Dr. Hofmann is dancing in his grave: A presidential order signed by US President Donald Trump in April 2026, instructing the FDA to dramatically shorten the timelines for approving psychedelic drugs, flooded the Wall Street sector with a sharp wave of increases: Compass Pathways stock surged by about 55%, and atai Life Sciences stock rose by about 25%.
In tandem with the governmental tailwind, the State of Texas allocated $50 million for ibogaine research to treat addiction and PTSD. The market is marking two key goals by the end of the year: Submitting a first-ever FDA approval application for psilocybin (magic mushrooms), alongside a resubmission of the application for MDMA – this after a previous submission made two years prior (in 2024) was rejected by the agency due to a lack of preparedness and a demand for supplementary data.
The tailwind from Washington and the investor rush do not stem from humanitarian considerations, but rather from a cold macroeconomic perception. The days when psychedelic substances were mentioned solely in the context of trance parties and leisure culture are long gone. Today, after the significant journey the field has undergone, they are becoming established as a scientific and effective solution to reduce the costs of the depression and post–trauma epidemic.
<br>Suicide and the Israeli Economy: Costs Estimated at Around NIS 2.5 Billion a Year
According to White House data, more than 14 million American adults suffer from severe mental illness. Military veterans suffer from a suicide rate twice as high as the general population. Every year, between 400 and 500 deaths by suicide occur in Israel, alongside approximately 7,000 reported suicide attempts that reach emergency rooms.
Meanwhile, concern is growing among security forces, as the war has led to more than 3,770 soldiers recognized as sufferers of post–traumatic stress disorder (PTSD) – a condition that dramatically increases the risk of self–harm. The total economic damage of this phenomenon to the Israeli economy is immense, and is estimated at around NIS 2.5 billion a year. Over 90% of the burden stems from indirect costs of lost labor productivity and output due to premature death among a young working–age population. The remainder of the damage, amounting to hundreds of millions of shekels, consists of direct medical costs for evacuation, intensive care, prolonged psychiatric hospitalizations, and allowance payments.
What excites investors about psychedelic drugs, what is the roadmap for their commercialization, and how do experts view the psychedelic retreat industry in Israel, which generates millions of shekels a year? For this, we turned to an expert from the Cathedra at the Eretz Israel Museum: Dr. Itamar Cohen, holder of a PhD in clinical psychology from the Institute for Psychedelic Research at Tel Aviv University and a member of the Association for Psychedelic Research and Therapy in the UK.
Investors' eyes are shining: What do they see in the medical psychedelics market that causes them such great enthusiasm?
"The immense economic enthusiasm in the sector stems from the fact that current trials with psychedelic substances present an efficacy identical to that of standard antidepressants, such as Cipralex and Nustral. However, unlike these drugs, which are characterized by numerous side effects and require regular, daily intake, the situation is different in the psychedelics–supported treatment track. The estimation is that a single therapeutic session (with a preparation meeting before and integration afterward), accompanied by a preliminary preparation meeting and a concluding meeting following it, can produce exactly the same effect. This is the central reason that pharmaceutical companies are showing such great interest in the matter."
How much does MDMA treatment cost within a private framework in Israel?
"Scientific research into treatment supported by psychedelic substances, which combines structured psychological therapy together with the effect of the substances, has developed significantly over the past 15 years in the US and Europe. This research is currently divided into two primary tracks: Classical substances such as psilocybin, LSD, and DMT, primarily for the treatment of depression, and post–trauma treatment processes using MDMA. Both of these research tracks are currently active and approved in Israel for clinical–research purposes only, and are not authorized as private treatment. Within this framework, the Institute for Psychedelic Research at Tel Aviv University conducts clinical trials using psilocybin to treat post–trauma and depression, while parallel organizations in Israel examine the efficacy of MDMA treatments primarily for post–trauma."
Who is the target audience for treatment with psychedelic substances?
"The accumulating findings in Israel and around the world support the potential for integrating the combined model as a legitimate, additional therapeutic arm within the mental health system. Although it is not suitable for all patients, it is emerging as a scientific alternative in advanced stages of consolidation, particularly for highly complex and treatment–resistant cases that have found no response in regular medication or psychotherapy."
More than 70 years after Albert Hofmann's first trip: What explains the delayed ignition of investors and pharmaceutical companies around psychedelic substances?
"Until the late 1960s, these substances were researched in universities worldwide. Cheap LSD leaked aggressively into the market and connected with American protest movements. In the absence of knowledge, people consumed massive quantities, and the panicked establishment slammed on the brakes and banned their use until the 2000s, when their safety was retested under laboratory conditions and under psychological supervision, and an exceptionally high safety profile was discovered. It is important to understand, the substances are not risk–free, but today it is known from studies that the risks can be minimized by combining psychological support and comprehensive medical screening."
Governments prefer the public to toe the line, pay taxes, and not think too much. How does this desire integrate with the legitimization given to the legal use of mind–altering substances?
"These substances have a sweeping power capable of deeply changing people's worldview and the way they define themselves. This impact can indeed appear to the establishment as a potential disruption of the status quo. The difference between the panic of the past and the legitimization of the present lies in the fact that in the past, the general public consumed these substances in massive quantities, 'blotters' with up to 800 micrograms and without supervision. In contrast, modern research and therapy use minute, controlled doses, and in a protected environment. This supervised system is perhaps less troubling to the political establishment's old panic."
A branching industry of millions of shekels operates in Israel under the radar, in ceremonies and retreats of mind–altering substances without any psychological supervision. The public does not hear about severe cases; Is this a sign that the demon is less terrible than it seems?
"The dark sides of the psychedelic experience are hardly ever heard, but they exist: Not necessarily as a danger to the body, but as significant mental distress that people sometimes carry for years. This phenomenon has a name – 'ontological shock'. Its meaning is an experience so destabilizing that it makes returning to stable ground very difficult. This does not necessarily refer to a psychotic level, although this risk exists and is higher among those with a genetic predisposition. The distress arises even without it, when fundamental questions about the essence of life and the composition of reality suddenly receive a question mark. These topics, which normally tend to blur and be swept from awareness as a matter for mere philosophizing, become gnawing questions that breed deep distress for those who underwent psychedelic journeys under non–optimal conditions."
Within how much time do you estimate we will be able to consume treatments with psychedelic substances in private clinics in Israel?
"It is very difficult to pinpoint the matter. Globally, people are talking about a submission to the FDA at the end of 2026, but the picture regarding a final date is still not clear. Alongside this, in my estimation, ultimately, the health funds will subsidize the cost of these treatments for severe cases of depression and anxiety."