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State of the Psychedelic Industry: 2023 Q1 (PRO REPORT)

The first three months of 2023 have been a whirlwind for the psychedelic industry– to say the least. Though it has been a particularly difficult quarter,…



Table of Contents

  1. Introduction
    1. Q1 Highlights!
  2. Research 
  3. Regulations and Politics
  4. Events & Media
  5. Business
    1. Challenges
    2. Growth
    3. Stocks
    4. Clinics & Facilitators
  6. What to Expect in Q2


The first three months of 2023 have been a whirlwind for the psychedelic industry– to say the least. Though it has been a particularly difficult quarter, it is just part of the growing pains of a novel industry. The industry had highs and lows throughout the past three months, but ultimately, things are moving in a positive direction. That might not be seen over the next few quarters or even years, but the events of this quarter are setting up the industry for long-term success– which is the ultimate goal.  

Q1 Highlights

Ayahuasca makes headlines more than ever before.

Small Pharma completes a successful short-acting psychedelic trial.

Closure of psychedelic clinics worldwide.

The Synthesis Institute faces bankruptcy.

Field Trip Health is restructuring in an attempt to survive.

Australia legalizes MDMA & Psilocybin for medical use. 

Biden ends Covid-19 state of emergency– leaving ketamine telehealth to face some challenges. 

More major media outlets cover psychedelics than ever before. 


There will be plenty of time to dive into the dreary side of this report, so let’s start on a positive note! The highest percentage of new drug trials in 2022 were for psychedelics, and the first quarter of 2023 continued to see very positive news on psychedelic research and clinical trials. 

This quarter, there were several first-of-their-kind trials that took place, offering more insight into what the future of psychedelic medicines might look like. One trial that got a significant amount of attention was Small Pharma’s phase IIa trial of its drug SPL026– a proprietary synthetic DMT formulation– for the treatment of major depressive disorder. This trial is the first to give us any indication of whether or not short-acting psychedelics will be as effective in treating mental health conditions as long-acting psychedelics such as psilocybin, mescaline, MDMA, or LSD. 

The initial data from this trial was positive– showing statistically significant effects compared to placebo after two weeks. This is by no means definitive proof that a short-acting DMT treatment is as efficacious as psilocybin, LSD, or MDMA treatment, however, it does potentially offer patients a new type of treatment. Short-acting psychedelics have been of interest to the industry because they offer solutions to some of the issues that come up with the clinical use of long-acting psychedelics– including time and financial constraints. Many of the psychedelics showing efficacy for clinical use will require 6-12 hours of therapist supervision, which will limit the number of patients who can access the drug and result in a high cost of treatment. Short-acting psychedelics offer a potential solution to these problems. 

Small Pharma’s trial was the one to make the biggest splash this quarter, however, there were over a dozen other trials either started, finished, or approved the start in the near future. If we went into an analysis of what each one potentially means for the future of the industry, we would be here well into tomorrow, so we’ve listed the most significant below.  

Regulations and Politics

The biggest development in the regulations of psychedelics this quarter came from Australia where MDMA and psilocybin were legalized for medicinal use. This is a big win for the industry. We have had a few US states legalize psilocybin, but this is the first country to make such drastic changes and the first place to legalize MDMA as a therapeutic. 

Both Australia and Oregon are now beginning the process of allowing the use of psychedelic medicines, and one of the main issues that both of them are facing will be the cost of treatment. It is estimated that MDMA and psilocybin treatment in Australia will cost patients 25k out of pocket, and Oregon may have a similar problem.

As the Oregon Psilocybin Program kicks into play, we are seeing some really interesting results. The program officially started on January 1, 2023, after a two-year process of forming the regulations governing psilocybin use in Oregon. Thus far, there has been far more interest in opening manufacturing businesses than there have been clinic applications. As of the end of the quarter, no service center applications had been approved, but two manufacturing applications had been. There were also about double the number of applications started for manufacturing compared to service centers. The result: consumer demand will far exceed supply, which will drive up prices to already expensive treatment and make it impossible for many people to access since there will be no insurance coverage involved. 

