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Derek Du Chesne and Dr. Sam Zand founded Better U and today discuss getting into ketamine therapy (4:00), psychedelics gaining more legal and medical acceptance (23:00), industry differences between cannabis and psychedelics (27:30) and advice for investing in the space (42:30).
Transcript
Rena Sherbill: Derek and Dr. Sam Zand, welcome to the Cannabis Investing Podcast where we also discuss psychedelics. It’s great to have Derek, it’s great to have you back on, and it’s great to have you both on today. So, thanks for joining us.
Derek Du Chesne: Rena, thank you. Thank you. It’s been a while, it’s been a couple of years.
RS: Yeah, changed industries and everything.
DDC: Yeah. Yeah, lots happened.
RS: Lots going on. So, talk to us. I guess, Derek, I’ll start with you since we have the cannabis connection pre-existing. I’d love to hear from you what got you into psychedelics, what made you change the switch and start Better U?
DDC: Yeah, absolutely. The cannabis industry or more specifically the non-psychoactive cannabinoids and bringing those to market, that industry did so much for me, and it helped me really launch a wonderful company and a great career in the space, helping a lot of people. And as we saw, like, with that market, how drastically that shifted end of 2019, 2020, with the cost of raw materials oversupply in the market, pandemic, kind of a perfect storm.
At the time, the company at EcoGen, we were through an acquisition. And my life before that, I was on the road for pretty much all 2019, like 300 days, and I was in 40 some countries. And every other day was different conference or events talking about cannabinoids within the pharmaceutical, tobacco, cosmetics, food and beverage, wellness, pets, every kind of industry. And it was amazing, but also very taxing. I mean mentally, I mean physically, and I couldn’t – I was having issues of sleeping because I was traveling a lot, right? So, the doctor is like take this Ambien and take this Xanax. Now, I’m having trouble focusing, take Adderall.
And the lack of just self-care, self-love and just living on this, like, crazy mentality of like build, build, build, go, go, go, and not taking care of myself mentally, that and, like, kind of neglecting my personal life as well.
So, I had an important relationship kind of take a 180 at the same time as, like, the business and I didn’t realize it up until that point, but like I identified who I was as a person, my happiness like almost entirely on my career and my business and my relationship and all these external things, right? And inside, there was – there’s really nothing there and nothing left. And I became very – it was in a very dark place and mentally rock bottom.
And my whole ethos being plant-based medicine coming into this. Somebody recommended when I kind of exhausted every other option recommended I should look ketamine therapy. And in my head, it’s like that’s a, silly; b, it’s a horse tranquilizer like, vial; and c, it wasn’t plant-based.
So, my whole ethos – I was very apprehensive to trying it. And I got to a point where it was like, what else do I have to lose? And I went in for a session and that one session took me from suicidal to, still had an underlying issue to deal with, but I was 90% back. And it was amazing to say the least, but there was also almost no treatment, like, preparation going into it mentally.
There was also no aftercare. It was also very expensive. It was, like, $1,500 a session. And I would just like was; a, in shock of how I spent years in alternative medicine, not even understanding or knowing this as an option. And, b, after failing like a bunch of other alternatives. And then b, looking at like how many other people could – are in my situation, right? And how many people or have lost all hope or lost all connection with themselves in the outside world and they feel so isolated and alone and terrible that they feel like the only way out is, or the only way to happiness is ending the pain.
And when I realized that this could be done in a different way or better way, and then more people just needed to know about it. It was almost like cannabis early on, right, where those people just didn’t have the access and information of, like, this is helpful.
And this is what it can help. And I’m like, “Wow, this can cure suicide, right? This is amazing.” And then throughout that path and journey a few months after my transformation, I connected with doctors, and I was working with a couple of doctors at the Psychedelic Research Institute at Stanford and really learning more about, like, what they were doing with LSD for dementia and Alzheimer’s and psilocybin, MDMA, and all these different incredible things and started working on developing this program there.
I was connected with Sam, and Sam had already been doing this work for years in treating patients in office and being a psychiatrist, he’ll tell you his journey to ketamine. But I was already doing amazing work and really helping patients. And I think a big problem with mental health is it’s like, they’re just overprescribing, over diagnosing. So, initially, I was like, this psychiatrists are a big part of that problem.
And after Sam and I met, I realized, like, his holistic approach and helping people get off medications and really looking at their lifestyle choices and their day-to-day habits. Like our first meeting, I think we were – we got on a call and we’re on the phone for hours and hours. And our first in-person meeting, it was a lot of incredible things, but somehow Jedi Mind Tricks me into what life mapping me on the board, and he’s just – he’s so powerful in helping people and helping people transform and was already doing the work.
And I was like, how do we create this together and combine, like, our past and his knowledge and what he’s been doing and how do we make it more accessible and how do we make it really education focused? And while the medicine does the work, really teaching people that we have to show up and do the work in order to, yeah, to get to where we want to be.
RS: Yeah. I asked somebody that works in psychedelics a couple of weeks ago, what would be the first psychedelic worth trying? And they answered breathwork. And I thought that that was such a great answer because it really speaks to the holistic nature of what’s needed, it’s not just a pill that you take speaking to the overprescription of society, I think, also a point of it is that we’re part of this process and feeling that we’re part of the process more than it is to just take a pill.
