See the fact that their city has an over abundance of monsters and that alchemy, the main thing that's used to process them the best, is considered forbidden within the last century or so, and that it seems like a legendary alchemist cave from their country leads me to believe that alchemy was forbidden because a small kingdom was starting to get very strong & the other kingdoms and the church ban the practice in order to keep them weak.
Comment by DaoistKaname on The Reincarnated Prince Becomes an Alchemist and Brings Prosperity to His Country - Chapter 3.2
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@DaoistKaname yeahh that always the reason when something like this happened just like hitler did in Germany,US did in iraq and Afghanistan they blame others religious.