Move over, maple syrup. Canada this week marked a significant development in the medical psychedelic drug industry by licensing a startup to export these substances to Australia for patient treatment.

Optimi Health Corp. (OTC: OPTHF), a Vancouver-based company, announced on June 3 that it had received a drug establishment license from Canada’s health department, allowing it to ship pills containing psilocybin (the psychoactive ingredient in “magic mushrooms”) and MDMA (aka ecstasy) to an Australian provider.

These substances, typically controlled and illegal in Canada and elsewhere, are being recognized for their potential in medical treatments.

In 2023, Australia became the world’s first country to allow the drugs psilocybin and MDMA to be prescribed by doctors to treat psychiatric conditions. With this license, Optimi Health aims to establish an early presence in the growing industry.

This news in the Great White North is further evidence that psychedelic drugs are becoming Big Business around the world.

To date, seven companies in Canada have legally exported psilocybin and MDMA for clinical trials. So, are psychedelics legal in Canada? The answer is complex: not really, but it varies depending on the context.

In Canada, the term “psychedelics” refers to a variety of regulated plants, fungi, and chemicals classified as controlled substances under the Controlled Drugs and Substances Act (CDSA). The CDSA categorizes these substances into different schedules based on their assessed risk, ranging from Schedule I, considered the most dangerous, to Schedule IX.

Most psychedelic substances fall under Schedule III, except for ketamine and MDMA, which are classified as Schedule I. However, not all psychedelic-containing plants are illegal. Some Schedule I substances are accessible in high-end private clinics for a hefty fee, while certain Schedule III psychedelics have become available to qualifying patients under medical supervision.

A burgeoning industry of Canadian psychedelic companies, supported by over $289 million in venture capital, is authorized to produce psilocybin, LSD, mescaline, DMT, and MDMA with a “dealer’s license.”

Currently, these companies are restricted to selling these substances for research purposes to a limited but growing number of Health Canada-approved studies.

The market for these psychedelics is clinical rather than recreational, differing from the cannabis legalization trend seen in Canada and many U.S. states.

Permitting the use of psychedelics such as psilocybin to treat mental ailments is popular throughout Canada, as shown by the results of a recent national survey (see chart).

The psychedelics market is on a meteoric rise. In the U.S., psychedelics are federally banned but they’re increasingly legal at the state and local levels. In the November 2024 elections, initiatives to loosen prohibitions against psychedelics will appear on several state ballots.

Analysts project the global psychedelics market is on track to reach $10.75 billion by 2027, reflecting a compound annual growth rate (CAGR) of 12.36% from 2021. This growth is driven by increasing clinical evidence supporting the efficacy of psychedelics in treating mental health disorders, alongside a more progressive regulatory environment.

Investors are eyeing the psychedelics sector with increasing interest. Unlike traditional pharmaceuticals, psychedelics offer novel treatment pathways for conditions such as depression, PTSD, anxiety, and addiction. This unique value proposition, combined with the high unmet need in mental health treatment, makes psychedelics a compelling investment opportunity.

The success stories emerging from early-stage clinical trials are adding momentum. The mainstream acceptance of psychedelics is evident in the increasing number of publicly traded companies.

As of now, there are over 50 publicly traded psychedelic companies in the world, each vying for a piece of this lucrative market. These companies are backed by substantial research and development (R&D) efforts, aiming to bring psychedelic-based therapies to market.

This proliferation of public companies highlights the high stakes involved. With substantial amounts of capital being funneled into R&D, the potential for significant returns is drawing in a diverse range of investors.

Key Qualities for Investors to Consider

Investors looking to enter the psychedelics biotech sector should consider several key factors:

• Clinical Pipeline: A robust and diverse clinical pipeline is critical. Companies with multiple compounds in various stages of clinical trials are better positioned to mitigate risks and capitalize on successful outcomes.
• Regulatory Pathway: Understanding the regulatory landscape and a company’s strategy to navigate it is crucial. Companies with clear regulatory pathways and strong relationships with health authorities are more likely to succeed.
• Scientific Validation: The scientific rigor behind a company’s research is paramount. Investors should look for firms with peer-reviewed studies and partnerships with reputable research institutions.
• Management Team: The expertise and experience of the management team can significantly influence a company’s trajectory. A strong team with a track record in biotech and pharmaceuticals is a positive indicator.

As this sector continues to evolve, it holds the promise of not only substantial financial returns but also profound societal benefits.

Read This Story: Cannabis and Crypto: The “Disruptive Duo”

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John Persinos is the editorial director of Investing Daily.

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