Part 1 explained the imperative needs and strong incentives that are driving the legalization of psychedelic drugs
Psilocybin and MDMA have the most-advanced clinical trials and are leading candidates for legalization
Psychedelic Stock Watch offers insights on which will be first to be legalized
Psychedelic drugs have enormous potential to revolutionize mental health care. The mental health treatment market in the U.S. alone is a $300 billion per year revenue pie.
But to commercialize these drugs – and access these revenue streams – these drugs first need to be legalized.
Even a few years ago, that would have been viewed by most as a long shot. Most psychedelic drugs have been legally prohibited for roughly 50 years.
However, as Psychedelic Stock Watch explained in Part 1 of this series, times have changed.
The Department of Defense desperately needs access to better treatment options to address its own Mental Health Crisis.
It’s not a question of if psychedelic drugs will be legalized for medicinal use. Only a question of when.
Clinical studies on psychedelic drugs are generating spectacular results and show clear potential to dramatically raise the standard of care with many mental health conditions. The Psychedelics Revolution.
To unlock this Revolution, first these drugs need to be legalized for medicinal use. While psychedelics (as a class of drugs) show amazing therapeutic potential, it is extremely unlikely that they will be legalized as a class.
What is much more likely is that these substances will be legalized one at a time – with each drug needing to separately demonstrate its own merits and address perceived risks.
Psilocybin and MDMA are leading candidates to be first to be legalized
Psychedelic Stock Watch has been following the legal developments with respect to drug reform. We’re tracking the clinical science. And we are closely monitoring the need (and markets) for psychedelic drugs.
Based on all these factors, we currently see psilocybin and MDMA being clearly in the lead as the first of these drugs to be legalized for medicinal use.
Psychedelic Stock Watch analyzes the Road to Legalization for psilocybin and MDMA, along with when – and where – these drugs will first be legalized. As a North America-based website, we will only examine the legalization dynamics in the United States and Canada.
Undoubtedly, it is psilocybin that has attracted the most media, consumer, and investor attention among all psychedelics. There are many reasons for this.
- Illicit use of psilocybin (both “experiential” and microdosing) is more popular than with other psychedelics
- The media has focused much more attention on psilocybin than other psychedelics
- Several psilocybin-based clinical research programs are well-advanced, most notably Compass Pathway’s (US:CMPS) Phase 2b clinical trial for treatment-resistant depression
- There has been more movement (already) toward psilocybin legalization/decriminalization than with other psychedelics
Psilocybin is the psychoactive substance found naturally in numerous species of “magic mushrooms”. It gained popularity (and notoriety) for its hallucinogenic high among users.
However, in more recent years, psilocybin use is being much more strongly associated with mental health care and health-and-wellness.
Supervised “experiential” doses are being administered in a clinical setting as part of psychotherapy, for those with more acute mental health needs. But larger numbers are already engaging in microdosing of psilocybin to maintain mental health – and for general health-and-wellness benefits.
Such users range from Silicon Valley executives to 75 year-old grannies.
Psilocybin also gets the most media attention out of all psychedelic drugs. Along with articles discussing the use of psilocybin, we see media articles on psilocybin drug development, public companies (like CMPS) pursuing commercial opportunities, and movement toward psilocybin legalization.
Coverage from the mainstream media is uniformly positive, a sharp contrast to MSM reporting on cannabis. In addition to general media coverage, the Renaissance in psychedelic drug research is sparking a wave of coverage in science journals as well.
As noted, Compass Pathways is in a Phase 2b clinical trial for treatment-resistant depression. The FDA has fast-tracked this research by granting it Breakthrough Therapy Designation. This acknowledges both the effectiveness of this therapy and the imperative need for better depression treatments.
Cybin Inc (CAN:CYBN) is beginning its own Phase 2 trial using psilocybin-based therapy. But this is for major depressive disorder, a significantly larger patient population.
Psilocybin R&D is also advancing in a number of other areas of medical research, not all of them related to mental health. As this research broadens and deepens, it adds yet more ammunition for legalization advocates.
Psilocybin remains a Schedule 1 drug at the federal level in the United States. This is the strictest level of criminal prohibition among narcotic substances.
We have seen little federal discussion of psilocybin legalization in the U.S. But (as with cannabis) we are seeing considerable movement at the state/local level.
Several U.S. cities (including Washington, D.C.) have decriminalized the use of psilocybin. The state of Oregon has gone furthest. Oregon has fully legalized psilocybin for medicinal use via voter referendum in the recent U.S. election.
In Canada, psilocybin is a Schedule 3 drug. Still illegal, but with much less-harsh criminal sanctions. Consequently, (black market) psilocybin dispensaries have been more common in Canada.
