Psychedelics Regulation and Commercialization: Insights and Updates

  • The current Schedule I classification for psychedelic drugs is legally, medically and logically perverse
  • Even a Schedule II classification for psychedelic drugs would equate them with many extremely dangerous drugs, like opioids, cocaine and methamphetamines
  • What is the optimal classification for psychedelic drugs that would balance necessary prudence with the enormous need for legal access to psychedelic medicine?

Psychedelic Stock Watch has been outspoken about the need to reschedule psychedelic drugs to a legal status that is a rational reflection of their chemical and medicinal properties.

This is part of the general movement toward drug decriminalization that has been advocated by authorities up to and including the United Nations itself.

From an industry perspective, our reasoning has been two-fold:
  1. Keeping psychedelics as Schedule I drugs (the most-restrictive classification) is delaying both drug development and drug commercialization – at a time where there is a critical need for psychedelic medicine to address the Mental Health Crisis.
  2. Rational (i.e. less-restrictive) drug laws regarding psychedelics would go a long way in increasing both corporate and public acceptance of these substances for medicinal use.

The Schedule I roadblock

According to international drug laws, Schedule I narcotics are drugs that “have no accepted medical use” and have “a high potential for abuse”. It is absurd to apply this classification to most psychedelic drugs.

Psychedelics such as psilocybin, LSD and MDMA are demonstrating a large-and-growing number of accepted medical uses, and formal clinical trials are underway exploring dozens of these medical uses.

These psychedelics are non-toxic (people don’t die from overdoses) and they are not physically addictive. A previous clinical study showed that not only are psilocybin and LSD not addictive themselves, but people using those drugs were less likely to develop opioid addictions – suggesting these psychedelics possess inherent anti-addiction properties.

An in-depth study on MDMA by the UK-based Beckley Foundation reported that 93% of MDMA users surveyed were using the drug less than once a month.

In fact, these psychedelics clearly have a low potential for abuse, along with their numerous medical uses.

The Schedule I classification for these drugs is a legal fraud.  And it is a fraud that carries a heavy (and measurable) price.

Maintaining a Schedule I classification hampers drug research and development at every stage of the process.
  • Harder to get approval to legally study these substances.
  • Harder to obtain access to these substances to conduct research.
  • Longer/slower/more expensive to ship these drugs for research purposes.

Then there is the actual cost of purchasing these drugs for medicinal research. In the same study by the Beckley Foundation, it reported that a gram of MDMA that could be purchased on the street for £30 – 40 per gram can cost up to £10,000 for research purposes.

Of course, part of the problem with the street drugs is that the purity of the drug varies greatly, and in some cases there is little actual “MDMA” contained. Even so, the cost for MDMA for legal research is at least an order of magnitude greater than buying MDMA illegally.

That amplifies research costs at every stage of the clinical trials process. In turn, it raises the actual drug and treatment costs once the drug is approved – to recoup those extra expenses. And that will result in lower adoption rates and less people getting treated with MDMA-assisted therapies.

Accelerating the Psychedelics Revolution

The Mental Health Crisis now encompasses two billion treatable (but generally untreated) mental health disorders. This directly leads to 8 million preventable deaths per year.

Increasing bodies of clinical research are showing – unequivocally – that psychedelic medicine represents the only hope in addressing this rapidly worsening crisis.
We have a “mental health crisis” precisely because conventional therapies don’t work. As a result, in the United States alone, one American dies from the Suicide Epidemic every 10 minutes. One American dies from the Drug Overdose Epidemic every 5 minutes.
Every hour that the deployment of next-generation psychedelics-based therapies is delayed more people die.

The Schedule I classification for these drugs doesn’t technically prevent approval and commercialization of these drugs.

In other words, governments like the United States are quite content to allow these drugs to be licensed-and-approved for critically needed medical purposes while it continues to classify them as Schedule I drugs that have no medical purposes.

However, the reality is that many more people will die unnecessarily because these drugs continue to perversely regulated.

PTSD is a national crisis in the United States and a national disgrace with respect to the U.S. federal government -- Democrats and Republicans alike.

Over the past 20 years, over 115,000 veterans have committed suicide, an average of more than 15 suicides per day for 20 years.
The vast majority of those deaths are attributable to (poorly treated) PTSD. Of the veterans receiving treatment for PTSD from the Department of Veterans Affairs, two-thirds report no benefit from treatment.

Currently, the Multidisciplinary Association for Psychedelic Studies (MAPS) has reported results for a Phase III clinical trial for an MDMA-assisted therapy to treat PTSD. Spectacular results.
  • ~90% of participants report some benefit from treatment
  • Two-thirds are effectively being cured of their PTSD

Phase III is the final stage of the clinical trials approval process, so this critically needed therapy will soon be available to veterans through the VA, right? Wrong.

Because MDMA remains a Schedule I drug, the FDA will require MAPS to repeat the trial before granting approval. That means likely another two years (or longer) before final regulatory approval is obtained.

At present, an average of 22 veterans per day are committing suicide. This means that two years from now, another ~15,000 veteran suicides will be added to this ongoing tragedy.

What will Joe Biden say to the survivors of these 15,000 veterans when they ask him why he couldn’t be bothered to reschedule MDMA today to save those lives?

An alternative regulatory perspective

With the significant cost/supply issue for pharmaceutical-grade MDMA for research purposes, one company (soon to go public) is already stepping into that void.

Private company PharmAla Biotech has commenced producing GMP pharmaceutical-grade MDMA for the psychedelic drug industry. Psychedelic Stock Watch recently had the opportunity to speak to CEO Nick Kadysh.

