Leila Rafi and Sasa Jarvis are partners at McMillan LLP, working in the Capital Markets and M&A Group. They work with clients, including investors, companies and private equity funds, in the psychedelics sector.
The federal government’s decision this month to grant British Columbia’s request to temporarily decriminalize certain illegal drugs for personal use in that province is part of a growing shift in the landscape of Canadian drug policy.
While the regulation of most psychedelic drugs under the Controlled Drugs and Substances Act (CDSA) – including psilocybin and psilocin, the San Pedro and peyote (mescaline) cacti and ayahuasca (DMT) – were not affected by this decision, the growing psychedelics industry in Canada has reason to pay close attention.
In recent years, individuals and organizations have been applying to the minister of health to exempt the use of psychedelics for applicants under section 56 of the CDSA, which gives the minister broad authority if “the exemption is necessary for a medical or scientific purpose, or is otherwise in the public interest.” In 2020, four terminally ill individuals were successful in obtaining the first known exemptions to access psilocybin to treat end-of-life distress.
The City of Toronto and the City of Vancouver have made similar applications to that of British Columbia, with Vancouver specifically requesting psilocybin mushrooms be exempted for personal use in prescribed quantities. If the federal government’s decision in B.C. is any indicator, its openness could affect the role that psychedelic substances are able to play in treating key health challenges faced by individuals in Canadian society.
The notion that psychedelics can be an important tool in medical and psychiatric treatments is not novel. Naturally occurring psychedelics have been employed for centuries as part of traditional ceremonies. And in the mid-20th century, research showed initial potential for their use in treating a host of conditions, including addiction and end-of-life distress. However, a negative shift in public and political perception of the drugs during the mid-1960s and ’70s resulted in much of that science being shut down or undervalued.
Since that time, public attitudes have changed significantly. Thanks to a higher societal priority on addressing complex issues such as mental illness, addictions and end-of-life trauma, Canadians are increasingly open to exploring unconventional options to help heal those in need. A Nanos Research study from August, 2021, found that 82 per cent of Canadians approve of the use of psilocybin-assisted therapy for people suffering from an end-of-life trauma, and 78 per cent would support a government that legalized the same.
Governments, too, have demonstrated greater openness to allowing the use of psychedelics in therapeutic contexts. Since the initial individual exemptions in 2020, the federal minister of health has granted at least 79 to individuals – and more still to institutions, companies and health care practitioners for research and training purposes. As of this past January, physicians in Canada can also request special access for their patients to obtain otherwise controlled substances such as psilocybin under emergency circumstances. This is a promising development.
Canada’s psychedelics industry is expanding, and additional policy changes at the federal and provincial levels could support further growth. Currently, approximately 60 companies operating here in the psychedelics industry have a class of their securities listed on Canadian stock exchanges including the CSE, TSX, TSX-V and the NEO. Of those companies, nearly one third have had their securities listed or have entered the psychedelics space in just the past 12 months alone.
If governments continue to demonstrate a willingness to consider exemptions and public opinion continues to be supportive, there could be a flurry of investments, developments and new interest in the sector. Canada could stand out as a global forerunner in this space, making critical contributions to medical research and supporting a rising industry that has considerable economic growth potential.
If this month’s news is any indication, there may be significant opportunities ahead for the psychedelics industry to play an important part in finding solutions to some of the serious health challenges facing Canadians.
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