But separate from that, so many follow-up questions that I have, but Dr. Zand I’ll let you get, kind of started with sharing how you got involved with psychedelics? And I’m also interested in why you chose to focus on ketamine, given all of your background and what led you to this? So, yeah, I’d be happy to hear your story.
Dr. Sam Zand: Sure, and thank you for having me on as well. So, as a psychiatrist, my academic career started back in Johns Hopkins as I studied Public Health. I studied Entrepreneurship & Management. And in that time, really just epidemiology, health promotion, at large scales, how do we help people? I went on to do my medical school and residency in psychiatry in Las Vegas, and we have a saying in Vegas. If you can heal Vegas, you can heal the world. There is a lot of pathology here. And so, it was a fun journey.
And when I became a psychiatrist and finally created my own practice, I started to see even through residency that we’re not really helping people, and it was frustrating. It was difficult. It was almost – it made me angry. Like, why are we – this is not what I signed up for.
And so, it wasn’t really until I started to understand the power of psychotherapy, which as psychiatrists, we often don’t get enough training. And putting aside med management as the first tool, started to realize, all right, if we can get into the core contributing factors, psychological, biological, the environmental, and the spiritual factors, that’s when we’re actually making change with patients.
And our practice was very holistic based from the get-go. It wasn’t until 2019 that SPRAVATO was introduced, the esketamine nasal spray formulation, FDA approved for treatment resistant depression. The reps came by the office, we started using it, we started to try to understand it, get ahead of the new technology, and it was a night and day difference in the way patients were responding.
I hadn’t seen anything like it. I’ve been doing this work. We see a thousand patients a week, and we do our best with psychotherapy and trying to minimally use medication where it’s helpful. But all of a sudden now, through this what was reintroduced to me from my early research experience in psilocybin is now accessible to me as a doctor that I can prescribe, and I can actually allow people to be there for themselves.
Allow them to be their own therapist, give them the tools, the hand holding, and all the safety and medical guidance to get to the point of what medicine is all about, allowing the body and mind to heal itself. We are these amazing machine organs that – organisms that want homeostasis. We want to be at peace. We want to be relaxed, but so many toxins, mental, emotional, physical, environmental get in the way. And what I saw from SPRAVATO really just changed my path as a provider.
We started doing a lot more of it. We started learning more about ketamine. I have a lot of mentors in the space that helped us to, kind of create protocols and make this effective, make it safe, and then we connected with Derek. And Derek’s whole past and growing businesses the right way and putting the patient first was refreshing, meeting someone with business savvy that really leads with their heart and leads with care and compassion. And so that was the perfect alignment for us, and we decided, let’s figure this out.
Let’s hit the drawing board. And now two years later, we’ve helped thousands of people, and it’s been such a – I think, optimal way of helping people address their mental health in a way that we just didn’t have before. There was a lot of shame, a lot of judgment, self-judgment when it came to addressing our mental health, and I think this liberates that.
And I agree with you that an introduction to psychedelics is really breathwork, is really just tapping in with self. And then after that, I’d say the most gentle introduction as an actual medicine is a low-dose ketamine.
RS: So, specifically as it regards ketamine, hearing Derek speak about that he was looking for a plant-based option and hearing you that you had previous experience with psilocybin. Is it because – is it what you said that it’s the most effective introduction to psychedelics or is it more readily available? Because, obviously, psilocybin is plant-based, and for some it’s more accessible or it’s something that they’ve experienced on a recreational, I’m using quote marks there, level, can you speak to that a little bit?
SZ: Absolutely. From a medical standpoint, ketamine is the only legal psychedelic medicine. So, as a provider, as a doctor, I can’t help people with psilocybin. I can’t help people with MDMA unless I have government-approved research trials, which we’re getting involved in all of that as well. But at scale, it’s just not there.
So, that’s primarily the reason that, this has become such a huge tool in the medical community, but beyond that, I have the understanding the research and knowledge of what the other chemicals do. They will be accessible to, I think, a medical population soon enough, and they’ll have their similarities in neuroplasticity and the effect of resetting our neuropsychiatry and seeing things from a new perspective. But they’ll have their subtle differences.
And ketamine really is a very meditated drug at low doses. I think it gets a bad rap because at high doses people have these psychedelic experiences, the k-hole and such. But at a low gentle introductory dose, it really just teaches somebody how to meditate. And I firmly believe meditation beats medication any day.
So, if we can use a medication that enhances meditation, enhances the ability to declutter to check-in with self to be that non-judgmental observer, it’s almost like a cheat code towards healing because now we can get out of our own way and really open up new possibilities for ourselves. So, that’s why I think ketamine stands out. It has the duality of being a meditative application, as well as a more mind expansive psychedelic application.
RS: I hope you’re putting meditation is better than medication on a T-shirt or something. That’s pretty good, I haven’t heard that before. So, in terms of the nature of the model that you’re using, which is at home care, which is different than a lot of psychedelic companies are doing a lot of in-house treatment not at home treatment, how did you decide on that? And then also, would you say that you’re training or I should ask, are you in-house training your service providers?
DDC: So yeah, so Sam started doing this in-office, right? So, all of our – we offer in-office services, as well as at-home. The at-home model was created to make it more accessible. Like I said, my first session when I went in was $1,500 first for one session. And there’s also no treatment preparation, there was no support integration. When you give people these incredibly powerful and oftentimes transformational, life-changing sessions, like, all they want to do afterwards is unpack it and then also have guidance or clarity on kind of what’s next and a lot of people will go into these sessions.
