Let’s talk about psilocybin today.

Psilocybin is the naturally occurring, psychedelic ingredient found in around 200 species of mushrooms. Like cannabis, it is believed that psilocybin use by humans predates recorded history by at least a few thousand years. Also like cannabis, psilocybin has always been thought to have medical applications; and it has demonstrated promising, preliminary results in formal studies. In Silicon Valley and elsewhere, microdosing of psilocybin and LSD has become a trend, for medical and other purposes.

The fact that people are freely using psilocybin (and writing about it) doesn’t make it legal, though. Like cannabis, psilocybin is a Schedule I controlled substance under the federal Controlled Substances Act (“CSA”), as well as relevant international treaties. This means that psilocybin has “no accepted medical use” and a “high potential for abuse” under the CSA, and a similar status under international law. We don’t see that changing anytime soon.

Because psilocybin is so strictly controlled, it was big news last week when the Food and Drug Administration (FDA) approved a psilocybin trial for treatment-resistant depression. According to a press release by sponsor Compass Pathways, 216 patients with that affliction will participate in the Phase 2 trial. This will be the largest ever trial conducted into psilocybin therapy, and the stakes are incredibly high: Around 100 million individuals suffer from treatment-resistant depression worldwide. This means that nothing works– not antidepressants, not psychological counseling, not even grisly procedures like electroconvulsive therapy.

So who is leading the charge on psilocybin? Compass Pathways (“Compass”) is a life sciences and mental health company backed substantially by Peter Thiel, of PayPal and Privateer Holdings fame. The latter company is probably the largest private equity firm in the cannabis space, and has been for a while. Compass is a different type of outfit than Privateer, in that its purpose is to develop, own and market solutions (including a psilocybin drug), rather than take debt or equity positions in existing brands.

The biggest question of all, though, is what happens next with Compass and FDA. From a products-to-market perspective, Compass is in the second of three “trial” phases. The initially approved trial in this case is a “Phase 2b dose-ranging study” which has the purpose of testing for both efficacy and side effects. Typically, Phase 2 trials last several months to two years. About 33% of Phase 2 trials succeed; the rest fall through due to study failure or lack of funding.

If the Phase 2 trial succeeds, Compass and the FDA would need to agree on how a larger-scale, Phase 3 trial should be done, with 300 to 3,000 volunteers. That leg would last up to four years. Ultimately, if the Phase 3 trial shows that psilocybin is more effective and/or safer than current standard treatments, Compass would submit a “new drug application” to FDA for approval and post-market monitoring. For a detailed look on the whole process, go here.

If everything goes well, we will probably see a psilocybin drug hit the market sometime in the next five to ten years. That’s a big “if”: Once trials start, it’s possible that the findings won’t pan out (although we are optimistic). The fact that FDA recently approved the first non-synthetic cannabis drug, Epidiolex, should give Compass some optimism that its psilocybin efforts have a real shot, and that the decision here will be entirely science-based and free of political considerations.

At some point soon, due to the Epidiolex approval, Congress or the DEA is going to have to re-schedule cannabidiol under the CSA. Perhaps one day they will have to do the same for psilocybin. Before that, who knows: It’s even possible that psilocybin, like cannabis, will be legalized in certain states. That could happen as soon as 2020 here in Oregon.