As the legalization of medical cannabis has swept the globe, it's also paved the way for another new health frontier: psychedelic medicine.
Once portrayed as an illegal way to "drop out" or "tune in," psychedelic and semi-psychedelic drugs like psilocybin and ecstasy are starting to turn into federally-regulated medicines. They're attracting the attention of investors, too.
A number of entrepreneurial backers including Peter Thiel have begun seeding psychedelic research, mostly with the aim of seeing new drugs approved for mental illnesses like depression and anxiety. Clinical trials of psychedelic drugs have blossomed in recent years, and a non-profit initiative called MAPS is currently working with federal regulators to have ecstasy approved for veterans with PTSD.
Now, the first venture fund dedicated to psychedelics is making its debut.
In an exclusive interview with Business Insider, Ronan Levy — a former corporate lawyer and cannabis entrepreneur — introduced Field Trip Ventures. Levy is a founding shareholder of the new venture fund.
Based in Canada but aiming to open clinics in the US, the fund plans to use what Levy called a "broad spectrum approach" to backing psychedelic research, starting with applications in mental health.
Levy declined to say how much money Field Trip hopes to raise. He said the fund is targeting a large financing round for some time in the fall, when he said he expects to see psychedelic companies getting more attention.
Together with co-founders Joseph del Moral and Hannan Fleiman, Levy plans to build cultivation centers for medical-grade magic mushrooms (the source of the psychedelic drug psilocybin), he said. They'll be borrowing strategies from medical cannabis cultivators and partnering with existing psychedelic research initiatives too.
Beyond investing in psychedelic startups, Field Trip will also be involved in operating and managing companies in the burgeoning space, Levy said.
Levy said his team is taking the lessons they learned working in the Canadian cannabis industry to start turning psychedelics into a sustainable business.
"We strongly believe that psychedelics are the next wave of the path that's been created by cannabis," Levy said.
'No shortage of investment interest'
Levy, Fleiman, and Moral previously built and sold the medical cannabis clinic CanvasRx to Aurora Cannabis in 2016, in a transaction that valued the company at just under $30 million. They then took roles at Aurora — now one of Canada's largest cannabis firms — and parlayed that into new roles across other startups in the cannabis industry.
Interest in Field Trip Ventures is high among prospective investors, Levy said — especially among those who've participated in the cannabis industry.
"There's no shortage of investment interest in the psychedelic space right now," Levy told Business Insider. "Almost everybody who's been participating in the cannabis industry is looking at it."
Field Trip Ventures will be structured much in the same way as the firms that pioneered the early cannabis industry, where operators made equity investments in startups to build out an ecosystem of companies in a new space, he said.
Evidence is mounting that psychedelics may help treat diseases
Research on psychedelics — a word that comes from the Greek roots "psyche," or soul, and "delos," or manifest — has been heating up in recent years.
The drugs appear to have a unique ability to treat conditions that fail to respond to the best current treatments, including severe cases of depression, anxiety, and PTSD. In some cases and with certain kinds of the drugs, the therapeutic effects may come about after as little as a single dose, or "trip," in a supervised medical setting. Other times, people benefit most from several sessions of talk therapy that uses the drugs as a source of additional support.
Earlier this year, the US Food and Drug Administration approved the first new antidepressant in 35 years — a ketamine-inspired drug made by Johnson & Johnson. And the author Tim Ferriss helped open the world's first research hub dedicated exclusively to psychedelic medicine.
In 2017, Peter Thiel backed a British mental health startup that made enough psilocybin to send 20,000 people on a trip.
Months later, a European venture sprouted onto the scene with $25 million (now that's up to $68 million) to back studies of psilocybin and another semi-psychedelic inspired by ketamine.
Read more: A startup backed by Peter Thiel has churned out 20,000 doses of magic mushrooms
Still, there are hurdles with psychedelic medicine, and the drugs are illegal in many countries including in the US.
Several cities and states are considering measures to either legalize or lessen the penalties for possessing some psychedelics. In May, Denver became the first North American city to decriminalize magic mushrooms, for example, and the California city of Oakland followed suit shortly after.
The excitement around the field remains palpable, Levy said.
"Everyone's just starting to figure out what's going on right now," he said.