There has also been some movement in Canada at the local level to decriminalize psilocybin. However, Canadian drug regulation tends to be more of a top-down process — as we saw with cannabis.
Here the psychedelic drug industry is seeing increasingly encouraging signs from Health Canada.
Health Canada has begun granting medical “exemptions” for the medicinal use of psilocybin, generally for palliative care. However, it has been both increasing and broadening these exemptions. This includes permission for several medical practitioners to personally use psilocybin – to assist them in providing better psilocybin-based therapies for patients.
Consequently, it is clearly Canada that is in the lead when it comes to full (national) legalization of psilocybin for medicinal use.
Executives in the industry – like CEO Doug Drysdale of Cybin Inc. – speak confidently about seeing psilocybin legalization in Canada in a similar time frame to regulatory approval of the first psilocybin-based therapies.
The movement to legalize psilocybin is broad-based and proceeding on multiple fronts. In contrast, the road to legalization for MDMA is much more focused. And (ironically) that road leads right through the U.S. Department of Defense.
There has been much less public discussion and media attention regarding the legalization of MDMA (for medicinal use). There has been even less political discussion about legalizing MDMA – in either Canada or the U.S.
As a street drug, MDMA is more commonly known as “ecstasy”, and is said to provide users with a secure sense of well-being.
Its medicinal use (and research) has been most strongly directed toward MDMA-assisted psychotherapy for the treatment of post-traumatic stress disorder (PTSD). The Department of Defense is a very interested spectator in this research.
The U.S. military has its own Mental Health Crisis, bordering on a medical catastrophe. The number of military personnel affected by PTSD is at epidemic levels.
Over 73,000 U.S. veterans have committed suicide in the past 14 years. That’s four times as many deaths as those killed while on active duty.
PTSD and other mental health conditions represent a major attrition rate for the U.S. military. At the same time, a recent report disclosed that 70% of Young Americans are deemed unfit for military service.
The combat readiness of the U.S. military is literally at stake. And MDMA-based therapy seems to be the key to warding off this catastrophe.
Not surprisingly, the Department of Defense is the largest individual donor in funding psychedelic drug research. It has contributed $27 million, specifically to advance MDMA research for PTSD.
The psychedelic drug industry has an extremely important ally when it comes to legalizing MDMA for medicinal use. MDMA also boasts one of the most advanced psychedelics-based clinical trials.
The Multidisciplinary Association for Psychedelic Studies (MAPS) is currently in a well-funded Phase 3 clinical trial for MDMA-assisted psychotherapy to treat PTSD. It has also received Breakthrough Therapy Designation. Research to date has shown clinical progress for ~90% of patients participating in the study.
Mydecine Innovations Group (CAN:MYCO / US:MYCOF) is about to commence a Phase 2 clinical trial on its own MDMA-assisted psychotherapy for PTSD.
Someone taking a quick look at the psychedelic drug industry may see psilocybin as by far the leading candidate among psychedelic drugs on the Road to Legalization.
It has the public and media support. It has the advanced clinical research. It has a host of potential medical applications (and treatment markets). And it has the funding.
MDMA also has the advanced clinical research. It also has the funding. Instead of broad public support, MDMA benefits from one strategically important ally.
Legalizing MDMA in the U.S. would seem to appeal to both the Right and the Left.
For the conservatives, it’s an important (necessary?) tool to maintain the combat readiness of the U.S. military. For liberals, it’s a progressive therapy for a particularly pernicious mental health disorder that currently offers few adequate treatment options.
Consequently, we see MDMA legalization likely occurring in the United States before it comes to Canada.
Given the current, fractured political atmosphere in the U.S., bipartisan support for MDMA legalization would be a highly visible way for the politicians of both parties to rehabilitate their reputations among voters.
Psilocybin and MDMA seem today to be in a neck-to-neck contest to be first to cross the finish line on the Road to Legalization.
It may ultimately come down to which drug is first to get an approved therapy through the regulatory process. Here MDMA has a slight edge.
Legalization of other psychedelics
Once we get past psilocybin and MDMA, it becomes much more speculative in discussing drug legalization.
LSD has many medical applications currently under research. DMT is a rapid onset/short duration psychedelic that offers interesting medical potential.
However, perhaps the inside track on the #3 slot on the Road to Legalization belongs to ibogaine. Ibogaine has unique anti-addiction properties – in a world where over 1 billion people have substance abuse issues with respect to addictive drugs.
Ibogaine-based therapies also have particular potential in combatting the Opioid Crisis, which can only bolster political support for ibogaine legalization.
The legalization of psychedelic drugs is coming. The Psychedelics Revolution is the one (and only) answer to the Mental Health Crisis.
Psilocybin and MDMA currently have the inside track with respect to legalization. However, over the long term we should expect most of these drugs to be legalized for approved medical uses