I think this is a confusion of the observation license and photo license. The Edit license button at the top right of the observation detail page is for the observation license (i.e. the observation itself and presumably in reference to text included in the description). (It’s often helpful if you can provide URLs and screenshots even if it doesn’t seem like it might be necessary.)
I was able to successfully change my observation license from public domain to CC-BY using that button, as well as the photo license to public domain at this page: https://www.inaturalist.org/photos/103039972
This is the text I typically use to ask if someone would be willing to change their photo licensing:
Hi, great photo
(s)! Would you consider changing the photo permissions to CC-BY (“Attribution”) for use on the article about this species on Wikipedia?[link to Wikipedia article]You can change the photo licensing at the following links, top right corner:
[link to actual photo page, e.g.]https://www.inaturalist.org/photos/103039972
[link to other photo page if I'm asking for more than one photo]Alternatively, you can upload them directly at this link: https://commons.wikimedia.org/wiki/Special:UploadWizard
Thanks for considering this request. :)
See also this feature request: https://forum.inaturalist.org/t/improve-viewing-editing-copyright-information-on-observations/308