Investors in cannabis and psychedelic drugs often talk excitedly about their promise to take a slice of the $20 billion-plus market for opioids and fix a societal addiction crisis along the way.
Now, an under-the-radar drug has joined them as a potential disruptor. It’s already drawing interest from Atai Life Sciences, a biopharma company known for putting psychedelic compounds into clinical trials. And a recent decision from the World Health Organization could help it gain further traction.
The drug is called kratom, and it’s made from the ground leaves of a psychoactive plant native to Southeast Asia. Kratom is already a $1.3 billion industry in the U.S. with sales occurring online and in smoke shops, according to the American Kratom Association. It’s also among the most commonly seized substances in the world among drugs classified as “new” by the United Nations. Millions of people use it for pain relief, to alleviate the symptoms of opiate withdrawal or simply for recreation.
U.S. agencies have sought to ban kratom for years, but they have faced opposition from some members of Congress, including Democratic Senators Ron Wyden and Cory Booker. Users of the drug are also so well organized that they’ve been known to send a flood of letters to their representatives in Washington any time there is movement on the issue.
Although kratom isn’t banned in the U.S., some states have their own restrictions and the Food and Drug Administration has seized dietary supplements containing the drug.
A closely watched World Health Organization panel decided Dec. 7 that kratom didn’t warrant a “critical review,” which could have led to UN restrictions and a federal ban. The panel found that while the substance can be toxic in very high doses, it is difficult to link kratom to overdose deaths with much certainty.
Advocates say the decision should reduce stigmas and boost business opportunities. Jenn Lauder, the marketing and advocacy director for Kraken Kratom, one of the largest online kratom companies, said investment interest has surged and a recent industry convention in New York was crawling with venture capitalists.
“I definitely think it opens doors for more companies,” Lauder said. “When people see this is potentially lucrative, that’s always the final push they need.”
Now, some pharmaceutical companies are looking to get into the game. Atai is developing a drug derived from kratom to treat pain and opioid-withdrawal symptoms. The company aims to begin clinical trials early next year, according to its chief scientific officer, Srinivas Rao.
Just over 2 million Americans a year consume kratom, with the highest rates occurring among users of opiates, according to a recent New York University study. Dafna Revah, co-owner of a nearly 50-store retail chain called CBD Kratom, said the WHO panel’s decision should “open doors for customers who were previously hesitant due to the pending assessment.”
The American Kratom Association says growth has been limited by legal ambiguity. In most of the country, it’s sold as a dietary or herbal supplement. Six states have banned it outright, although no new statewide restrictions have occurred since 2016. Five states have passed industry-backed rules dubbed the “Kratom Consumer Protection Act” that include age restrictions and quality standards.
Regulatory concerns keep away most mainstream companies. The FDA’s jurisdiction to seize shipments creates major supply-chain risks since almost all U.S. kratom is imported from Southeast Asian countries like Indonesia and Thailand. Earlier this year, 75,000 pounds of the substance were intercepted and destroyed, and an FDA official said the agency would continue to take action against shipments.
The risks haven’t stopped small companies from exploring the market. LFTD Partners, which largely focuses on cannabis and vaping, is in talks to acquire kratom companies, according to a spokesperson. Kratom-infused gum is being developed by Tauriga Sciences Inc.
As public acceptance grows, Lauder sees kratom following the legalization path set by cannabis — regulations at the state level first and then a push for federal recognition. “In the past five years, we’ve been able to move from being on the defensive to really going on the offense,” she said.
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