Like, we’ve heard horror stories about somebody going into an office or getting ketamine therapy for their son and the clinician said, you can listen to whatever music you want. And as our brains are very malleable and very receptive during these sessions, the kid put on death metal because that’s music he liked, and he’s 16-years-old. And now he’s in a not ordinary state of mind. He’s in a psychedelic state, and now he’s, like, imprinting this music, and had a very terrible experience, right?
So, it’s a lot of people, a lot of the training needs to be worked on and part of, like, the reason that that I built this with Sam and partnering with Dr. Zand is because of his robust training protocols and the fact that he’d been working with ketamine, basically, since it’s been FDA approved. Since SPRAVATO is FDA approved. So, I’ve been working with it for years. And so, all of our clinicians that do the at-home ketamine treatments, they also do in-office treatments as well.
SZ: Yeah. I’d also say one thing about the at-home treatment, if I may. It’s not for everybody, but the in-office visit isn’t for everybody either and teach their own. And I think what we have to do in mental health is to meet people where they’re at, where they’re comfortable because that’s the only way to bridge towards progress and improvement. If we force someone into a category or into a box that they just don’t fit in, they’re not going to be comfortable and open.
So, at-home, I have patients who say, I’ve come to the office and I just couldn’t relax. Everyone is so sweet here, and I try my best, but at the end of the day, like, I’m never comfortable anywhere outside my house, and you have your agoraphobics and people with panic. And so, the at-home model helps that community and it helps that population so much more, and they wouldn’t really be open to the ketamine clinics. So, that in addition to the scalability, we have the luxury to help people for a living, and the goal is to try to help as many people as possible.
In my hometown in Las Vegas, statistically, we’ve reached 1 in 200 people in this town. We want to do this all over the country. And if we just open one office, we’re limited. And so, now with the ability to safeguard, provide virtual assistance, therapeutic care, psychiatric care, COVID obviously accelerate all of that, we’re now able to really reach a larger demographic and really help a lot more people.
RS: Would you say, I – something that I picked up in studying more about psychedelics is a lot of people point to the number one risk in the industry being bad service care providers that can really ruin the whole reputation and people’s experience. A, would you agree with that? And the other thing is, is that, speaking to the similarities of different psychedelics and that we’re just touching the surface of what they can provide to society at large?
Is the role of service provider as people navigate different opportunities as they start to come online? That’s also the most important thing that they can choose is a service care provider that is the most appropriate for them. Would you agree with that level of importance being placed on the service care provider?
SZ: I think it’s so important, obviously, that you have the right clinician, the right air facilitator for you. But I think, whereas 10, 20 years ago, if you wanted to go to a ketamine clinic, it was just an anesthesiologist who really often no mental health, obtaining our background, now we’re drawing the people who really want to do the work the right way.
So, I’d say today, it’s far easier to find the right clinicians. And what’s harder is to find the right business infrastructure because doctors suck at business. And so, if you’re going to put your life in someone’s hands, but all of a sudden, their call team’s not picking up, the shipment is delayed, the service that the doctor can provide very well is being interfered by technology issues or infrastructural issues, the patient suffers, and we’re seeing that right now.
We’re seeing tons of ketamine clinics close for multiple reasons, over funding and putting the funds in the wrong direction and not prioritizing care. Whatever it is, it wasn’t the clinicians that let the patients down, it was the business infrastructure. So, I think in this day and age, that needs a lot of attention. I think that’s where we stand out as a company as well. We prioritize the patient first, so everything is patient-oriented. And we made sure that the infrastructure supports the patient before it supports the actual profit motive.
DDC: And going on what Sam said and thank you for highlighting that piece. That’s something that we’re very proud of and we have a lot of people that have come to us from other providers and also people that have left us and went to other providers and come back and said that, like, their level of care and detail or attention to detail and support that they get from us is unlike anything else that’s out there. So, something that we’re very proud of and spend a lot a – lot of time in building.
But going back to your question on the provider, I think, that the provider is absolutely critical because like I said, when I went for my session, there was no – it wasn’t anesthesiologist. It was an in-office clinic, and there was no very intrigued, very little training.
And you didn’t know how to work with ketamine, but it had little training on the mental health aspect of it and these transformational experiences. And mentally, yes, there’s no preparation and afterwards, all I want to do is unpack it and talk about it. And all they do was have somebody come in the room and say, what are you doing next week? And didn’t say, “Hey, like, your brain’s in this heightened state of malleability or neuroplasticity, and you’re going to be more receptive to things.” So, maybe don’t go home or maybe don’t get on social media for a couple days. Don’t go home and watch a scary movie. Like, all these things that you don’t want to do after a psychedelic therapy session.
And so, I didn’t – there’s none of that guidance. And we’re seeing out there, even at home models, we’re very big on having that human-to-human one-on-one connection, not just with your provider, but with your integration coach, your treatment preparation team, and making sure that you have that support.
And ketamine being as powerful as a substance as it is, it’s like there are other providers out there that you’ll – people are signing up and there’s not a structured program or there’s not that one-on-one care. They see the doctor, they ship them ketamine, and it’s basically the end of the relationship until they need a refill.
And I think that that’s reckless, and I think that there needs to be love and support and hand holding because I think majority of people, probably over 90% of people that come to us have never tried any type of psychedelic experience. And when for the first time, especially somebody’s in their 60s and then they’ve never kind of stepped off the hamster wheel, and they’ve always been in that default mode network at a very rigid thought patterns or beliefs systems and you shake that up and they step off of that for the first time and they’re not doing it properly with, like, doing breathwork before setting their intentions or making sure that they’re in a good headspace.
