Insider's Look At Psychedelics Industry On Risk Management, Gray Market & Cannabis Industry

Benzinga spoke to cannabis insurance broker AlphaRoot’s managing director Isaac Bock on the need for rules and potential outcomes on psychedelic-assisted therapies to be precise. He called on healthcare providers to be prepared, from a risk management perspective, to offer and conduct these treatments.

In Part 1 of this series, we discussed coverage variability and availability. Here are several key insurance aspects concerning the psychedelics industry.

ICYMI, read here: Psychedelic Therapy Providers: Risk Management Perspective From A Cannabis Insurance Specialist

Risks & Management

From the companies AlphaRoot works with, Bock says his understanding is that they've done a lot of research on their own and that there is a mutual understanding between patient and provider of what will be done. 

He views inherent risks in the fact that there has not been sufficient research into dosing, which is where practitioners come into account with “their training and their understanding on how to slowly ramp up doses to get to a desired effect.” 

But from a risk management standpoint, the types of coverage don't differ from any other type of medical-based business. “Telemedicine companies offering Algemene or psilocybin services are getting the same thing as the standard primary care telemedicine company,” he added.

Gray Market & Cannabis Industry 

The psychedelics industry is different from cannabis, as the latter’s state-level legal recreational component is not prominent in the former’s case.

“I think overall from a medical side, the psychedelics industry has done a very good job of making themselves almost more of a life sciences type of player rather than like the way cannabis is dynamic, still very science-like but more so like the CPG model,” Bock told Benzinga. “If you look at the largest cannabis companies in the world, all publicly traded, a lot of them are run more like CPG companies so yes, they have a medical component. Yes, they have that goal dispensaries. But at the end of the day, they're selling products, individuals and there hasn't necessarily been the focus on research and education and true therapeutic use cases.” 

Unlike many psychedelics companies (including publicly traded ones,) which are “very focused” on the therapeutic benefits, a “hard lesson” from cannabis is taken by the psychedelics industry.

Psilocybin having been decriminalized in Oregon and Colorado, it is still not legal from the standpoint of operating businesses and selling products. So for companies profiting within that gray area, Bock says there's “definitely no market for insurance.” 

Yet he sees the psychedelics world eventually heading toward a recreational market -possibly with stricter rules and enforcement, including legalizing the substances. Bock also stresses the importance of ensuring that licensed individuals don’t get pushed out by gray area operators.

See Also: Psychedelic Drugs Market Will Generate Over $12B In Next 12 Years, NY Consulting Firm Predicts

Nonetheless, the biggest hurdle will be federal regulations. “It's going to be the availability of banking, financing. All of the things that every industry in the world is going through right now, which is access to capital, is going to be a huge problem,” Bock said. “But I do think the more the psychedelic industry can push the conversation about research and true medical benefits, the better we'll all be.”

Photo courtesy of AlphaRoot.