In other political news affecting the US psychedelic market– President Biden announced that the COVID-19 state of emergency would be officially ending on May 11. When the state of emergency ends, so does the exemptions that had been temporarily allowing doctors to prescribe scheduled substances without examining the patients in person. This will have a big effect on ketamine companies who had been relying on a telehealth model– MindBloom for example. 

Though many are concerned about what this change will do to the industry, especially those who have invested large sums of cash in ketamine telehealth, it may not be a bad thing for the industry long term. Ketamine Telehealth has brought the industry a lot of controversy from major media outlets, with The Guadian even going so far as to call it “glorified drug dealing.” Given the history of psychedelics, the industry is very sensitive to negative stigmas, therefore, increasing the standards of practice for ketamine clinics may be beneficial, if not crucial, for the long-term success of psychedelic therapy. 

Events & Media

Media continues to increase coverage of psychedelics, with most of it being positive. Of course, on the business side of things, there is realistic coverage of the challenges that the industry faces. However, news continues to be incredibly positive about the benefits of psychedelics and how they may be an asset to society. 

In Q1 2023, over 500 major publications covered psychedelics– compared to less than 50 in 2020. That is no small feat, as media plays a huge role in changing stigmas and providing people with information on treatments that may change their lives. The media coverage of the benefits of psychedelics continues to be incredibly positive as it reaches new audiences. 

In February, HBO released an episode of Last Week Tonight with John Oliver that focused entirely on psychedelic-assisted therapy. Since its release, the video has gained over four million views on youtube. This is only one example of the extensive coverage that psychedelic and entheogenic medicines have warranted over the past three months. As major publications continue to spread the good word on psychedelics, and, people all around the world have gathered at conferences and events to discuss psychedelics– both its benefits and issues.

There were several events during the quarter with a strong psychedelic presence. Perhaps most notable was the SXSW conference that took place at the beginning of March. There were over 20 panels covering a variety of topics ranging from the use of psychedelics by athletes, musicians, artists, or women to business and ethical discussions on the use of these medicines. Several psychedelic companies also presented at Cowen’s 43rd Annual Health Care Conference– bringing psychedelic treatment to the ears of the greater healthcare industry. 


  1. Challenges

“I have not failed. I’ve just found 10,000 ways that won’t work.”

Thomas A. Edison

This is the section that could be viewed from two different perspectives. The struggles and failures that the industry faced this quarter could be seen as detrimental to the mission or as necessary growing pains to shape a strong industry that can flourish long into the future. 

Success without failures is… well, a pleasant fairytale. Nevertheless, it is struggle and failure that separates the temporary from the truly successful. It shows us who has what it takes to face challenges head-on and overcome them. When the economy is in the toilet, and it’s proving a great challenge to progress psychedelic treatment, it is easy to get frustrated. But, it is more useful to focus on solutions that will continue to drive forward the mission of changing mental health care so that more people are able to find purpose and joy in their lives. 

So, let’s take a look at some of the industry’s failures this quarter and discuss the important lessons to be learned.

One of the big failures in the industry this quarter was the bankruptcy of the Dutch company– Synthesis Institute. With operations already up and running in the Netherlands, the company aimed to take advantage of the Oregon Psilocybin Program. The company purchased a 124-acre property in Oregon with the intention of turning it into a psilocybin retreat center, only to later face zoning issues that would not allow them to utilize the property as intended. Nevertheless, Synthesis Institute continued with the application for its facilitator training program and was successful. Unfortunately, this left nearly 300 students blindsided when the company went bankrupt at the beginning of March, and they were locked out of the course that they had paid nearly $10,000 for.  