Kadysh is confident that PharmAla can start producing cashflow with its MDMA production within 15 months. And the company plans on using some of the MDMA it produces for its own development of novel molecules. PharmAla is looking to go public some time toward the end of 2021.

Kadysh also had some interesting insights to share on the regulatory front for psychedelic drugs. Certainly, the PharmAla CEO is someone who can speak with authority on the subject.

In previous time he spent working with market leaders like Juul and RedBull, drug regulation (especially with respect to minors) has been a thorny issue. This has led Kadysh to develop a more conservative attitude toward, in particular, psychedelic drug rescheduling.

Kadysh’s primary fear? That moving too fast to liberalize drug laws for psychedelics could return society to a paradigm similar to what existed in the late 1960s. Exuberant “experimentation” with psychedelic drugs (epitomized by psychedelics guru, Timothy Leary) led to an Establishment backlash.

The result was (and is) 50 years of drug Prohibition.

Kadysh councils caution for industry advocates wanting (for many good reasons) to see broader access to psychedelics. He would rather see the successful rollout of several licensed-and-approved psychedelic drugs -- even with current drug scheduling still in place -- before governments begin to broaden access.

Once these medicines become established in our healthcare systems, Kadysh believes that the possibility of some new Prohibition movement would be greatly reduced.

Is there a middle ground on drug reform?

Urging “caution” with respect to reform of obsolete drug laws will be a bitter pill to swallow for many advocates of psychedelic drugs – who are fully focused on the costs (each day) of continuing to heavily criminalize these substances.

Some authorities advocating for psychedelic medicine, including the Beckley Foundation, urge that psychedelics be reduced to a Schedule II classification. A Schedule II classification maintains the definition of drugs “with a high potential abuse”, but drops the additional criterion of “no accepted medical use”.

By implicitly acknowledging that Schedule II substances do have valid medicinal uses, this places less restrictions on importing/exporting as well as licensing for research purposes. It greases the wheels, at least slightly, for conducting formal research.
Ironically, dangerous drugs like cocaine, opioids, methamphetamines, and the most hazardous/addictive -barbitals already receive this less-restrictive classification.

The same governments that won’t loosen the regulatory chokehold on psychedelics to allow psychedelic medicine to be used to treat the Opioid Crisis also won’t increase regulatory restrictions on opioids themselves.

It makes one wonder how serious these governments really are about reducing the carnage from opioid-related overdoses.

Reducing restrictions on psychedelic drugs to a Schedule II classification is a step in the right direction, but is it enough? These safe psychedelics would continue to be classified as substances with a high potential for abuse – and still be falsely equated with a long list of extremely dangerous drugs.

Even a Schedule III classification would continue to label psychedelics as substances with “high abuse potential, moderate to low physical dependence, and high psychologic dependence potential, with acceptable medical uses”. That would still seem to overstate the risk presented by the safest of the psychedelic drugs, like psilocybin, LSD and MDMA.

Psychedelic Stock Watch would like to see psilocybin, LSD and MDMA (in particular) reduced to a Schedule IV classification. Schedule IV drugs are defined as drugs with “minimal abuse potential, limited physical or psychologic dependence potential, nonnarcotic”.

This would seem to be the most factually accurate Schedule for the safest of the psychedelic drugs. Drugs currently listed as Schedule IV substances include the less-dangerous -barbitals as well as other sedatives with a lower abuse potential.

Schedule IV drugs are drugs that are not intended to fall into the hands of minors, especially younger children. The sedatives on this list are capable of causing serious harm (even death) from accidental overdose – and are thus arguably still more dangerous than psilocybin, LSD or MDMA.

A Schedule IV classification continues to place restrictions on general manufacturing, shipping and distributing these drugs. But it provides minimal restrictions for valid medicinal and research purposes.

Presumably, a Schedule IV classification would allow MAPS’ proven successful therapy for treating PTSD to be approved – and starting to save lives -- immediately. Not two years (or longer) down the road.

The caution of industry insiders like Nick Kadysh toward the rescheduling of psychedelic drugs is understandable. No one wants to see psychedelics banished back to some regulatory ‘deep storage’ because drug-phobic governments overreact to more liberal usage of these substances.

However, the genie is already out of the bottle. The drug Prohibition fictions peddled by our governments that drugs like psilocybin, LSD and MDMA carry dangerous risks are now known to be false by a large-and-increasing segment of society.

The current ultra-restrictive Scheduling of psychedelic drugs is now doing little to discourage or prevent illicit use. But (as noted with the MAPS clinical trial) it’s still producing a major impact on legitimate drug development.

Ironically, the primary “danger” today associated with illicit use of psilocybin, LSD, or MDMA is that illegal supplies of these drugs are tainted with contaminants, or ‘cut’ with substances more hazardous than the drugs themselves.

In other words, it has now become completely impossible for governments or other regulatory authorities to argue that the current Scheduling of psychedelic drugs is for the “protection” of society.

Keeping these drugs as Schedule I substances kills people every hour of every day by delaying the development and commercialization of psychedelic drugs.

Keeping these drugs as Schedule I substances is also killing people by exposing them to untested/unapproved black market products (i.e. the tainted vaping crisis caused by black market cannabis products).

Decades of neglect by our governments with respect to mental health has led to a mental health pandemic that is rapidly spiraling out of control.

Regulatory baby-steps are not enough. We need rational drug laws – today.
FDA approved 2 (cover) by Maksym Yemelyanov is licensed under Adobe Stock


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