And if they’re not having a stressful day, like, doing it at a different time, it’s not giving that guidance and infrastructure. Psychedelics can be almost as harmful as they can be therapeutic, if not done properly. So, I think the right provider and the right structure is absolute necessity.
RS: Do you – do either of you have a strong opinion on what happens when the psychedelic start gaining more legality, I guess, in the framework like MDMA is, they’re saying that it’s going be FDA approved for PTSD sometime this year? Do you feel like that the wider spread adoption is going to change how the therapies are approached? Or do you feel that that’s so far away, it’s hard to navigate exactly what that’s going to look like?
SZ: I feel that we’re there already. I mean, MDMA, as you said is, right on the horizon, but this work is being done. The protocols are made. When you wanted to get into psychedelic medicine prior to these last few years, you really had to go to shamanistic origins in the ancient cultural kind of approaches to it, which is great, which is really all we had and which is, what now Western medicine is adopting more and more.
So, I’m seeing in the medical community this evolution from a Western medicine disease state model, which doesn’t really serve us in the mental health community to tell someone they’re sick or there’s something wrong with them. And, really, they’re just struggling with trauma or they’re struggling with acute stress or environmental problems, but to move from the disease state model to a more mind expansive self-exploration model. And I think that’s what we’re doing with this wave, and we’re already there.
I mean, this might be new for a lot of people. I’m in the thick of things. Many doctors don’t really understand it yet, but I’ve just started teaching at UNLV a course on psychedelic medicine. I teach it at several residency programs now to train our future psychiatrists of the world to be ready for this and we’re pretty proud of that. I think that education is the number one thing we need in this space. As we get more and more tools, the education remains very similar, but the application changes.
DDC: Oh, yeah. I think that the – if you look at it from both mine and Sam’s perspective as a patient and as the doctor, when both of us first heard ketamine therapy, like that sounds ridiculous. So that sounds silly. Both of us had that same – yeah, and until we both got educated on it, right? And it’s the same thing with a lot of doctors that, like two, three years ago, they’re like, what, that doesn’t sound right. And now, the same doctors turn around, and they’re the biggest advocates for it.
So, it’s really all about education, and it’s really exciting seeing that now that there are residency programs that are being taught and Sam leading the way there. But seeing that all of the – especially in the last few years, all of the biotech companies that have raised and deployed hundreds of millions of dollars for psilocybin, MDMA, different analogs of LSD and all these different applications for things, for problems that are so widespread and affecting depression in suicidal ideation or suicide and Alzheimer’s, and, like a lot of these things that, yes, there’s environmental factors and a ton of other things, right? But there’s also, like, a lot of prescription medications that can – have caused a lot of these mental health issues as well.
And so, seeing that change that doctors are having and like, this is in, “Hey, take this pill, you’ll get better. Take this pill every day. You’ll get better.” It’s making it more of a, like, a ritual or ceremony – a ceremony or like these really intense like the MDMA program, like really intense rigorous in-person programming and these back-to-back sessions, right?
So, it’s really forcing people to do the work. And I think so many people are – have, especially during the pandemic, so many people are still used to that model of their doctors saying take this pill, you’ll get better. And when they don’t get better, being mad at themselves at the medicine or the doctor when in reality, like there’s so many things that come into our – that play an important factor in our happiness, right?
So, it’s sunshine, it’s movement, it’s nutrition, it’s social. There’s so many different things and being able to approach like, medicine with these rigorous and structured programs. I think it is going to give everybody the best chance for success and seeing more of these programs popping up is, I think, really exciting not just for the medical community, but for everyone.
RS: Do you think it stays in the medical community for a while before being more recreational, like the difference between how cannabis is medical and adult use? Do you think the difference is much starker with psychedelics?
DDC: Well, I think psychedelics and cannabis. So, cannabis is really one molecule, right? It’s THC, right? So, comparing that one molecule to a ton of different delivery systems and terpenes and cannabinoids and other blends, but comparing that to psychedelics, which is thousands of molecules for thousands of different applications, right?
So, I think that’s vastly different, and there’s people that have been recreationally abusing or recreationally self-medicating on all these substances for a very long time of whether it’s – if you look back to the 60’s and The Hippie Revolution era or if you look at, yes, like, a lot of this psychedelics came through in that, but it’s also that, like, we’re seeing a very interesting time with psilocybin and seeing states decriminalizing it, areas legalizing it. At the same time, seeing the biotech, the FDA embracing it and biotech companies getting a lot of traction and movement.
So, I think it’s going to be a really interesting dichotomy there. But as far as, if you look at even how people recreationally use psilocybin, cannabis is something people tend to do for quite frequently, right? And there’s also functional, like, people that, like, instead of taking pain meds, they’re able to function all day long and use cannabis as a substitute, which is absolutely amazing. I don’t know anybody that would be functional that’s eating psychedelics or mushrooms or LSD or these other things all day every day like, you can…
RS: Well, micro-dosing?
DDC: Well, that’s a different – completely different, like, the conversations as well because like micro-dosing isn’t a recreational, or at least in my eyes is a recreational thing that’s more neural optimization and performance and thought clarity, right? And so, I’d like, but that’s not typically what you’re looking at in recreational. I think recreational is somebody’s going to a music festival and eating a bunch of mushrooms with their friends.
