Altered reality? An update on psychedelics in Canada

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Life Sciences Update


Those with an eye to investment trends and new industry growth may have noticed the surge in news related to psychedelic drugs in recent months. Although some may be quick to suggest this is the next frontier from the cannabis boom of 2017-2019, we would caution that this emerging industry is much more than an offshoot for past cannabis investors. Psychedelics have a long history of use in spiritual practices, and while certain psychedelics were also used experimentally in psychiatry in the 1950s and the early 1960s, a changing tide of acceptance, the international drug conventions of the 1960s and 1980s, and corresponding criminalization of psychedelics led to research stagnating for a number of years. In the past decade or so, there has been a resurgence in the interest in psychedelics as the scientific, pharmaceutical, and mental health communities revisit their therapeutic potential. With a number of psychedelics companies having had their IPOs over the last couple of months, it is the perfect time to consider the legal landscape in Canada.

Psychedelic primer


The term “psychedelics” can be used to describe a wide range of drugs, with the term generally capturing “psychoactive substances that alter perception and mood and affect numerous cognitive processes”. For the purposes of this bulletin, we will focus on those substances that are currently a primary focus of therapeutic research: lysergic acid diethylamide (LSD); 3,4-methylenedioxy-methamphetamine (MDMA); ketamine (long-used as an anaesthetic); and psilocybin (the “Psychedelics”). The Psychedelics have different effects on the brain, but LSD, MDMA, and psilocybin share a strong influence on serotonin pathways, with ketamine believed to principally affect glutamate pathways. Serotonin is responsible for modulating many brain functions, but the effects often associated with psychedelics are heightened empathy, sudden insight, and dream-like states. Glutamate similarly has myriad roles in the brain, with some of the effects associated with using ketamine as a psychedelic being mood elevation and dissociation. Interestingly, both serotonin and glutamate pathways are thought to play an important role in learning and memory; this neuroplastic effect might help explain how the Psychedelics can have anti-depressant and anxiolytic effects (i.e., by helping to “re-wire” the brain).


Based on the growing body of research, companies are popping up to support the medical advancement of the Psychedelics and their related chemical compounds in various ways, including: (a) setting up clinics for guided psychedelic treatment sessions; (b) refining the scope and effect of certain molecules through drug design; and (c) exploring treatments for a number of health issues including addiction, depression, anxiety, cluster headaches, and other chronic conditions.


Current law


Health Canada regulates the Psychedelics under the Controlled Drugs and Substances Act (CDSA) - MDMA and ketamine are Schedule I controlled substances, while LSD and psilocybin are both Schedule III controlled substances. In all cases, this means that there is a general prohibition on the sale, export, import, possession, and production of the Psychedelics. However, under Section 56(1) of the CDSA, the Minister of Health has the ability to grant exemptions to these restrictions if the Minister deems them necessary for a medical or scientific purpose, or otherwise in the public interest. We will touch on local efforts toward advancement under Section 56(1) below.


Health Canada and the Public Health Agency of Canada have prepared informational pages describing each of the Psychedelics, with acknowledgments on the pages for MDMA and psilocybin that their therapeutic use is being studied, notwithstanding that there are not currently any approved uses. Notably, while the U.S. Food and Drug administration approved Johnson & Johnson’s SPRAVATO® (a drug related to ketamine) for treatment-resistant depression in March 2019, Spravato remains under review by Health Canada. Health Canada does not appear to have provided any commentary on the potential therapeutic use of LSD as of June 24, 2020. Visit the Health Canada LSD page for up to date information.


Changing landscape


Although the Psychedelics are tightly regulated in Canada, there are initiatives underway to try and relax the laws. One example is petition e-2534 to the House of Commons; this petition includes a request for the immediate discontinuation of regulations that “prohibit or impose onerous restrictions on informed adult use, growing, or sharing of any plant or fungi, where an established record of traditional use exists”. Assuming that at least 500 of this petition’s 7,000+ signatures are valid, it will be certified and presented to the House of Commons for response.