Another big upset came a few weeks later when Field Trip Health announced that it would be closing five of its clinics. Then, a week later the company obtained CCAA protection– none of which looks good for the future of the psychedelic treatment company. The company has been known in the industry for being a bit frivolous with its spending and a cash-negative business. Ultimately, Field Trip Health’s high cash burn rate caught up with the company and it is now faced with needing to restructure– or risk going bankrupt like The Synthesis Institute.

We could be here all day picking apart every poor decision and miscalculation that led to the big failures in the psychedelic industry during these past four months, but there are a few overarching lessons that can be learned– the main one being the necessity of adaptability. There are so many different factors influencing the psychedelic industry, and there are so many things that are out of our control. The most successful companies are going to be the ones that understand this and are prepared to endure the unexpected. Companies that grew too much and too fast– instead of being conservative with their spending– were faced with some serious challenges when capital began to dry up, and now we are seeing the fall out of that. 

On a brighter note, Mydecine has managed to hold on, despite predictions that the biotech company was going under nearly a year ago. They have managed to continue to raise capital, settle debts, and move forward with their pipeline, though all drugs are in the early stages of clinical trials. However impressive that the company is able to continue moving forward after nearly running out of cash several times in 2022, Mydecine will need significantly more capital to bring a drug to market. 

Lastly, Reunion Neuroscience filed a lawsuit against Mindset Pharma claiming inventorship and co-authorship on one of its patents. Reunion also claims that Mindset breached a contract between the two companies. Mindset denies the allegations and plans to fight the lawsuit. Nothing else is known about the conflict at this time.

  1. Industry Growth

Company Growth continues on a down-trend that started at the end of 2021. We are currently in a state of “survival of the fittest,” as opposed to the rapid growth state that existed just a few years ago. There is very little capital being deployed into psychedelic companies compared to 2020 and 2021, however, psychedelic funds continued to invest in companies that they believe have what it takes to succeed in this industry. 

As some companies begin to fail, we’ve seen others rise to the top. One company that has seen positive growth is Irwin Naturals. It is a long-time supplement company that has very successfully pivoted to a new goal– to become the largest network of psychedelic clinics. While they are not the only company with this goal, they very well may be the ones to reach it. 

While many other companies have been closing down ketamine clinics due to a lack of capital, Irwin Naturals has continued to acquire assets and expand its network. The company has been able to do this because they have something that the other companies do not– a strong source of revenue outside of psychedelics that makes it a profitable business. 

While people in the industry realize that turning a profit is going to be more difficult than initially anticipated, companies will begin looking for strategic partnerships to strengthen their financial position, and some have already done that. 

There have been several mergers and acquisitions as the industry begins to consolidate. As mentioned above, Irwin Naturals has continued to acquire new assets– including a ketamine clinic and an advertising firm. The company is in a unique position to solidify its position in the industry by building assets.

Core One Labs also made a big acquisition– positioning itself as a ‘full cycle psychedelics supply chain solution for clinicians, researchers, and drug developers.” The purchase of GMP Drug Inc. now gives the company access to new facilities to expand production and research. The newly acquired facility has licensing that allows Core One Labs to produce, manufacture, distribute, and export psychedelic compounds to licensed parties in Canada– positioning the company to be a main supplier of medical-grade psychedelics. 

MAPS also continues to move forward, with the FDA approval of its MDMA treatment for PTSD expected Q1 of 2024. Thought there has not been any major news out of the non-profit this quarter, it is not necessarily a bad thing. The positive phase III results came out in 2022, so now its a waiting game. 

A handful of other companies have also continued to grow by securing supply and distribution agreements. Below are some additional positive growth highlights from the quarter. 

  1. Facilitators and Clinics

One of the future issues predicted to plague the industry is a lack of facilitators and facilities to meet demand, and we are already seeing that play out. There is a high global demand for psychedelic treatment while stigmas continue to be shed by society. However, there is still a huge lack of facilitators and treatment spaces. Many players in the industry are very much aware of this issue and are making moves to remedy it. 

