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Psychedelic therapeutics market may receive federal approval before cannabis does

In a recent interview, Palo Santo cofounder and partner Tim Schlidt stated that he believed that the federal legalization pathway for psychedelics was much smoother than cannabis’ approach. Palo Santo is a psychedelic investment fund, and Schildt has been working to help increase the supply of clinically effective and accessible addiction and mental health treatment solutions.

This comes as psychedelic therapeutics gain more recognition in the mainstream medical space. However, there’s still concern that these treatments may have negative outcomes in the longterm.

When asked about whether the psychedelic therapeutics market could in the future outpace the marijuana market, Schlidt stated that from a market sizing standpoint, if marijuana could replace alcohol, its market potential would be huge. However, he continued, from a regulatory perspective, the psychedelic market would most probably outpace marijuana, as the pathway to federal legalization for this particular market was much better than the approach being taken by the marijuana market.

Schlidt explained that this was despite the now-prescribed medications such as Xyrem, Syndros, Marinol and Epidiolex, which were rescheduled after receiving approval from the FDA. If marijuana was to achieve federal legalization, he continued, most states would have to give up their tax revenue generated from the marijuana market, which was easier said than done.

Schildt explained that he expected to see a complex patchwork of federal regulations vs. state regulations for the federal legalization of marijuana, which isn’t what the psychedelics market would deal with. He argued that the psychedelics market would definitely outpace the marijuana market in terms of its timeline to market given the advancements that had already been made.

For instance, Compass Pathways is advancing a psilocybin treatment for the management of treatment resistant depression, which will likely hit the market in 2025. MAPS is also advancing an MDMA treatment for post-traumatic stress disorder, which will probably hit the market next year.

Schlidt noted that we’d see psychedelic treatments being prescribed for various medical applications in a couple of years. With regard to concerns about the potential for abuse of psychedelics, he stated that psychedelics were much better than most known medications prescribed for a number of indications. He then explained that, for classic psychedelics such as psilocybin, mescaline and LSD, there is no physical dependency because these drugs were serotonin based instead of dopamine based, which means they didn’t induce addictive behavior. Medications that activate an individual’s reward system, which operates on the dopamine neurotransmitter, tend to have more potential for abuse.

Given the fact that leading psychedelics industry companies such as Cybin Inc. (NYSE American: CYBN) (NEO: CYBN) have opted to focus on the medicinal rather than recreational use of psychedelics, there is likely to be less resistance to the legalization of psychedelics since their administration will occur in clinical settings only.

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