Crypto News: Ketamine-assisted therapy isn't stemming illicit use

Welcome to our weekly look at what's going on in the business of psychedelics and cannabis. There's increasing interest in ketamine's rollout across the US — and what that means for psychedelics writ large. With that in mind, I took a look at a recent study on illicit seizures.

The amount of illicit ketamine seized from 2017 through 2022 rose 1,100%, according to a recent study — hinting at how bubbles in the drug business can have unintended impact on the black market.

The psychedelics industry overall seems to have gotten ahead of itself, with an index of stocks down more than 80% from its peak in 2021. Legions of nonpublic entrepreneurs are also facing trouble; training programs are churning out individuals eager to make a living at psychedelic-assisted therapy, but there are few legal places for them to practice. Even Oregon, which has legalized therapy with drugs such as psilocybin, has yet to ramp up actual programs.

That has sparked discussion over whether the dynamic will feed the underground practice, especially as cities and states, including Colorado, move to decriminalize. Just like cannabis, it's beginning to appear that legalization of psychedelics doesn't necessarily stymie the illicit market. In some cases, it may have the opposite effect as people start to see the substances as less risky.

The study of illegal ketamine seizures, released last week by researchers at New York University and the University of Florida, further backs this up. It shows that even a thriving legal market for ketamine — which is formally a dissociative drug but is often spoken of in the same breath as psychedelics — hasn't diminished the black market for the drug.

Ketamine has shown promise in treating depression, anxiety and other mental-health afflictions, and it's now estimated to be a $900 million market in the US. But even as ketamine clinics expanded in recent years, the study documented a 12-fold increase in seizures by weight. The number of overall seizures also surged 349%, according to the analysis published in Jama Psychiatry.

"This dramatic rise in ketamine seizures by law enforcement may be indicative of rising nonmedical and recreational use," according to study author Joseph J. Palamar, an associate professor at NYU Langone Health. The findings are a concern given most illegally obtained ketamine today isn't pharmaceutical-grade and is sold as a powder, he added, increasing the risk that it contains other drugs such as fentanyl.

Companies in the ketamine space have also started to run into some financial trouble. Earlier this year, Field Trip Health & Wellness closed down clinics that served ketamine and filed for creditor protection in Canada. Earlier this month, Revitalist Lifestyle & Wellness, a ketamine company with physical locations and virtual offices across 28 states, said it failed to make an interest payment on some of its debt.

The closure of more ketamine clinics raises the question of where customers and trained therapists will turn — especially in light of discussions around the drug's potential to be addictive at high levels.

Those working in the ketamine space say recreational abuse and therapeutic use are two very different things. Richard Meloff, co-founder of New York-based ketamine company Nushama, said in a phone interview that population-wide struggles with mental health are growing, and that ketamine has promise in helping people with treatment-resistant depression and other ailments.

"It's incumbent on us to continue educating the public," he told me. "I think we can do a good job of creating a separation in the public's eye about what responsible use of this molecule can do, versus irresponsible use."

103,000

The number of fatal overdoses for the 12-month period ended November 2022, driven mostly by synthetic opioids like fentanyl, according to the US Food and Drug Administration. The agency commented in its recent approval of the first over-the-counter opioid reversal agent, nalmefene hydrochloride.

"What we saw was a lot of public market exuberance in '21 and '22; a bunch of entities came out of the gate hard and fast and decided to scale before they had a well-functioning business."

— Richard Meloff

Nushama co-founder

Meloff spoke in reference to companies administering ketamine.

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