One of the major moves to increase the number of facilities available for psychedelic treatment is the founding of Healing REIT– a real estate fund focused on the unique needs of psychedelic clinics. There are currently 1800 ketamine clinics in the US, however, only about 1% of those can be utilized for MDMA, which will become legal within the next year. Healing REIT is working to help providers build clinic spaces that are tailored to the unique needs of psychedelic clinics.

Other companies are working to increase the number of qualified facilitators through training programs. Numinus launched a psychedelic-assisted therapy training program this quarter, and 22 facilitator training programs were approved in Oregon. The efforts this past quarter to solve the supply problem facing the psychedelic industry were beneficial, but, still not enough. This will be unavoidable over the next few years, however, companies are certainly making an effort to bridge the gap as much as possible. 

  1. Stocks

The psychedelic index remained on a steady decline throughout the quarter, except for a very minor increase in January. The index is at its lowest point since its inception, however, the biotech index has finally started to creep up recently, suggesting that people are regaining confidence in more risky stocks, and the psychedelic index may follow suit. Unfortunately, the complex regulations surrounding psychedelic compounds make its stocks even riskier than regular biotech stocks.

Despite stock prices being in the toilet, over a dozen psychedelic companies went public during quarter 1, 2023.

  1. Investments

Though capital has dried up compared to the amount of money coming into the industry a few years ago, psychedelics continue to gain acceptance as a viable investment opportunity from mainstream investors. There are currently more than 20 investment banks putting capital into the industry– compared to about 4 in quarter 1 of 2022.

Investors are still putting money into psychedelic companies, however, those companies now need to have a stronger business plan than some of the businesses that might have been able to obtain a significant amount of cash a few years ago, and that is not necessarily a bad thing. Putting over a hundred million dollars into a company that doesn’t have a solid plan to turn a profit (*clears throat* Field Trip Health) is a waste of capital that could be put to better use bringing life-changing treatments to market.

What to Expect in Q2

We will likely see many of the current patterns continue into the second quarter of 2023. The industry will continue to consolidate, and the top companies will continue to rise as some of the less secure companies fail. As we’ve seen with Field Trip Health, it is a little late to start trimming the fat in an attempt to weather the economic storm. Companies without a low cash burn and strong cash runway are not likely to make it through the end of 2023.

Psychedelic clinics will likely continue to struggle to go into quarter two. With inflation, many families are struggling with the basic costs of living, and as a result, costs for mental health treatment become unessential and unattainable. Since very few psychedelic clinics are able to take insurance to cover the cost of treatment, the recession will continue to hit clinics hard– and this will not change until ketamine and MDMA gain FDA approval for depression and PTSD– which will likely come at the end of 2023 or in the first quarter of 2024. After approval, it will another 2-3 quarters to enact commercialization. MAPS is doing as much as they legally can to prepare for the FDA approval of MDMA, but there is little that they can do until then.

Another thing to keep an eye on throughout the rest of the year is the US election. Candidates have already started campaigning, and even though the official vote is over a year away, it is in our best interest to start considering the potential outcomes and how they could affect the industry. Though the Biden administration has come out in favor of psilocybin and MDMA for the treatment of depression and PTSD, it is unlikely that he will be the winner of the upcoming election. In 2022, his administration said that they expect both compounds to be legalized within two years, however, the question remains– will they put anything into action before the president’s term is up?

Surrendering control is a lesson people often learn through working with psychedelics, and it’s perhaps what the industry needs right now. No, it doesn’t mean just sit back and stop working because there is no control over the outcome anyway. The goals and intentions that are driving this industry have the potential to change the world. So, remember the goal and remain unattached to short-term pitfalls. The path to a world where everyone has access to psychedelic medicines will without a doubt have many more failures, unexpected pivots, and surprises. Anyone who wishes to be at the forefront of the industry must be able to remain adaptable to short-term circumstances while staying focused on the long-term goal. 

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