So, I think that there’s still always going to be that. I don’t know, like up until we saw this massive decriminalization movement and legalization movement with psilocybin, I was under the firm belief that because of the capital alone that’s being deployed on the research and bringing, getting psilocybin – different psilocybin products to market for different applications that it was going to be very strictly regulated and funneled only in similar ways that’s controlled substance and DEA and other medications, but then seeing how much the decriminalization movement has opened up and recreationally.
And I think since the pandemic, you can walk into almost virtually any smoke shop in a coastal city in New York, Miami, Los Angeles, San Francisco, and they’re selling cannabis products illegally, they’re selling every kind of mushroom chocolate bar illegally, and it’s very well accepted and not being like, yeah, it’s not being penalized to a point where it’s – yeah, it’s a very interesting time for psychedelics and kind of seeing where this path is going.
Yes, because I think adopting these things that have already been in recreational, like, per view, I would say, like, seeing and be like, wow, these aren’t, these shouldn’t be scheduled once substances. There’s tremendous value. And for these different molecules, like, for LSD and Alzheimer’s, like, when you have people that are, yeah, if you’ve never met somebody personally or been through with your family if somebody has dementia or Alzheimer’s, it’s painful and it’s really hard and it’s dark and it’s scary. And if there’s something that can give them hope and it just happens to be a psychedelic, they don’t care what it is, right, and – but that exists, but people haven’t been able to get access for it.
And the research and the studies that have been there for a long time are there, right? So, it’s – and then, like looking at things like suicide. If we can cure suicide or for something that people just didn’t know existed, like that’s shame on us for not like yelling from the tops of the mountains that this is available, right? So, yeah, it’s an interesting time. Sam?
SZ: Okay. You got to follow the money. And in this industry, Big Pharma is funneling a lot of money, and it’s nice to be very anti-Big Pharma. As a psychiatrist, I saw how these drugs are actually damaging a lot more people than they were helping.
But I’ve come a long way, and my perception and to try to not be resistant to the current, I actually see Big Pharma’s on our team now because we’re using, we’re adopting, we’re evolving with these new chemicals a new approach to medicine. And so, I’m actually firmly in belief that Big Pharma will control the psychedelic application to this.
I mean, you might have the psilocybin in different communities, but even saw Oregon and Colorado set the precedent that this is still to be done in a therapeutic setting. And I’m looking forward to that because what Derek alluded to when someone can’t sleep, when someone’s feeling anxious, the average doctor is just going to give them what they know works, which is the Ambien, the hypnotic, the Xanax, the benzo. And what we’ve done for 50 years now is create these kind of neurotoxins in our culture. It has become so commonplace.
I think what psychedelics have the power to do now through the same engine that actually maybe went too far and overprescribed a lot of the psychotropic medications we now have, some psychotropics that will undo the damage and create a lot of a neural reset for people who have had longstanding damage, much of the work I do is helping people get off their meds with ketamine.
And so, if they’re stuck on opiates, if they’re stuck on high doses of antidepressants that they’re scared to come off, this has given them that bridge to allow them to reset. And I just don’t see that happening in a recreational sense. And so for care reasons, for commerce reasons, I think it’s all aligned that we are probably going to be in a very heavily regulated pharmaceutical market. There’s always going to be illicit drug use and recreational use or see where we’ll see where our sales often lands. I think that’s the interesting variable everyone’s trying to fight over.
RS: Yeah. I think it’s definitely interesting to – I think for me, it’s even redefining what recreational means because I think the whole approach – the person that keeps coming to mind is Payton Nyquvest from Numinus (OTCQX:NUMIF), who we had on, and he was talking about how he really takes issue with even calling it the psychedelic industry because he sees it as really transforming healthcare.
And I think to your point about pharma coming in, and we see pharma and biotech, and all of those players sniffing the space out and some people fully in it at this point, but I think it’s – what does it look like? What do they do to it? What is the treatment? What does the treatment look like? What are the opportunities?
And then also the access, if somebody is maybe not comfortable in doing it in a certain situation or a certain setting, and I think in many cases people just haven’t had access to it. And when they are afforded access, they can approach it in what ways suit them. And I’m experiencing that a lot just seeing to your point about psilocybin and more mass adoption. I live in Tel Aviv most of the year and it’s people that didn’t even know what psilocybin was are now growing it at home in a lot of instances. And I see it across every state line and across the country. So, you see people talking about it a lot more.
From a medical perspective, do you feel that micro-dosing is going to be adopted as a real thing? I know there’s a lot of misinformation about it and I know a lot of people in the medical community, kind of poo poo its efficacy until there’s real-world research, but I know also the anecdata is pretty strong. For both of you, how do you think about micro-dosing, and its place in, kind of popular culture at this point? Do you think it serves the community?
SZ: Yeah. I can let Derek talk a little bit more about the pop culture application, but medical application of micro-dosing, I think, is soon there. You talked about MDMA coming next on the horizon, and that’s obviously not a micro-dose, but there is infrastructure and a precedent for the infrastructure already built.
Once SPRAVATO came out, the FDA said, this can’t be sent to someone’s home. This has to be done in the clinic. There’s a risk evaluation management system that needs to be followed. And my assumption is that when MDMA gets FDA approved, it will fall on that same REMS criteria that needs to be followed. Your question about micro-dosing is different.
