How Can Employers Prepare for Psychedelics?

Tasha Patterson@Work

How Can Employers Prepare for Psychedelics?

By DMEC Staff

Interest in the use and legalization of psychedelic substances for mental health treatment is growing in the U.S. At least one third-party administrator is helping employers consider “psychedelic healthcare as a workplace benefit,”1 a “psychedelic accelerator” is providing venture capital for psychedelic startups,2 and discussions have been had with the American Medical Association about developing Current Procedural Terminology (CPT) codes so providers can bill for treatment.2

While it could be years before psychedelic treatment is included in employer-sponsored plans or insurance offerings, the groundwork is being laid for that to happen.3 Many people believe psychedelic medicines are following the path of cannabis, which is illegal under federal law though states have legalized recreational and medicinal use. And considering expectations for market growth from $2 billion in 2020 to $10.75 billion by 2027,4 this is an issue employers will want to watch.

Psychedelic drugs, also called hallucinogens, can alter perceptions, moods, and thoughts, which in some instances can lead to breakthroughs for people with post-traumatic stress disorder (PTSD), anxiety, and depression. And while clinical trials and studies3 show promising results — including marked improvements in debilitating symptoms of mental health conditions — employee use of psychedelic drugs has operational implications for employers.

Employers will get an overview of this issue during the 2023 DMEC Annual Conference sessionComing Soon? Regulated Psychedelics for Mental Health & What You Need to Know, on Aug. 16 in San Diego. The session will cover the effects of psychedelics on work availability, insurance and benefits coverage, and lessons learned from the cannabis movement. Conference speaker Michael Copeland, RPsych, vice president, occupational health, Field Trip Health, will explain “why employers and payers can benefit from staying educated and up to date” with this issue.

For example, what will the treatment entail in terms of doses? How will the treatment affect productivity and safety in the workplace? How will it influence leaves of absence and accommodations? Should employers in cities and states that have approved the use of psychedelic drugs adjust drug testing policies?

Studies show that two doses of psilocybin may ease depression symptoms for up to one year. And while every case is unique, the Johns Hopkins Center for Psychedelic and Consciousness Research shows that two doses of a psychedelic compound can ease major depressive disorder symptoms for up to 12 months.5 That is promising considering that depression costs employers between $17 billion and $44 billion annually.6


Eleven states have passed laws that allow the use of psychedelic substances for mental health treatment. Below are three psychedelic substances that have been approved by voters and the Food and Drug Administration (FDA) in some form:

  • Esketamine, a more potent version of the anesthetic ketamine, is the only FDA-approved and widely available psychedelic treatment. It was approved in March 2019 for treatment-resistant depression in conjunction with oral antidepressant use.7
  • Psilocybin is a psychoactive compound found in certain mushroom species that can alter mood, cognition, and perception, which may enable therapeutic growth. In 2019, Denver became the first U.S. city to decriminalize psilocybin, and more than a dozen cities have followed suit. Oregon legalized and decriminalized psilocybin in November 2020, and several other states and municipalities have proposed doing the same with psilocybin and MDMA (3,4-Methylenedioxymethamphetamine).8
  • MDMA is an empathogen, which increases feelings of empathy and kindness, and increases the feeling of social acceptance and connection with others. The FDA granted “breakthrough” status to MDMA in 2017 for the treatment of PTSD.9

In the next year, the FDA is expected to approve the use of ketamine, MDMA, and LSD.

In addition to dozens of studies on psychedelic drugs,10 there are ongoing clinical trials for psilocybin, LSD, ayahuasca, ibogaine, and other psychedelics. On June 23, the FDA released Psychedelic Drugs: Considerations for Clinical Trials,11 a draft guidance that “provides general considerations for sponsors developing psychedelic drugs for treatment of medical conditions.”

While it’s important for employers to monitor city and state laws that legalize psychedelics to treat mental health conditions, they must also consider what accommodations will help employees receiving this treatment stay at work or return to work when they are ready to do so, and how or whether they should adjust their drug policies.


While many believe FDA approval of MDMA is imminent, it would not mean patients could pick up psychedelic drugs at pharmacies, as noted in The American Journal of Medicine.12 The request is for approval of a drug-assisted therapy protocol in which specially trained professionals administer the drug in clinical settings and conduct guided therapy sessions.

Even with FDA approval, psychedelic drugs face additional hurdles from the Drug Enforcement Administration (DEA) before they are readily available. They are designated as Schedule I drugs, the most restrictive (and illegal) category. FDA approval would prompt the DEA to reassess categorization, but doctors could not prescribe it until the DEA reassigned the drug’s schedule classification.9

There is still much to be learned about the side effects of MDMA and other approved psychedelic drugs, which may influence leave duration and stay-at-work accommodations during treatment. In addition to insurance coverage, there are questions about workers’ compensation for employees who suffer stress-related health issues, such as healthcare providers, police officers, and firefighters.

And while questions outnumber answers, employers should stay attuned to news about psychedelic drugs and assess whether these treatments fall within existing policies and procedures. Similar to the cannabis movement, acceptance and legalization of psychedelic drugs is expected to spread across the U.S. The key for employers is to be prepared to respond quickly when (or if) it does.


  1. Enthea. Breaththrough Therapies for Mental Health in the Workplace. Retrieved from
  2. Forbes. Insurance Provider Enthea Offering Psychedelic Therapy Coverage as an Employee Benefit. Dec. 6, 2022. Retrieved from
  3. Stat. Psychedelic Therapy is Moving to the Next Frontier: Workplace Perk. Dec. 6, 2022. Retrieved from
  4. JAMA. The Rapid Rise in Investment in Psychedelics — Cart Before the Horse. Retrieved from
  5. Johns Hopkins. Psilocybin Treatment for Major Depression Effective for Up to a Year for Most Patients, Study Shows. Feb. 15, 2022. Retrieved from
  6. Centers for Disease Control and Prevention. Depression Evaluation Measures. Retrieved from
  7. U.S. Food & Drug Administration, FDA Approves New Nasal Spray Medication for Treatment-Resistant Depression. Retrieved from
  8. Employer Benefit News. Views. Psychedelic-Assisted Therapy, Coming to a Health Plan Near You. Dec. 19, 2022. Retrieved from
  9. Multidisciplinary Association for Psychedelic Studies (MAPS), FDA Grants Breakthrough Therapy Designation for MDMA. Retrieved from
  10. Reinsurance Group of America, Psychedelics and Mental Health — A Review of the Current Research. Retrieved from—a-review-of-the-current-research#:~:text=Currently%2C%20esketamine%20is%20the%20only,junction%20with%20oral%20antidepressant%20use
  11. U.S. Food and Drug Administration. Psychedelic Drugs: Considerations for Clinical Investigations. June 2023. Retrieved from
  12. The American Journal of Medicine, Prescription Psychedelics: The Road from FDA Approval to Clinical Practice. Retrieved from
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