From the desk of:

KEY CONTACT

Howard Manis

Partner

From the desk of:

KEY CONTACT

Michael Carey

Counsel

Law and the Emerging Psychedelics Industry

It may come as a surprise, but psychedelic drugs could be a legal business opportunity. Research on the medical uses of psychedelic drugs show promise for treatment of mental illness such as depression. Therapeutic doses of certain psychedelic drugs may be effective treatments for other mental health disorders as well. 

The research has led to one psychedelic drug being approved by the US Food and Drug Administration (FDA) for treatment of depression. In 2019, the FDA approved a ketamine based drug for patients with treatment resistant depression, and in August of 2020 approved the same drug as part of a treatment for depressive symptoms in adults with major depressive disorder with acute suicidal ideation or behavior. These once taboo drugs are becoming accepted as legitimate medications. 

But are any psychedelic drugs legal in Canada? Psychedelic drugs such as “magic mushrooms” containing psilocybin, and ketamine are listed as controlled substances under Canada’s Controlled Drugs and Substances Act, and most cannot even be obtained except under specific circumstances. To obtain access to controlled substances for research, regulatory approval must be obtained from Health Canada. Once the research has been approved, the drugs to be studied must be obtained from controlled manufacturing facilities, and may be very expensive as a result.

However, ketamine is readily available because it has been approved by Health Canada for use as an anaesthetic. Health Canada describes ketamine as a “dissociative drug, producing a sense of mind from body separation (dissociation)” that may cause “vivid dreams or hallucinations, which may be intense and terrifying.”  Activities such as sale, possession or production of ketamine are illegal unless authorized for medical, scientific or industrial purposes. Health Canada also acknowledges that ketamine has legitimate uses in medicine. Accordingly, physicians may prescribe ketamine for medical purposes. 

Some physicians do prescribe therapeutic doses of ketamine for patients with mental health disorders. Because of the effects of the drug, such therapy is often conducted in a controlled clinic. Depending on their practices, clinics in Ontario providing ketamine treatment for mental health purposes may be subject to regulation by the College of Physicians and Surgeons, College of Pharmacists and Health Canada. These regulations impose numerous operational controls, such as the safe storage of the medicine, licenses for those administering the medicine, and advertising. Further, there are privacy regulations related to the personal health information of patients. Patients’ consent to treatment is also important, so patients understand and accept the risks as well as possible side effects associated with these innovative treatments. Furthermore, because of its novelty, insurance is not readily available for clinics and currently may be obtained from a only few underwriters.  

Outside a medical environment, ketamine remains a controlled substance. In February of 2020, RCMP arrested two individuals in relation to importation of ketamine into Canada and possession of a ketamine for the purpose of trafficking contrary to the Controlled Drug and Substances Act.  Although available legally, ketamine must be obtained from proper sources.

As psychedelics are researched further, their medical uses may become more evident and accepted, so business opportunities will similarly expand. If you want to discuss the legal aspects of the psychedelic business, please contact the author.

Michael has represented clients in the mental health field, including walk in clinics, physicians practising through corporations, and practitioners treating mental illnesses, such as depression.

This article is not intended to serve as a comprehensive treatment of the topic and is not legal advice. All legal matters are dealt with pursuant to their specific facts and circumstance. Nothing replaces retaining a qualified, competent lawyer.