- On Nov. 3, Oregonians voted in favor of Measure 109, creating a regulated therapeutic psilocybin program in the state.
- The initiative tasks the Oregon Health Authority (OHA) with creating a program to permit licensed providers to administer psilocybin-producing mushroom products to adults for treatment in the next two years.
- Because there aren't yet any established rules or frameworks, nobody knows what the program will look like exactly— or who the winners of the market will be once things get rolling.
- Business Insider talked to psychedelics companies, and most of them said they're applauding the initiative from afar as the market's regulations become more clear.
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Oregon made history in November when it passed a measure to create a regulated therapeutic psilocybin program, opening the door to what could be the first legal market for psychedelic medications on the state level.
The use of psychedelics as treatments for mental health conditions, as well as for a variety of ailments like opioid addiction and Alzheimer's disease, has been gaining more attention as well as investor dollars over the past few years.
But many psychedelics giants told Business Insider that they're unlikely to dive into the state, citing the unknowns surrounding the program as well as the risk associated with entering a market that's still illegal on the federal level. Instead, they're focused on conducting research on psychedelics-based therapies, with the aim of getting them approved as medicines by the US Food and Drug Administration.
Psychedelics giants say they're unlikely to enter Oregon's therapeutic psilocybin market
"We are really laser focused on our own programs to produce data that can then be used to convince the FDA to approve them for the whole US," said Florian Brand, the CEO of psychedelics company ATAI Life Sciences.
He added that he doesn't see the company getting involved in Oregon's market anytime in the near future.
Oregon voters signed off on the use of some psychedelics-based treatments in the state by voting in favor of Measure 109. The initiative gives the Oregon Health Authority (OHA) two years to create a program to permit licensed providers to administer psilocybin-producing mushroom products to adults for treatment. So far there are very few details about what the program will look like, including which products or medications will be allowed or how many clinics the program will include.
Read more: A major psychedelics company just landed a record sum of cash from VCs. The CEO told us how he raised the mega-round and why it's a sign psychedelics are going mainstream.
Oregon's program has the potential to be similar to some state medical cannabis programs, by allowing broad access to a federally illegal substance. However, unlike medical cannabis programs, Oregon's psilocybin therapy will be restricted to a clinical setting, meaning patients will not be allowed to purchase and take products home with them.
Most companies we spoke with said that while they were encouraged to see popular support and acknowledgement of these substances as medications, they don't want to operate in a grey market akin to cannabis, where a substance may be legal and regulated on the state level yet still illicit on the federal level.
ATAI, which is backed by Mike Novogratz's Galaxy Investment Partners and by Peter Thiel, just closed a $125 million funding round. After winning FDA approval for its treatments, the company wants to ensure that doctors use them and insurance companies pay for them, Brand said.
"What's important for us is really reimbursability and I think that can't be stressed sufficiently," Brand said. "We need buy-in also from the insurance companies, buy-in from the therapists, the doctors and psychiatrists who deliver those therapies."
Read more: Investors are pouring millions into startups that are developing magic mushrooms as medications for conditions like depression and PTSD
Psychedelics company MindMed, which is aiming to move its stock listing to the Nasdaq, says it's on the same page. Operating in a federally illegal market would jeopardize the company's access to investors, said JR Rahn, the cofounder and co-CEO of the company. He's focused on developing treatments that can gain FDA approval, he said.
'It's a step in the right direction'
"We would never probably operate under Measure 109 for the very fact that we intend to be Nasdaq-listed," Rahn said. "We want to do everything in a federally compliant manner and we want bank accounts."
Doug Drysdale, the CEO of Cybin, which is focused on developing a psilocybin-based medication to treat major depressive disorder, said Measure 109 is a good sign of the political momentum validating psilocybin for therapeutic use.
"It benefits everyone in this space and it benefits the patients in particular," Drysdale told Business Insider. "Nothing is going to change overnight, but it's a step in the right direction."
Drysdale said Cybin has reached out to the initiative to offer its moral support and congratulations, but said that so far it hasn't been involved in any detailed discussions around ways that Cybin can enter the market there or help in framing the program's regulations.
Read more: The ultimate guide to marijuana legalization: Here are all the states that passed cannabis reform, the key dates to know, and which stocks could benefit the most.
Ultimately, the company is focused more on its mid-stage clinical trials.
"We've got our eyes on the long game," he said. "Clearly this is a positive step which has been received positively in the industry. Now we're waiting to see what happens next, what the process is for creating the framework."
Oregon's psilocybin program 'didn't seem to have resonated with the business community' before garnering votes
Sam Chapman, the campaign manager who backed Measure 109, said that the main goal of the initiative is to provide services to patients.
"There are plenty of different business opportunities that exist within this model but it's important to keep in mind, we're talking about providing services and helping people," Chapman said. "It's important that people recognize that there are ways to make money in this future psilocybin program but it's incredibly more important in my mind that this program is affordable, accessible, and equitable for as many people as possible."
Chapman said that prior to the campaign it was difficult to get psychedelics companies interested and active in the campaign.
"There were very few currently operating companies that actually took our campaign seriously," he said. "I found it pretty interesting, that it didn't seem to have resonated with the business community yet."
Now that the measure has passed, he says he expects businesses to offer psilocybin treatments.
"You'll be able to come in and make money but I argue you can help the maximum amount of people and make money simultaneously," he said.
One company we spoke with is making plans to enter Oregon.
Field Trip Health, which operates clinics that provide ketamine-assisted therapy, announced soon after Measure 109 passed that the company would set up in Oregon. Field Trip already has clinics offering the treatment in Toronto, New York, and Los Angeles.
Field Trip — which runs ketamine clinics — is making moves to jump into Oregon
To be clear, ketamine clinics are already legal, because they rely on doctors giving an approved drug to patients, and Field Trip isn't planning to offer psilocybin in its clinics until the rules for Oregon's program are established.
Company founder and Executive Chairman Ronan Levy told Business Insider in an email that "being at the cutting edge of, and building the infrastructure necessary to support this emerging industry" has always been central to the company's strategy. "It establishes a strong, defensible first-mover advantage for us, and we expect the same is true in Oregon," Levy said.
Field Trip donated to Measure 109 before the initiative passed earlier this month, according to campaign finance filings on the Oregon Secretary of State's website.
Levy said that Field Trip will plan to build health centers in Oregon that will provide ketamine-assisted therapy while the psilocybin regulations are established. Ketamine is a surgical anesthetic that has some psychedelic properties and Field Trip uses it to treat depression and PTSD.
"This enables us to build our brand, and develop a strong working relationship with the local medical and therapy community," Levy said.
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