Psychedelic-assisted psychotherapy is seeing a resurgence as a treatment approach for mental health disorders. It melds pharmacology and psychotherapy, using psychedelic substances such as lysergic acid diethylamide (LSD) and psilocybin, under medical supervision, to treat conditions such as post-traumatic stress disorder (PTSD) and extreme depression. Psychedelic therapy was a popular research topic in the 1950s and 1960s; however, it lost favor by 1966 due to backlash around poor research and a growing association with the ‘60s counterculture. In recent years, interest in psychedelic therapy has regained steam. Significant, rigorous research is being funded, and FDA trials are under way for certain treatments.

The old: mid-century experimentation

Movie star Cary Grant, writer Aldous Huxley, movie director Sidney Lumet and playwright Clare Boothe Luce, along with thousands of people globally, were tested and treated with LSD and other psychedelics between 1950 and 1965.[1] More than 1,000 published studies and six international conferences on these studies were produced during this period.[2]  However, by 1962 US regulators began to restrict the use of LSD, and possession of the drug was made illegal in 1966.

This shift in attitude was the result of poorly constructed scientific research, reports of “bad trips” and the growing association of LSD with the political counterculture.  For example, Harvard psychologist Timothy Leary was accused of giving psychedelics to undergraduates without medical supervision. He was also famous for his counterculture quote, “Turn on. Tune in. Drop out.”  This backlash negated some of the past accomplishments in helping individuals cope with chronic depression and other psychological problems. [3]

The new: mainstream medical research

Starting in the 1990s, academics began a new round of psychedelic psychotherapy research focusing on depression and anxiety in people with cancer. Today research is moving forward and broadening in scope. Several psychedelic drugs, including ketamine, methylenedioxymethamphetamine (MDMA), psilocybin, and the aforementioned LSD, are being studied for use in treating psychiatric disorders including PTSD, depression, drug, tobacco and alcohol addiction, obsessive compulsive disorder (OCD), anxiety disorders and existential anxiety related to life-threatening diseases such as cancer. [4]

In September 2019, Johns Hopkins announced the launch of the Center for Psychedelic and Consciousness Research. Its goal is to study LSD and psilocybin for various mental health problems, including addiction and depression. The center was established with $17 million in commitments from wealthy private donors and a foundation. This announcement followed the launch of a similar center at Imperial College London in April 2019 with $3.5 million from private sources.[5]

Mental health disorders: demand for better treatments

According to the National Alliance of Mental Illness, a patient advocacy organization, one in five U.S. adults (over 19% of the population, or 47 million people) experience mental illness annually.[6] This figure includes one in 25 adults (11.4 million people) facing serious mental illness each year.[7]

People with mental health issues often do not receive help until they are in crisis. Nearly 60% of those with a mental health disorder did not receive treatment in the previous year.[8] Also, despite the introduction of a variety of medications during the past decades, the rates of mental illness are not declining – in stark contrast to the success of pharmaceutical advances in treating infectious diseases.

Given the scope of the problem and questions regarding the effectiveness of current treatments such as antidepressants, which often entail unpleasant side effects,[9] interest has grown in new areas of treatment. Recent studies have been promising. In psilocybin trials at Johns Hopkins and New York University (NYU), 80 cancer patients suffering from cancer-related anxiety or depression received psilocybin in a session guided by therapists.  In the resulting study published December 2016, 80% of the Hopkins volunteer subjects were reported to have experienced significantly reduced depression and anxiety from a single large dose of psilocybin.  These improvements continued for six months or more. [10]

The challenge in considering use of psychedelic therapy is how to obtain FDA approval; the FDA typically focuses on the effectiveness of a medication rather than the effectiveness of a therapy.[11]  According to Dr. Thomas Insel, former Director of the National Institute of Mental Health, it is key that researchers focus on safety and medical/psychotherapeutic use, rather than recreational use. One very negative experience can risk derailing the research efficacy.

Promising trial results

In a step forward toward FDA approval, the non-profit Multidisciplinary Association for Psychedelic Studies (MAPS) is studying MDMA-assisted psychotherapy for people with PTSD. The objective is to find out whether MDMA-assisted psychotherapy can help heal the psychological and emotional damage caused by sexual assault, war, violent crime, and other traumas.

In 2017, the FDA granted Breakthrough Therapy Designation for a MAPS Phase 3 clinical trial of MDMA. Phase 3 is the final phase of research required by the FDA before deciding whether to approve a drug as a legal prescription treatment, which in this case involves MMDA to treat PTSD.  Prior Phase 2 clinical trials showed that MDMA can reduce fear, enhance communication and introspection, and increase empathy, augmenting the therapeutic process for people suffering from PTSD. In the trial, participants all had suffered chronic PTSD for an average of more than17.8 years.  After three sessions, over 60% of participants no longer had PTSD, and in a 12-month follow-up, 68% no longer had PTSD.