Pharmaceutical companies, if we sit in their shoes, they want to sell more pills. And so, I agree that micro-dosing can be beneficial and advantageous, and that neuroplastic reset is helpful. So, if that’s true and we want to sell more pills, we’re probably going to do a formulation that’s a micro-dose every day for people to take.
So, I think that will even be FDA approved soon as well versus the macro dose concept, where we’re doing, kind of with the ketamine oscillating high-dose, low-dose, MDMA would be more of that probably macro-dose psilocybin therapeutic, kind of clinics in Oregon and Colorado will follow that macro-dose.
I think that’s going to be reserved for the office setting. And that’s one of the reasons why we’re still opening satellite clinics in brick-and-mortars And some of the DEA regulations suggest that we can probably keep doing generic ketamine at home. We just think there is much safer applications for certain people and certain demographics that need that in-person touch. You live in LA where it’s kind of like, you see it all the time.
DDC: Yeah, yeah, it’s against the norm if you’re not micro-dosing. I think that then, again, like, bundling up, there’s so many different molecules that we’re talking about here, right? But even micro-dosing, like, real micro-dosing protocols like you need to, you shouldn’t be doing it every day. You need to give your body, your brain time to process the medicine, flush it out, reset and then do it again. I’m a big advocate of micro-dosing the proper ways for certain molecules.
Ketamine, I don’t think there’s a reason why SPRAVATO and almost every single provider out there in office and for at-home that it is not a daily prescription, right, and or daily micro-dose because I think there’s – while we’re, like, I’m a big advocate of the macro because of the transformation that it personally gave me and what I’ve seen now, thousands of people have similar life-changing transformations with it. But the ketamine or psilocybin or LSD or MDMA, like, when somebody’s taking these every day, even small doses, like, that’s when they can – start to be very, very real problems.
Like, these are very different molecules, they’re very powerful molecules. And while they can be normalized in pop culture, they are still very powerful things. And when you’re taking your body or your brain and putting it into a different state of consciousness, it’s even at subperceptual doses like there still needs to be that break and that time for recovery.
And I think that psilocybin has made it – and this has been going on very openly for maybe 10 years in the Bay Area and San Francisco, and then kind of moved its way down to Los Angeles and then across the country. But looking at for, if there’s an alternative, right, if there is an alternative to somebody taking a Prozac every day or taking something every day that’s for their depression or for anxiety and they’re taking a micro-dose every couple of days and this is what works for them. Like, I’ve seen a lot of people get off medications with micro-dosing.
I wish that it were legal, I wish that it were more accessible and we’re seeing with the FDA approvals that there’s or, like, there’s some psilocybin products like one that’s in Phase 2 for weight loss, right? So that’s a very low dose, not even sure what else is in it. That’s a very, very low dose applications taken more regularly.
There’s obviously ones for depression. And what’s interesting, especially for psilocybin and micro-dosing, like if you look at a chart and intolerance for it, or macro-dosing, either way, it’s, your body builds a tolerance to psilocybin so rapidly that if somebody is taking a micro-dose of psilocybin every day for seven days, like you’re not going to be getting those effects anymore, right?
So, I think that there’s tremendous benefits for some of these molecules. I don’t know and I’m not educated enough to say, I just know from my limited opinion and education that I probably wouldn’t recommend anybody. Like, I just like ketamine, I wouldn’t recommend anybody micro-dosing MDMA.
SZ: You come in and medically say, daily use of ketamine is causing problems in society when even it’s done under a medical guidance. We have – I’m not going to name the companies, but we have several companies in our space that are prescribing daily ketamine at low doses, and we’re seeing the responses all over Reddit, all over messaging boards that people are getting bladder toxicity. So, we know ketamine affects the cells of the bladder.
And if you do it every single day, you’re going to all of a sudden have, we call ulcerative cystitis that’s ulcers in your bladder and your urine actually seeps through your cells causing permanent damage. These are serious things, and they come from daily use of substances that should be held sacred. They should be used more ritualistically once a week, twice a week, rather than every day in my opinion.
RS: That’s good points. So, speaking to, honestly, I feel like there’s so much to talk about in these topics. It’s such – we’re really just figuring stuff out, I think, as a society and how we’re adopting this and the notion between Western approaches and ancient approaches to these things is happening in real time. But keeping things geared towards the investing community, which does not feel like a natural segue to that preamble, but here we are.
How do you speak to the investing community, or how would you speak to the investing community in terms of looking at the space and trying to figure out, I mean, even in the public companies, there are pre-revenue, and it’s hard to judge it how you would typically judge a company. But speaking to the broader ideas and then also the business models, how would you advise investors looking at the space and approaching the space?
SZ: Can I jump in? I think what’s really, really important is if you’re going to back something as an investor, make sure that you’re backing a medical service provider team, a team that leads with compassionate care. The leadership is revolved around being there for the patient. Because I think what we’re seeing far too often are tech companies who are coming in and saying, oh, we’ll just find the doctors, that’s the easy part. And I agree it in certain circumstances to find a clinician is easy, but to build your culture, I believe it has to come from care and compassion and medical service.
And so, that’s where I would caution someone to put their money into understanding who’s providing the best care, not who has the fancy bells and whistles. Further, I think that when it comes to investing in psychedelics, there are so many who are, as you said, pre-revenue. And they’re just raising, raising, raising before they’ve even actually helped anybody.
