I’ve heard the theory that the government was nervous about organized antiwar and civil rights groups and spread LSD and hippy culture to try to divert and destabilize them into less political bodies. Is there any credence to this or is it a conspiracy theory?
I can give a fairly short but referenced response.
Acid Dreams by Martin A Lee and Bruce Shlain gives an account of the relationship between Hippie, the CIA and LSD. The authors have trawled through the opened archives of the CIA and complemented this with a sympathetic but not uncritical history of the counterculture.
In short, they don't find evidence that LSD was deliberately used to defuse political movements. The CIA and other US agencies were heavily involved trialling LSD (and other hallucinogens). This included dispensing drugs to witting and unwitting subjects in the field. The CIA also paid very close attention to the effects of LSD and other drugs on the hippie movement. However they had no significant role in producing or distributing the drug and they didn't actively try to use it to disrupt countercultural/political movements.
On the other side of the equation, the promoters, producers and distributors of LSD (and other drugs) appear entirely capable of doing this successfully without government help. In the view of Lee and Shlain, the idea that tripping would lead to a sort of enlightenment and bring down the system was misguided, and did have a negative effect on political engagement, but this was not deliberately encouraged by state agencies to any significant extent.