Before psychedelics caught the eye of entrepreneurs, they intrigued scientists. After decades of prohibition, researchers resurrected the study of psychoactive substances for therapeutic purposes a few years ago, hoping to find new solutions to a mounting mental health crisis. Now, years into what has been deemed the “psychedelic renaissance,” a growing collection of studies are showing that these substances could become paramount treatments for depression, PTSD, addiction, end-of-life anxiety, and much more.
The U.S. government — which 50 years ago banned psychedelic substances — has started loosening restrictions to allow their study and use. In 2017, the Food and Drug Administration (FDA) designated MDMA a “breakthrough therapy” to treat PTSD, potentially paving the way for full approval by 2021. The FDA also approved ketamine for treatment-resistant depression in 2019 and deemed psilocybin a breakthrough therapy for major depressive disorder.
Psychedelics have been further legitimized as potential treatments for disease by the Johns Hopkins Center for Psychedelic and Consciousness Research, a first-of-its-kind facility in the United States that launched last year. The organization received $17 million in funding from private donors, largely driven by author and investor Tim Ferriss, to exclusively study the efficacy of psilocybin and other substances for a variety of disorders. The center’s establishment marked a turning point for psychedelic research — if one of the most prestigious research institutions was devoting this much to the cause, it must be worthwhile.
But, of course, the use of psychedelics has also become prevalent outside of clinical trials. Many in the tech world are vocal proponents of microdosing or full psychedelic experiences in the name of self-optimization, which has helped tip psychedelics into the mainstream.
The trajectory of cannabis looked pretty similar. After years of the plant being buried under a seedy reputation, legal restrictions began to loosen after new research showed promising medical applications. What followed was an explosion of highly branded, startup-lingo-laden cannabis companies, which pushed the once-illicit drug to the status of luxury lifestyle item. Beauty, beverage, and edible products cropped up everywhere, peppered with health claims that almost seemed beside the point.
Psychedelics are not quite there yet — and may never be. Cannabis is used chronically, making it a bigger opportunity both medicinally and recreationally than psychedelics, which are typically done only a handful of times. Cannabis also produces the nonpsychoactive compound CBD, which is being shown to have a long list of health benefits, opening the market to a wider subset of people — not just those who want to get high. Psychedelics, on the other hand, have no such derivative. As far as we currently know, their effects on mental health come from the mind-altering experience they produce. Removing that psychoactive component may not provide any benefit.
That’s not stopping Arnold and others like him from betting that psychedelics will, in fact, follow a path similar to cannabis, becoming not just drugs that can alter your mind, but potentially part of a lifestyle. This is especially the case for microdosing, which could turn out to be the exception to these rules. A microdose is a small dose of a psychedelic that can barely be felt. Used consistently, many people believe — and some studies show — that microdosing helps boost mood, creativity, and productivity and could even work as an antidepressant. This is the market Silo is tapping into.
Regardless of whether or not psychedelics are the next cannabis industry, investors are catching on to this proposition. Last year saw the formation of Field Trip Ventures, the world’s first venture fund exclusively for psychedelics. German company ATAI Life Sciences is investing in biotech companies working on psychedelic treatments for mental health. Peter Thiel has backed Compass Pathways, a startup setting itself up to become the first legal provider of psilocybin-assisted therapy, and Shark Tank host Kevin O’Leary funded the startup MindMed, which is manufacturing a drug from the psychedelic ibogaine aimed at treating addiction. Earlier this year, MindMed became the first psychedelics company to go public after raising more than $24 million in a pre-public funding round, and Compass’ IPO may be next.
“Those of us that think these could be viable medications want to see them developed and disseminated very broadly to populations that need them… As to whether this is the right time for it, that’s a different question.”
In their quest to dominate the space early, these companies are acting before the medical research is fully established and accepted—and before their products are legal to sell. Though their ultimate goal may be to sell psychedelics at stores like Whole Foods, many of these companies are running clinical trials that they hope can speed up medical demand for psychedelics and, therefore, the process of getting these substances approved for therapeutic use.
Silo Wellness is also partnering on clinical trials to research the efficacy of psilocybin, particularly for soldiers with PTSD. MindMed is organizing clinical trials for addiction treatment. Compass is organizing clinical trials it hopes will validate its plan to develop, brand, and corner the market on psilocybin-assisted therapy in Compass clinics. The startup NeonMind Bioscience is constructing a lab to research psilocybin for weight loss, obesity, diabetes, and heart disease — and then plans to tailor its products to the health claims its trials establish.
While these sound like straight-up health applications, their status as for-profit enterprises helmed by entrepreneurs with no previous experience in the psychedelic space has some worried that these treatments and substances could be exploited.
“Those of us that think these could be viable medications want to see them developed and disseminated very broadly to populations that need them. That in and of itself will involve some form of commercialization,” says Jennifer Mitchell, a psychedelic researcher at the University of San Francisco. “As to whether this is the right time for it, that’s a different question.”