2023 Psychedelic Industry Outlook

February 16, 2023

A look ahead at the future of the psychedelics industry.

2022 was a challenging year for the global economy - and for psychedelics. 

Appetite for emerging industries dried up and many companies operating within them faced financial difficulties. Even major psychedelics players, like Compass Pathways and MindMed, saw their market gains reversed. Outside of tumbling company valuations, the psychedelics industry underwent a broader shake-up;  consolidation began, some groups repositioned or restructured, and others did not make it through the year. In March 2022, Mindcure reported that it had stopped its research into psychedelics due to financial constraints. This was followed shortly after by Core One Labs announcing interest in being acquired, Mydecine having cash issues due to a burn rate of $4 million CAD a quarter and, most recently, concerns growing around the cash burn at Numinus.

However, as we enter 2023, there is renewed interest in the integration of psychedelic medicine into mainstream mental health treatments. According to the World Health Organization, mental health disorders are now the leading cause of disability worldwide (PSYCH, 2023). 

Despite industry changes and setbacks, the hope that psychedelics could help solve the mental health crisis has not gone away. Last month, the Economist included psychedelic medicine in a list of the top 5 things to look out for this year (alongside India’s population boom, for perspective).

With this potential, let's take a look at the current state of the industry, and both the upcoming opportunities and obstacles.


Research is always at the forefront of a pharmaceutical sector and psychedelics are no exception. 2022 was an important year for psychedelic research, with psychedelics involved in clinical trials for mental health indications such as depression, PTSD and anxiety. Psychedelics are also being used for physical disorders and addictions such as alcohol use disorder, phantom limb pain (Ramachandran et al., 2018), end of life distress, terminal illness and neurological disorders such as Alzheimer's (Kozlowska et al., 2022). 

In November, MAPS announced that it had completed a second phase 3 clinical trial of MDMA-assisted therapy for PTSD. Going into 2023, the development of this treatment could be a large catalyst for the wider industry, especially given the support the department of defense in the United States has shown towards the therapy.

"88% of the people [in the MDMA for PTSD trial], had clinically significant decrease in their PTSD symptoms…67% of them lost their PTSD diagnosis." 

MAPS PBC CEO Amy Emerson

Another psychedelic compound to watch in 2023 is psilocybin. One company, Compass Pathways, is leading the way - with psilocybin-assisted therapy anticipated for FDA approval in 2025 (PSYCH, 2023).

In Compass’ phase 2 clinical trial in 2022, psilocybin-assisted psychotherapy was found to be as good as the current gold standard for depression treatment, selective serotonin reuptake inhibitors (SSRIs) (Carhart-harris et al., 2021). Many in the industry were underwhelmed by the results, hoping that the psilocybin would be found to be significantly more efficacious than the SSRI. Dr. Robin Carhart-Harris, the study's lead researcher, chose the Quick Inventory of Depressive Symptomatology (Q-16) as the primary outcome measure (one of the few outcome measures in the study where psilocybin was not significantly more efficacious than the SSRI). Psilocybin beat out the SSRI on most secondary measures including a wellness score and a tolerability scale.

Despite the mixed study reviews, it is an important step forward for the industry, especially given the systematic review also published last year which debunked the “chemical imbalance” hypothesis, on which all SSRIs are based (Moncrieff et al., 2022). Additionally, the fact that psilocybin beat out SSRIs on many secondary measures such as tolerability is noteworthy given that 40-60% of people on SSRIs experience emotional blunting (Ma et al., 2021) and other negative side effects.

Compass Pathways’ phase 3 clinical trial for treatment-resistant depression is underway already, and the results of this study will be closely watched. Given that Compass’s treatment received FDA “breakthrough therapy” status – which expedites the review and development of drugs that show evidence of improving available treatments for serious conditions – the outcome of this study could have an impact on the entire industry.

“Our study showed that after a single 25mg dose of COMP360 psilocybin therapy with psychological support, approximately 30% of patients were in remission at three weeks, and we saw effects lasting for up to three months.”

Guy Goodwin, Chief Medical Officer at Compass Pathways

Beyond MDMA for PTSD and psilocybin for depression, several companies are studying psychedelic compounds for indications such as ADHD, neurological disorders, substance use disorder, bipolar disorder and more this year.

Overview of psychedelic approval timelines (PSYCH, 2023)


Important steps were made towards legalization in the psychedelics industry last year. 

