe

However, absinthe was banned in many countries due to its rumored effects and resulting bad reputation. Numerous crimes were claimed to have been caused by absinthe.

This article claims that absinthe was the victim of cheap substitutes that really did have hallucinogens:

A group of chemists from Germany famously pieced together that many individuals who had every reason to believe that it was absinthe in their glass, were not, in fact, drinking absinthe, but rather a cheaply manufactured approximation of absinthe that had been adulterated with other substances – and toxic ones at that.

Some of the prejudice might also have been cultural. The drink was popular with liberal bohemians and the artist community, which carried a negative impression with more conservative members of society. (This Wikipedia page lists numerous artist references to absinthe.)

Bans on absinthe were mostly lifted towards the end of the 20th century.