Another example is the advocacy work by TheraPsil, a Victoria-based non-profit coalition “dedicated to obtaining legal access to psilocybin-assisted psychotherapy for Canadians”. In January 2017, TheraPsil’s founder, Dr. Bruce Tobin, applied to the Minster of Health for a special exemption that would permit him to use psilocybin in end-of-life treatments. While this application was denied in March 2020 on the basis of “insufficient evidence to demonstrate the medical need for psilocybin”, TheraPsil is now providing Section 56(1) application support to individuals meeting both the Government’s eligibility criteria and TheraPsil’s patient inclusion criteria.


Health Canada has also granted approvals to certain companies to enable them to conduct research on psychedelics. Salvation Botanicals, a wholly-owned subsidiary of Numinus Wellness Inc. (Numinus), recently received approval “to conduct research to standardize the extraction of psilocybin from mushrooms”. Salvation Botanicals also has a licence permitting, among other things, research and development with respect to MDMA, psilocybin, psilocin, DMT, and mescaline. In addition, as part of a larger project being run by the Multidisciplinary Association for Psychedelic Studies (MAPS), the British Columbia Centre on Substance Use is conducting Phase III trials on the efficacy of MDMA-assisted psychotherapy for post-traumatic stress disorder.


Yet another sign of the psychedelic sector’s rapid growth trajectory is the number of IPOs that have taken place over the last couple of months. Among the companies to go public are Numinus (TSX-V), Champignon Brands Inc. (Champignon)(CSE), and Mind Medicine (MindMed) Inc. (NEO). Companies have also been engaging in M&A activity, including Revive Therapeutics Ltd.’s acquisition of Psilocin Pharma Corp., which has patent-pending formulation and production solutions for psilocyibin, and Champignon’s acquisition of AltMed Capital Corp., a Canadian ketamine clinic operator. As many companies seeking to advance clinical research will have a long path before they obtain the Health Canada approval required to bring their products and services to market, we anticipate seeing more companies seek to list and access public capital to help meet their considerable funding requirements.


South of the border, some U.S. cities have already seen the decriminalization of certain psychedelics. Thus far, Santa Cruz and Oakland have decriminalized a variety of psychoactive plants and fungi, and Denver has specifically decriminalized magic mushrooms containing psilocybin, with other cities considering similar measures. It is important to note the distinction between decriminalization and legalization here - decriminalization means that the drugs are still illegal but possession will not lead to criminal charges (often subject to meeting certain conditions, such carrying less than a specified amount of the drug or being over a certain age), while legalization means removing all legal prohibitions in respect of the drugs. As such, although advocates view decriminalization as an important step in the process, it is not necessarily the end-goal.




Based on the exponential increase in psychedelic research and the numbers of companies entering the space, this may just be the beginning of the “mushroom boom”. The challenges with traditional medications and therapies for treating individuals suffering with addiction, depression, anxiety, and post-traumatic stress disorder mean that there is significant motivation to develop alternative options. Although some proponents of psychedelics are wary of commercialization given the historical spiritual context, the injection of capital is facilitating much more research than would be possible if the sector were relying solely on government grants. With corporations and universities alike launching studies, we are likely to see material progress over the next number of years. It remains to be seen how Canadian law will develop as the psychedelic knowledge-base evolves, but the House of Commons’ response to petition e-2534 may provide further insight into the Government’s current attitude. We will provide further updates on the law as it evolves.



On August 4, 2020, Canada’s Minister of Health, Patty Hajdu, granted Section 56(1) exemption approval to four Canadians with terminal cancer. The effect of the exemptions is that these Canadians can now access psychedelic therapy, making them the first known patients to be able to legally use psilocybin since it was made illegal in 1974. TheraPsil provided these individuals with Section 56(1) application support, and has indicated that it “looks forward to continuing to support patient applications, and to working with the Health Minister […] and Health Canada to approve exemptions for Health Care Practitioners so they may use psilocybin for professional training in psilocybin-assisted psychotherapy.” Given the significance of this development and TheraPsil’s commitment to advancing this cause, we expect to see more Section 56(1) applications over the coming months.

This article provides only general information about legal issues and developments, and is not intended to provide specific legal advice. Please see our disclaimer for more details.