As of January 1, 2023, Oregon became the first state to legalize the use of magic mushrooms for mental health treatment. It’s important to note that the mushrooms can only be consumed by adults aged 21 and older at licensed service centers, in the presence of trained psilocybin therapists. Full, recreational legalization is still yet to be approved.

The Oregon framework is unique because it only allows natural psilocybin - no synthetic versions. Also, patients will not need to go through a doctor referral system and instead can go directly to trained psilocybin-assisted therapy practitioners. This structure has unsettled some companies - the leading synthetic producer of psilocybin, Compass Pathways, even lobbied against the legalization measure. Going into 2023, look out for whether the precedent in Oregon will see other states creating systems that are outside the traditional medical model.

In November 2022, Colorado followed Oregon by voting to decriminalize the use of psychedelic mushrooms in drug centers across the state - with provisions for full legal status by 2026.

This is in addition to several American cities such as San Francisco, Oakland, and Santa Cruz which decriminalized psychedelics in recent years. There are now 17 jurisdictions in the United States that have deprioritized or decriminalized psychedelics altogether.

“[For widespread adoption] it is going to take change at the federal level, but I don't think we can get there … without this local grassroots movement,” 

Courtney Barnes, a partner and lawyer with Barnes Caplan. (Govern, 2022)

In Canada, Quebec became the first province to authorize insurance coverage for psilocybin-based psychotherapy. Also, through the Special Access Program, Canadians nationwide now have increased access to psilocybin through their doctors.

Some speculate that the legislative action which took place in Colorado and Oregon will lead to a domino effect throughout all the states this year - ultimately putting pressure on the Federal government to take action.

Between January 2019 and September 2022, there has been a 7-fold increase in proposed decriminalization bills introduced (Siegel et al., 2022). In that same timeframe there have been 74 bills across 25 states that have looked to decriminalize. Going into 2023, pay special attention to the largest market in the US, California, where a proposed bill for decriminalization could provide much needed mental health support and open up a new market for psilocybin services.

The Biden Administration has taken notice of industry advancements, mentioning in a leaked letter this year that it anticipates regulatory approval for breakthrough psychedelic therapies to take place within the next two years. 

Legislative action related to psychedelics has been growing in recent years. Recently, the Australian drug regulator approved certain psychedelic medicines for treatment resistant depression and PTSD - rapid progression given that the first research trial in the country occurred only 3 years ago. 2023 could be another year of “firsts” for psychedelic legislation.


A few years ago, the hype around psychedelics was driven by an almost frantic excitement regarding potential market size. One company, MindMed, even increased its stock valuation by more than 10X seemingly overnight.

However, last year these same companies were hit hard, with Compass and atai falling 66% in valuation, and MindMed plunging as much as 90%.

So, was the hype for nothing?

The short answer is no. But as with pharmaceutical drug development, the development of psychedelic medicine will take time.

For past market projections to be realized, continued high-quality research will need to take place. Not only will psychedelic medicines need to be better than the current gold standard treatments for each indication, they will likely need to be more cost-effective as well. Cost-effectiveness will be a particular concern in European countries where healthcare is primarily government funded. 

With so much uncertainty, it’s no wonder big pharma has mostly stayed away from psychedelics up to this point.

Despite this, the projected numbers are still big. In its latest review, Bloomberg reported that the psychedelic market will be greater than 8 billion USD by 2028

Total projected market size for psilocybin-assisted therapy (PSYCH, 2023)

All eyes will be on Oregon this year to see whether its adult use framework can offer a boost for psychedelic companies. With the potential to generate US$165 million a year in psilocybin state services, (PSYCH, 2023), returns for participating organizations could be substantial.

But this would be just the tip of the iceberg.

If California were to adopt an adult use framework similar to Oregon’s, it would open up a total addressable market that could generate US$1.6 billion a year (PSYCH, 2023).

This year, New York, California and other states could legalize or decriminalize psychedelics. California and New York alone would open psychedelics into markets that constitute more than 22% of the United States GDP!


With all this potential, what are the barriers that need to be overcome in the next few years?

One issue that remains is that of stigma. In the 60s, psychedelics were demonized for political purposes despite showing positive signs for treating mental health. Today, stigma surrounding psychedelics still exists, yet many studies indicate their safety and tolerability. Psychedelics are often thought of as “party drugs,” and categorized with other drugs such as stimulants or alcohol.

However, this stigma could be on the decline. From 2015 to 2018, psychedelic use has increased 56.4% across America (Yockey et al., 2020) - signaling a shifting in public perception around these substances. Major news outlets are continuing to release positive articles surrounding psychedelics and last year Netflix released Michael Pollan’s popular documentary about psychedelics.

