With a watchful eye on shifting regulatory landscapes throughout North America, how might investors or operators interpret proposed or enacted loosening of drug restrictions and the impact on psychedelic business?
This two-part series examines the commercial implications of regulatory frameworks and proposed changes in North America.
Part 1: Paths and Parallels
When looking for historical comparisons to help understand how and when psychedelics will be permitted for scaled commercialisation in North America, the most natural point of reference for many is found in the cannabis industry.
Not so fast, though, say Jeffrey Merk and Sherri Altshuler, partners at Toronto-based law firm Aird & Berlis LLP. The two industries are not as similar as they may appear on the surface.
A previously illicit substance in Canada, cannabis was ushered into full federal legalisation in 2018, for both medical and recreational consumption. The drug had been authorised for medical use years earlier, under a series of legislations that permitted patients to access cannabis for medical purposes from a licensed producer. Widespread patient access – and the birth of a colossal legal cannabis industry – stemmed from a series of legal challenges, including a landmark Supreme Court decision.
And while the Canadian government is facing a handful of legal challenges with respect to psychedelics, current allowances to permit the consumption of psychedelics fall under Section 56. At present, Canadian law allows for ministers of health to grant any person or class of persons access to a controlled substance if deemed necessary for medical purposes. Today, roughly 30 patients in Canada have been granted exemptions for treatment-resistant depression and end-of-life therapy. Physicians and practitioners are also permitted to apply for the exemption to help inform their approach to treatment.
‘The big thing will be enactment. Will the government actually put forth legislation or will they continue to rely on exemptions? What we’ve seen to date is a very clear message that they will be relying on exemptions,’ Altshuler said.
Despite the current fervour of commercial psychedelic activity in North America and an apparent business opportunity, it is likely the government will only be swayed in its decision to modernise access laws by persuasive medical research, Merk said.
‘The government won’t be particularly persuaded by demands from the business world… science and research will drive the results I think most people in the sector are expecting. When you combine that with the political groundswell and grassroots movements, both in Canada and the United States, those things will combine to encourage and put pressure on the government to move to some legislative change.’
‘Decriminalisation measures in certain US states in recent months, and calls to end the War on Drugs, have given hope to those advocating for criminal reform around psychedelics, though those actions won’t necessarily lead to immediate medical commercial benefit,’ Merk cautioned.
‘It’s unlikely that any individual piece of legislation will be a game-changer for business… all these activities at the city, state and federal level in the United States and in Canada are all bits of evidence leading to the broader medicinal commercialisation of psychedelics, but I don’t think at this particular point that there’s enough groundswell or political capital built up to have that happen quickly.’
PART 2: Threats or Opportunities?
But what does the narrow channel of exemption-based access mean from a commercial perspective? And what are the quickest paths to market under the current legal framework in North America?
Part 2 of this series examines the opportunities posed by current regulations, and how companies are taking advantage today.