The advantage of MMDA-assisted psychotherapy is that MMDA is only administered a few times, unlike most medications for mental illnesses which are often taken daily for years, and sometimes forever. Many of these medications have unpleasant side effects as well.

MAPS also completed a Phase 2 pilot study using LSD-assisted psychotherapy sessions. The completed study found positive trends in reducing anxiety following two LSD-assisted psychotherapy sessions.  LSD in these sessions seemed to be safely administered – and may justify further research. [12]

How and why does psychedelic therapy work?

In psychedelic therapy, neural networks are activated under the influence of LSD or psilocybin.  The effect appears to link with the marker most correlated with personal “ego dissolution.” From the patient’s perspective this amounts to a “mystical experience.” [13]

Michael Pollan, a journalist and author who has written extensively about medical research related to psychedelic drugs, discussed his interviews with cancer patients participating in psychedelic tests using psilocybin at NYU and Johns Hopkins. Several described their guided psychedelic journey as similar to birth or enlightenment. It is important that participants are supervised by a qualified guide in case they have an episode of extreme anxiety, also known as a “bad trip.” The guide is there to ensure the participant has a positive experience while undergoing this type of therapy. [14]

A common theme that many test participants discussed was finally understanding the secrets of the universe or realizing that “we are all one.” Mysticism, love or unity are recurring themes. Many said that they visually encountered their cancer, and this had the effect of reducing its power over them.  One woman who had been diagnosed with ovarian cancer years earlier and was worried about a recurrence said she envisioned a black mass while looking into her rib cage. This mass, she realized, was her fear of cancer and not the cancer itself. She confronted the mass aggressively and said she stopped worrying about a recurrence after the trial. This was one of the objectives of the trial.[15]

Researchers know “how,” but not “why,” psilocybin tends to work in psychedelic therapy. One theory is that the drug interrupts the circuitry of self-absorbed thinking that is prevalent in depressed people, paving the way for a mystical experience.[16] A neuro-imaging study at imperial College in London may explain why this therapy works:


The drugs appear to change “the default mode network” (shown above in (a) where there is heavier traffic over fewer connections) in the brain, which tends to be hyperactive in depression and is subdued when on psilocybin or in deep meditation. Information is usually processed in the brain using various circuits. Some circuits experience a steady stream of informational traffic while others are rarely used. Psychedelics appear to open up different circuits (shown in (b) above where more connections are utilized, freeing up space along the more heavily used ones shown in (a). This may explain the expanded sense of awareness and new perspectives among participants in psychedelic-assisted psychotherapy sessions.[17]

Potential beyond mental health

Chronic low-grade inflammation is at the root of aging and age-related disease. Termed “inflammaging,” this impairment of the immune system contributes to the disease burden in older adults and accelerates the aging process. One notable example of this phenomenon is Alzheimer’s disease.

Studies dating back decades indicated that illnesses ranging from tuberculosis to diabetes responded well to treatments with peyote (taken in low dosages). According to Shlomi Raz, founder of the company Eleusis, which is focused on research in this space, “In 2008, the psychedelic compound related to the primary psychoactive alkaloid in peyote, mainly mescaline,  was discovered to exert ‘extraordinarily potent’ anti-inflammatory effects at very low drug concentrations.”  Very low dosages of this compound didn’t tend to induce changes in brain function that might alter perception, mood or behavior.

Additional studies have confirmed the capacity of psychedelics to modulate processes that perpetuate chronic low-grade inflammation.  The psychedelics seem to exert significant therapeutic effects in a diverse array of preclinical diseases, including asthma, atherosclerosis, inflammatory bowel disease and retinal disease. [18]


Given the large and growing problem of mental health disorders today, it appears that current standard pharmaceutical options are insufficient to the challenge, especially for treatment-resistant conditions such as PTSD, chronic depression, high anxiety related to terminal illness, and persistent drug or alcohol addiction. A new approach, such as psychedelic-assisted psychotherapy, may offer a solution to a problem that traditional pharmaceuticals haven’t solved.

Currently, with a few exceptions, research in this space is still in the early stages. While near term investment options are very limited, this is a topic that bears watching and may offer some good impact investment options in the near future.











[11] Paul Summergrad (psychiatrist) & Thomas Insel (neuroscientist): Future of Psychedelic Psychiatry- April 26, 2017 with George Goldsmith – Executive Director of Compass Pathways


[13] Ibid.


[15] Ibid.


[17] Ibid.