🍄 Should we compare psychedelics to cannabis?

Psychedelic medicine - driven underground for 50+ years by archaic policy - has proven to be insanely effective in treating addiction and mental health. This feels familiar…

It’s tempting to compare the nascent entheogen market to cannabis. Psilocybin, LSD, DMT - they come from fungi or plants. Granted, they are often synthesized, but the origin is natural (like cannabis). They seem to be better suited to treat chronic mental illness than mainstream, human-manufactured medicines (like cannabis). They’re illegal almost everywhere (like cannabis 20 years ago). 

And yet…they just FEEL different. 

☝️ But first, business models

Cannabis has transitioned from an illicit substance, to a doctor-prescribed medicine in a murky market, to a consumer packaged good, bought and sold at licensed retail establishments. It was a rocky road, but the game is relatively straightforward now.

Retail. Brands. Value props. Easy to digest.

Psychedelics are earlier in their growth, and, as such, companies are focused on a few very different business models, which warrant our review.

🔬 Clinical development

Do you know the stages of clinical development of new medicines? Me neither. Let’s learn together:

Some psychedelic companies are focused on bringing new medicines to market according to the above schedule.

As you can imagine, developing novel medicine for humans is a hugely capital-intensive process. Not only are operational costs very high (for beakers and scientists and such), but the chances that a medicine makes it through to the end (where the profit is) is very low. However, if you manage to make it to a point where your patent-protected product is being purchased, you have a huge TAM and big barriers to entry, so it’s worth the gamble.

To offset the cost, many early-stage entheogen companies going the clinical development route often get through Phase 1 and 2, then partner with a big pharma company to take the reins from there.

Sample companies: Compass, MindMed

🧬 “Out-licensing” new, fancy molecules

Some companies are not keen on spending the time and money to develop fully-realized products - instead, they invest in discovering, validating, and synthesizing novel chemical compounds. Then, they license out the new discoveries to companies that can develop a product and bring it to market.

The foundation of these novel molecules are the familiar ones:

Sample companies: Enveric (formerly MagicMed)

🩺 Therapy

Psychedelic-assisted psychotherapy (or “PAP”) is hard to spell. It is also a promising field where entheogens are used to augment psychotherapy - usually talk therapy. It has shown tremendous promise. From a recent Forbes article:

These kind of clinical data agree with mountains of anecdotal evidence around the power of psychedelic therapy (btw, prehistoric murals depict images of psilocybin trips, suggesting that humans have been successfully integrating hallucinogenics into spiritual ceremonies since before recorded history - this is not a new trend).

Companies are capitalizing on the positive press; most of the operators in the US are focused on ketamine (because you can prescribe it legally), and will open the doors to more compounds as regulations allow.

Sample companies: Field Trip Health 

🍫 Consumer packaged goods

Psychedelic companies, so far, have focused on above-referenced biz models, which will be the primary offering for several years. 

At some point, though, we’ll all get used to the idea of ingesting a new alternative medicine, and companies will - and this is the key - begin to design and manufacture products for casual consumption. Some will be microdosed. Some will pack a punch. There will be different form factors, and flavors, and lots of creative innovations (just like cannabis).

Once the efficacy is proven out, and everyone agrees that it’s a good thing for humanity, those kind of products will become mainstream. 

👩‍💼 The Sentiment from Leadership

So - should we compare psychedelics to cannabis?

CEOs of new(ish) psychedelic companies think not. JR Rahn of MindMed, for a vivid example, said that his company exists to treat mental health, not to enhance your experience at Burning Man.

Not only are they different from a business model perspective - they are also different in the intensity of the experience. If you smoke too much cannabis, you go to bed. If you take too much acid, you blast off to space and experience a 5-hour ego death.

Still, though - as psychedelics evolve, we will get our dosing right. We will develop and sell branded products. We will even buy them at retail. Ultimately, they are plant-based medicines that we can use to improve our mental health - so they’re more similar to cannabis than some might think.

📚 tl: dr

• Psychedelic innovation falls into a few different business models currently:

  • Clinical development

  • “Out-licensing” new molecules

  • Psychedelic-assisted Psychotherapy (“PAP”)

  • CPG (exists underground, will exist at scale)

• Entheogens are more similar to cannabis than we might initially think

• It is Thursday