There are many problems to solve in the game, and "the role of the Peeping Eye of Yog-Sothoth's Courtyard" is one of them. If you don’t know how to deal with this common problem, you might as well take a look at the detailed content compiled by the editor. I believe it will be helpful to you.
After using it, San will be dropped (used in alchemy and warehouse), and can be sold (San will not be dropped).
There are some item recipes that use this, and you can also actively use it to reduce sanity (low sanity adds to the hotel's income, and some guests only buy it at low sanity)