And there are some companies who just went out and bootstrapped and helped people and have gotten to a point where they believe their systems work because they see that it has worked. And now a little bit of funding can take this company to the next level. So, that’s – if I was in this space to invest and not to serve, I would look for people who’ve been doing it and then leading with that compassion and care.
DDC: Yeah. I couldn’t agree with you more, Sam. It’s super interesting to see almost some of the things repeat pretty heavily from what happened in cannabis a few years ago. What’s happening now in the psychedelics industry, and yeah, like you said earlier, I don’t even like to call it that because there’s so many different variables and applications to it.
But it’s – you see these companies that have raised a ton pre-revenue that – on one side, so that you have like the biotech side, right, where – and then I saw this happen all the time between 2016 and 2019, where companies would say, “Hey, we discovered this new molecule in cannabis or we discovered this new like extraction system and we’re going to raise a ton of money and we’re going to be worth hundreds of millions of dollars.”
And just because they discovered something new, like now you’re seeing a lot of companies like, we discovered this new part of the mushroom, this new ethanol or a new compound in the mushroom, but that doesn’t mean that it’s any better or worse than psilocybin, right? It doesn’t mean that it’s going to be more effective or more marketable or more applicable.
So, we’re seeing that a lot in the biotech side. The provider side, we’re seeing in the last two weeks, one of the biggest publicly traded psychedelics provider companies has closed down five doors that a year ago was worth 300 million on the Nasdaq. We’re seeing another one that just closed down on 12 ketamine clinics. We’re seeing another company that raised over $20 million, lay off their entire teams.
So, very similar to what we saw years ago in cannabis. It’s like the money is amazing and can really help these companies build and grow and seed them, but it’s – a lot of these when we’re really looking at it getting granular and if you don’t have like, the historicals, like traditional investments, it’s – a lot of these companies will have strong leadership or a strong track record that looks great in the deck and really sells like on what they’ve done in the past. But they don’t have that infrastructure built or vice versa, they’ve got a really great infrastructure and a bunch of great clinics that were operating and now somebody came in and brought in capital and the leadership isn’t there.
So, it’s rare, I think, and more rare these days to find both. And I think looking at companies that, like Sam said, if you look at ones that have started with bootstrap and altogether enough to get – to prove the model in a way that’s that they’re going to be a lot more thoughtful where the dollars are going, and said, like, okay, now we’ve raised money, and here’s how we think we should deploy it to make a successful business model. And actually doing that in real-time. And when you’re spending your own cash, typically, it’s – people are a lot more careful.
So, I think that right now as an investor, it’s a challenging time to really dissect and see like where – who are the winners going to be, but I think the best way to look at that is the team, the infrastructure, really spending time to get to know people. I’ve spent a lot of time on both sides of the table as you know on the investment side and helping friends bet deals and bet projects and companies.
And really spending time with those companies outside of those business settings and business environments and really getting to know them as a person. And I’ve seen deals in companies where people are like, I don’t really understand the model, but I do see historicals. I see a beautiful roadmap going forward. And I really believe in, like, what this company is doing based off of my interaction with the other people on the team.
So, I think getting to know the team is also a great way to spending that extra time in your due diligence and getting feedback of like, what’s actually happening on a day-to-day is really important.
RS: Speaking to the comparison about the, kind of breakdown in the cannabis industry, would you also liken it to a focus on expansion too early, I guess, like expanding while they have the money when – what you’re saying is the business model itself isn’t there or the infrastructure isn’t there? And then also, would you also point to – another similarity that happened in cannabis, which is that too many companies went public, that didn’t necessarily have business be in public?
DDC: Yeah. Yeah. Well, I think, taking the public model is to being able to raise a ton of capital to keep things going, right? But, like, it’s very similar to cannabis is, I would see companies that had done 400 grand in revenue and they just went public, a cap of valuation of 300 million, right, and just astronomical numbers.
And looking at, like, a very similar thing on this sector seeing a couple of clinics where they were not profitable, they were nowhere near profitable or really a plan to get there, but they went public at a pretty inflated valuation. And then once the money comes in, being able to thoughtfully deploy it as opposed to now we’ve got to check the boxes, right? We said we were going to hire 5C suite people at x amount. So, now we just got to fill these seats and now we’ve done it.
We’ve got to open x amount of clinics and, yeah, expanding too fast is definitely something that – if you don’t have a proven or a – not proven, but a wheel that’s going down the right track. If you don’t have that in one city, like why would you replicate that model into 10 other places, right? So, if you’re like, okay, when we enter a new territory or a new market, here’s how we’re going to pre-market. Here’s how we’re going to recruit and find the leadership and operators.
Here’s how we’re going to do x, y, and z, and then take that from the existing wheel that’s going on the track, open in another one. Okay, great. This is going well. Okay. Now maybe it’s time to raise capital or deploy capital to open up in multitude of these. And while there’s always going to be so many different factors and expansion, if you look at, like – a lot of the things that crush the cannabis industry is regulatory changes, right?
Regulatory changes, oversupply, and, yeah, like the growers not being able to stay afloat; the distributor is not being able to stay above board, the taxes and then looking at the supply and demand. I mean, if you look at CBD isolate, like, my first kilo of CBD isolate was $20,000 at Healing Ventures as a business. By the time I left EcoGen, it was $300 a kilogram. And this was within a three-year span, right? So, now imagine the hundreds of employees, not only that we had at EcoGen, but looking at mile highs and kind of like, all these other companies that were doing what we were doing.
