Psychedelics Market Forecast: 3 Top Trends That Will Affect Psychedelics in 2023

1. If a psychedelic drug is approved, what's next?

Clinical trials have a gigantic role to play in the progress of the psychedelics business. These trials are set to essentially make or break the industry's viability, and have the potential to generate huge momentum for publicly traded companies.

Right now, the industry is waiting for companies to receive their first approvals so that they can move past clinical trials and forward to the next stage of drug development: commercial availability.

Maria Velkova, managing partner at Tabula Rasa Ventures, told INN a lot of uncertainty is still present in the story for psychedelic medicines. The investment expert, who has a decade-long background in the pharmaceutical industry, said since so much attention is paid to drug development, commercial rollout can be cast aside despite being just as important.

“Most people in the space have never launched a drug before or haven't worked in Big Pharma,” Velkova said.

She expects the rollout of psychedelic drugs to be the biggest challenge yet for the industry.

When asked if difficulties caused by a lack of experience in drug rollout could be eased by acquisitions from pharmaceutical corporations, Velkova said the Big Pharma model has morphed into a commercial engine rather than a drug development model.

“I think Big Pharma is really waiting for us to build out the entire infrastructure, because this is a completely new infrastructure … there are so many aspects of the psychedelic-assisted therapy process that are not just a drug,” she told INN.

Broad questions about the psychedelic drug business model remain, according to the expert, such as how insurance payments will work. “We're literally building out novel ways of stakeholder alignment that haven't naturally been seen in the past,” she said.

2. Psychedelics legality making progress, but still murky

The psychedelics industry is also facing uncertainty when it comes to the legality of medicines.

Top regulators like the US Food and Administration (FDA) have drugs under examination, which may open the doors to limited access to these substances, but broader framework changes are in the works as well.

Both the US and Canada have seen recent political adjustments geared at getting a better understanding of the work being done within the psychedelics industry. As part of this year's US midterm elections, the state of Colorado voted to decriminalize the use of psychedelic mushrooms in drug centers for people 21 and older.

The policy will come into effect in 2024, and an advisory board may add more psychedelic drugs to the legal system in 2026.

Colorado will join Oregon to become the second state to allow the medical use of psychedelic substances.

One drug policy lawyer told INN that a grassroots state-by-state approach to psychedelics policy will be vital, but federal policy will also be needed at some point. “It is going to take change at the federal level, but I don't think we can get there … without this local grassroots movement,” Courtney Barnes, a partner and lawyer with Barnes Caplan, said.

The lawyer said there could be a domino effect as states approach legalization programs for psychedelic drugs, and this could lead up to federal change. “I'm very grateful that we have a state regulatory pathway available,” she told INN.

3. Expert wants psychedelics industry to band together

Najla Guthrie, CEO of Wellbeing Digital Sciences (NEO:MEDI), told INN she wants to see more advocacy within the psychedelics space. In Canada, she hopes to build a coalition to unify a variety of interested parties.

“We need the regulatory framework to happen responsibly,” Guthrie said. The expert hopes for this coalition to lobby the Canadian government for “evidence-based change” as the market continues to grow.

When asked how comfortable regulators and the Canadian government are with the use and administration of psychedelic substances, Guthrie explained that these authorities are looking forward to receiving official data; however, the groundwork is being laid right now when it comes to their future actions.

“I think the government is looking for some guidance on what makes the most sense,” the expert said.

That’s where she hopes her association can come in and represent the sector as a whole. “I think we as an industry need to do a better job of having one voice, or being on the same page and being aligned with what we want to see happen,” Guthrie said.

Investor takeaway

Psychedelics investors have been impacted by 2022's broad financial downturn, but there's light on the horizon in 2023.

“I think there are deals still being done, depending on the opportunities that are out there … (a) different type of investor is now at the table,” Guthrie said, referring to more established players with longer-term views.

For her part, Velkova told INN that due to the economic downturn, many companies are desperate for new capital to come into play. “I think right now and into the next year will be a great market for new investors to come.”