- Over the years, boutiques and giant law firms alike have waded into the cannabis industry, helping companies navigate complicated laws and regulations, which are often in flux and vary from state to state.
- Lawyers who specialize in cannabis say they’ve recently seen an uptick in inquiries from psychedelics companies.
- Business Insider talked to some top law firms involved in the cannabis space to ask them about this trend.
- Some firms say they’re diving headfirst into the psychedelics industry. Others say they’re watching the industry closely from the sidelines, waiting for more regulatory changes before they take on the new client base.
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Lawyers who specialize in the cannabis industry say they’re getting inquiries from a new kind of client: psychedelics companies.
The calls started coming in around a year to a year and a half ago, as the psychedelics industry began to ramp up and garner more investor dollars, half a dozen cannabis lawyers told Business Insider. It’s accelerated in recent months as companies seeking to use psychedelic substances as medical treatments have gone public on US and Canadian stock exchanges.
Like cannabis, psychedelic substances like psilocybin and ibogaine are Schedule I drugs under the Controlled Substances Act in the US, which creates complications for businesses seeking to work with them. That helps create new clientele for cannabis lawyers, who have the expertise of helping cannabis companies navigate complicated laws and regulations over the years.
Read more: The top 7 law firms in cannabis, according to investors, startups and major companies in the booming industry
Boutique cannabis-focused law firms have been around for around a decade now as the drug became legal in Canada and in some US states. In recent years, bigger names like Reed Smith, Locke Lord, and Dorsey & Whitney have joined in, becoming more vocal about their cannabis clients and involvement in the industry, and in turn providing more validity for the industry as a legitimate field.
Now, a similar process is beginning in the psychedelics sector.
’We get calls on this stuff almost every week’
„I would say we we get calls on this stuff almost every week,” Vince Sliwoski, managing partner at Harris Bricken, told Business Insider. Harris Bricken is a boutique law firm that has been taking on cannabis clients since 2010. Recently, it’s taken on psychedelics clients as well.
The inquiries have been varied, according to the lawyers Business Insider spoke with. They’ve come from decriminalization advocates, clinic operators, life sciences companies wading through Food and Drug Administration regulations, and investors interested in the space. Cannabis companies have also started to inquire about the industry, lawyers told Business Insider.
Some firms are diving headfirst into the psychedelics space. Others say they’re watching the industry closely from the sidelines, waiting for more regulatory changes before they take on any psychedelics clients. Business Insider talked to half a dozen law firms for this article and four said they’ve started to work with psychedelics companies.
The real uptick in interest began around 18 months ago, Sliwoski said, when Harris Bricken began to write about evolving psychedelics regulations on its company blog. The firms is currently working with a number of psychdelics companies, he said.
Read more: Meet the top 9 startups raising millions to use psychedelics to treat depression, anxiety, and more
Cannabis companies are 'kicking the tires’ on the psychedelics industry
Many of the psychedelics-related inquiries are coming from current cannabis clients publicly traded on the Canadian market who are „kicking the tires” to see where the market opportunity may be in the space, he said.
Sliwoski says he expects that psychedelics clients will become a bigger part of Harris Bricken’s client base over the next few years and that he expects bigger international firms to get involved in psychedelics faster than they did for cannabis because they already specialize in services like helping companies gain FDA approval.
For now, many psychedelics companies are focused on running medical trials to show whether compounds like psilocybin (found in magic mushrooms) and MDMA can be used as treatments for mental health conditions like depression. Unlike cannabis companies, the majority say they’re not planning to sell the drugs for recreational use.
Some psychedelic or semi-psychedelic substances are already used in medical care. Ketamine, a somewhat psychedelic substance that’s used as a surgical anesthetic, is classified as a Schedule III substance in the US. Spravato, a nasal spray that’s similar to ketamine, is administered in clinics in the US and Canada to patients who have treatment-resistant depression.
Psychedelics companies are going public
The psychedelics company Compass Pathways said in 2018 that it got a breakthrough therapy designation from the FDA to study the use of psilocybin in treating people with depression that doesn’t get better with other therapies. The designation helps to accelerate the process of drug development and review. Compass Pathways is currently testing the treatment in medical trials.
Compass Pathways is also among a wave of psychedelics companies that are going public. It held its initial public offering on the Nasdaq earlier this month and surged to a market value of $1.3 billion. New York-based Mindmed, which currently trades on Canada’s NEO exchange also announced last week that it would be applying to trade on Nasdaq.
Other psychedelics companies have also started trading or applied to trade on Canadian exchanges in recent months, including Vancouver-based Havn and Toronto-based Cybin.
Colorado based cannabis law firm Vicente Sederberg has established a psychedelics practice group that works with advocates in shaping decriminalization regulations on the local level. The group also helps to advise ancillary companies to the psychedelics space as well as healthcare professionals looking to work with the substances.
Vicente Sederberg founding partner Josh Kappel, who heads the practice group, told Business Insider that the firm has been involved with psychedelics clients for a few years now but that he and his partners have seen more interest recently amid clinical trials and a wider movement to decriminalize psilocybin at the local level.
An expanding client base in psychedelics
The majority of the firm’s clients still come from the cannabis industry, but Kappel said he expects the firm’s psychedelics client base to grow as more scientific breakthroughs occur.
Unlike the cannabis industry, most psychedelics companies are working to bring their products to market after years of clinical trials and a rigorous approval process by the FDA. There is currently no legal recreational market for psychedelics substances in the US.
„Cannabis has never been allowed to move forward the way other psychedelics have had,” long-time drug policy attorney Noah Potter at Hoban Law Group told Business Insider.
Potter says that non-cannabis psychedelics compounds have not faced the same resistance from the FDA and Drug Enforcement Administration (DEA) on drug development, which means that psychedelics have a way to move faster toward legal access under federal law than cannabis did in the past.
Jeff Schultz, a partner at cannabis law firm Feuerstein Kulick, said that he and his partners are „really closely monitoring” the psychedelics space, though they have yet to dive into the industry.
’Our role is to keep a close eye on it’
So far, Schultz says his firm has taken on a ketamine therapy clinic as a client and is in talks with a venture capital fund focused on psychedelics.
Psilocybin has been decriminalized in a few jurisdictions in the US, but the substance — like most other psychedelics — is far from obtaining legal status on any state or federal level in the country.
„It’s important to distinguish between decriminalization and legalization,” Schultz said, pointing out that though a substance may be decriminalized, that does not mean a business is able to lawfully participate in selling the drug.
Schultz says that he doesn’t see Feuerstein Kulick representing any businesses actively involved in selling psychedelics until some sort of legalization, either medical or recreational, that takes palce.
„There will be an opportunity at some point to represent these companies,” he said. „We see something developing so our role is to keep a close eye on it.”