And while the technology has advanced over the few years in supply chain processing extraction, distribution. When you take that big of an oversupply in the market and the demand stays the same, relatively the same like one of the things I think is going to be interesting for psilocybin is like cannabis companies, there’s people that are still using cannabis or like pretty much regularly, daily, and that’s a pretty common thing.
Psilocybin, even if they’re micro-dosing, it’s such a small amount and it’s every few days. So, the amount that a consumer is actually taking on the rec side is vastly different, right? So, if you look at, like, the amount of CBD that goes into a product, like, or how much – how many products, like, 1 kilogram of CBD isolate makes and spreads so far, and it’s going to be interesting to see like, that market when it – as it expands, it’s not in the supply chain of the DEA or the FDA, how those companies are going to continue to grow and expand.
If you look at the clinics, it’s – I think a lot of the clinics are they built these beautiful spaces and hired on great teams. And now let’s make 15 of these, but then not deploying, like the right leadership in those places not having enough marketing to keep eyeballs on it. We’re seeing a lot of that happening. So, I think that, yeah, I think that there’s a lot of very fascinating things happening, but also really exciting because there’s still – there’s no shortage of people that have depression or anxiety that are going to benefit from this, right?
So, when you see things like a shakeup in an emerging market, like, this is to be expected. And as with any emerging market, there’s going to be some people that in the first few years like whether it’s by their own doing your external factors, it’s going to – they’re not going to be able to stick around.
So, seeing who has the longevity and who’s, kind of in it for the right reasons. Like, we’re seeing also a lot of tech, kind of tech bros or tech companies that came out and are like, we’re going to sell ketamine and not really looking at the patient care or how to really put the patient’s needs or support team around every patient that comes on. We’re seeing a lot of those not be able to sustain, right?
So that’s really interesting and also very exciting time because as the industry matures, I think, so will the education and so will the care and so will the companies that are providing those things.
RS: Yeah. There’s definitely building a burgeoning industry is no small thing.
DDC: Yeah.
RS: First of all, I want to thank you both for joining me and sharing so much. It’s been a great conversation. And I hope just the first, if we can end just how you decide what states to be in and where to go next, how you make that decision? And anything else you want to share is, kind of your final word?
SZ: Yeah. We bootstrapped this from the beginning in my clinical home, State of Nevada, and then we just kept expanding based on where I work. And our story was very interesting because I was a doctor, Derek was the integration guy, we bootstrapped and kept expanding, expanding, as Derek said, once we had the formula down. Now, it’s about, just kind of a little bit of strategy, our goal is to be in all states because we want to serve everybody, but there are certain states that require in-person visits. There are certain states that have corporate practice medicine laws that become very tricky to navigate.
So, there are just infrastructural and regulatory reasons why certain states are tough. There are certain states we’re targeting because we just know the need is so high, and it’s so underserved. We just opened Alaska for that reason. We’re opening Puerto Rico soon because mental health and Hispanic culture is very underserved and under addressed. So, it’s a combination of regulatory obstacles, plus opportunity and underserved need, in my opinion.
DDC: Yeah, to second on that, it’s – initially, a lot of it was where do we want, like, where do we see the need for it? And I grew up in a little farm town in Wisconsin where when you tell somebody that you grew up in a little farm town in Wisconsin, almost every time somebody says, “Wow, that must have been so nice.” And reality is, that it’s a lot of very angry, ignorant, racist, alcoholism, there’s a lot of – it’s a much different world than what you think when I say that sentence. And people that don’t spend time or money on their mental health that they need it the most.
And so, like we’re entering Wisconsin and that’s not the – in the rural communities. And it’s not really that’s – like that’s where the big revenue driver is going to be. It’s, like, really the communities that we’re passionate about. And I think that we really want to help heal and they really need it the most, and very excited about Puerto Rico and what Sam’s been building down there.
I think for us personally, I never thought that I would be in this industry. I never thought I would be in this space. And taking something that took me, that lifted me up when I was rock bottom, and, like, when I’m able to help one person, right, or I see one, like text come through and somebody says that this helped them from and taking their own life or this is something that they’ve tried everything and this is something that’s really helped them or that they quit smoking or quit drinking or they’re nicer to their kids or their loved ones because of this treatment.
Like that’s why we get out of bed and this is why we do what we do and to see now over the last few years, the widespread adoption of different psychedelics and psychedelic medicine, it’s really, yeah, it’s – I’m waking up every day. It’s incredibly grateful to be along for their ride and a part of this healing experience.
RS: Yeah. It must be extremely gratifying to get into something because it was a personal challenge for you and then to be able to kind of pay it forward. That’s a beautiful thing, and I think it’s exciting for people like me to watch it and see who’s able to succeed in this, and hopefully, the people that actually care are the ones that are able to do it. So, yeah, it’s nice to follow along and for, I think, anybody alive, it’s clear that mental health issues are the greatest threat to humanity at this point.
So, thanks, Derek, and thank you, Dr. Zand, who really provided us a lot of, I think, insight and education today, and it’ll be interesting to follow along what’s happening with Better U. So, thanks for taking the time. Really appreciate it.
DDC: Thank you, Rena, so much. And, yeah, looking forward to connecting with you again, hopefully very soon. And, yeah, thank you for everything that you do and for having us on.
RS: Yeah, awesome. And I hope so.
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