Opportunities for the IPO of psychedelics companies
If anyone had suggested only a few years ago that it is a realistic proposition to float a psychedelics company on any of the London markets that suggestion would likely have been met with derision. Commentators would have pointed to a lack of understanding and therefore acceptance of psychedelics in the investment community and to potential problems under the Proceeds of Crime Act 2002 (POCA).
The investment community has therefore rightly been wary of companies that might be considered to be committing a criminal offence, particularly as any investment might generate criminal proceeds in the hands of an investor under POCA.
However, times are changing. Although there are some impediments to investment through current drugs legislation, the FCA has given guidance about floating medicinal cannabis-related companies, although these differ for UK-based and overseas firms, such guidance can also be applied to psychedelics companies.
Current legislation, the Misuse of Drugs Act 1971 (MDA) and the Misuse of Drugs Regulations 2001 (MDR), can be viewed as impediments to investment, particularly as psilocybin, a psychedelic compound, is defined as a Class A drug by the MDA. The MDA describes a number of criminal offences relating to controlled drugs including prohibitions on: the importation and exportation of a controlled drug; the production and supply of a controlled drug; and the possession of a controlled drug.
However, the MDA also sets out some exceptions and defences to those offences, in particular, in the case of operations in the UK, where the handling and use of the controlled substance has been licensed by the Home Office pursuant to its powers under the MDR.
In the last few years there has been a growing awareness of how widespread mental illness is and also of the potential of psychedelic drugs to treat certain mental illnesses effectively. If psychedelics can add to the treatments that medical clinicians can use then this would be a very welcome development with a potential to improve people’s lives significantly. Psychedelics companies would then have a role to play in researching, developing and eventually supplying such treatments and that role would benefit both the world at large and psychedelics companies.
Given increased investment into psychedelics companies, usually through newly-established specialist funds and private family offices, there may well now be opportunity for these companies to carry out an IPO on one of the UK’s markets, reflecting activity in the US.