Another large potential issue will be intellectual property.

It is notoriously difficult to have strong patent protection over psychedelics like psilocybin. Many psychedelic compounds are naturally occurring, meaning that these substances are not able to be patented (some natural-focused companies, like Filament Health, instead patent the extraction process or the de-phosphorylation process in the case of psilocin). Most psychedelic companies are developing synthetic versions of psilocybin - which can be patented - but this can be problematic as the molecule can be slightly modified by competitors to overcome the patent, while retaining the therapeutic qualities. 

Furthermore, according to The Harvard Law Review, the United States Patent and Trademark Office has limited experience with psychedelics which could slow down the acquisition of IP protection and affect the potential for investment in the industry .

The belief that patenting psychedelics is biopiracy presents another challenge. Biopiracy is defined as the commercial exploitation of biochemicals or genetic materials that occur in the natural world. Typically, biopiracy refers to the exploitation of  indigenous communities who have used these compounds in traditional ceremonies for centuries and are now being sourced for profit by western companies. Some groups are attempting to patent as many psychedelic compounds as possible in order to hinder their competitors’ access.  Yet many of these substances are naturally-occurring and have been used for centuries, so they are not considered novel. Highlighting this, Compass Pathways has had a patent challenged in court by Freedom to Operate on the grounds that it is not a “new invention”. Additionally, the competitive nature of the patent application means that profit sharing with indigenous communities is becoming less likely, further contributing to potential biopiracy. 

Without secure IP, risk will increase in the sector, discouraging investment in  psychedelic companies, and slowing the pace of research and development. Large pharmaceutical companies want to see that the drugs are not only effective, but also patent-protected to dissuade competitors and maximize profits.

The outlook for Filament Health

At Filament, we have recognized from the beginning that the development of psychedelic medicines, and their adoption for treating mental health conditions, is a long term play. In such a capital-intensive industry, we understand the importance of staying “lean” and focusing on execution. 

For Filament, a significant strength has been our licensing agreements - we are one of the only psychedelic companies that is generating revenue. These deals provide us with near-term cash to support operations, and long-term royalty payments. Our partner network will continue to develop this year.

We are also advancing the field with research of our own. Our botanical psilocybin drug candidate is being studied in an FDA-authorized clinical trial at UCSF, comparing psilocin (a psychoactive compound found in magic mushrooms) directly against psilocybin - the first trial of its kind. This is in addition to our psilocybin PEX010 drug candidate already being studied at universities in Canada, the United States, and most recently, Europe. Furthermore, with the recent announcement of Magdalena Biosciences, a joint venture with Jaguar Health,  our R&D program will explore many new compounds, utilizing Jaguar’s library of 2,300 medicinal plants and 3,500 plant extracts.

In 2022, our subsidiary Psilo Scientific became a Health Canada-licensed producer of psilocybin. Since then, we have been authorized to provide 65 Canadians with our botanical psilocybin through the Special Access Program – in fact, we are currently the only psilocybin supplier for the SAP. We look forward to continuing our support of this important program in 2023.


After the investor hype of 2021, the valuation of psychedelic stocks crashed in line with the wider market in 2022. Despite this, continued progress in research, legislation and fundraising pushed the field forward. For now, continued investment into research will be paramount, as widespread medical adoption and gaining the trust of public health will not be possible without rigorous, evidence-based certainty of the therapeutic benefit of these substances.

In a world where the need for effective mental health treatments continues to grow, we are proud to be part of the movement driving a promising potential solution forward.

Bullet-point catalysts for 2023

  • MDMA and psilocybin-assisted therapy are expected to be regulated by the Food and Drug Administration (FDA) (PSYCH, 2023). With FDA approval anticipated in 2024, health practitioners may be able to provide MDMA-assisted therapy as early as next year. 
  • Although uncertain, in a stabilizing of the wider market in 2023, risk appetite for more risk-heavy sectors such as psychedelic could increase - improving the ability to raise capital for psychedelic companies. It is worth noting that the markets are always highly unpredictable, and forecasts should be read with caution.
  • Big pharma could further step into the scene. Otsuka Pharmaceuticals already dipped its toe into the sector when it paid Mindset Pharmaceuticals 5 million USD to support psychedelics
  • Following Oregon and Colorado developing legalization frameworks, 14 other states will vote on psychedelic medicine this year. These actions could spread awareness and help to normalize the treatment of mental and physical indications with psychedelics


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