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Robert Bergman, MD, in "Navajo Peyote Use: Its Apparent Safety," _Amer.
J. Psychit. 128(6):51-55/695-699, writes: 

"Some rough estimates of the rate of negative reactions to peyote can be
made.  The Native American Church of Navajoland estimates its membership
at 40,000.  This estimate may be high and there may be inactive members,
so we will use a population base of 30,000.  Our informants report attending
meetings with an average frequency of about twice a month.  Since this may
be exaggerated, we will assume an average attendance of only once every
two months.  This would result in a total of 180,000 ingestions of peyote
per year by the population we serve.  Assuming that all five of our cases
represent true reactions to peyote and that we hear about only half of
the cases occurring, the resulting (probably overestimated) rate would
be approximately one bad reaction per 70,000 ingestions."

"This rate is much lower than others that have been reported for the use of
hallucinogenic agents, and it calls for at least some attempted explanation.
It is thought that the usually repressed emotions freed by hallucinogens
sometimes are not integrated and cause panic or psychosis.  I believe that
the feelings made available at meetings are carefully channeled into
ego-strengthening directions.  Some of the crucial factors are a positive
expectation held by the Peyotists, an emphasis on the real interpersonal
world rather than the world within the individuals, emphasis on communion
rather than withdrawal during the drug experience, emphasis on adherence
to the standards of society rather than the freeing of impulses, and certain
practices during the meetings."


As you can see from this estimate, the incidence of negative reactions
among peyote users is very low when the substance is taken in controlled
circumstances.  We should note that there may be a sampling bias in the
quoted estimate since people who experience repeated or severe problems
after using psychedelics may drop out of the Church.  

The 5 case reports which the article mentions involve: one man who, against
rules, had been drinking and experienced a paranoid panic attack after
taking peyote and who recovered in 24 hrs but quit attending the
ceremonies; an acute schizophrenic episode which began at the time of
the meeting and became worse over the next few days but improved after
inpatient treatment and didn't prevent attendance at further meetings;
a man who had attended ceremonies at the insistence of his wife and
over the objections of his family and who reported feelings of anxiety
and depersonalization which stopped after he quit attending meetings and
worked out some of his feelings about the marriage; and two chronic
schizophrenic patients who became anxious during meetings but who continued
to attend them without untoward effects.

This is too small a sample of cases to say anything meaningful, but it
is important to note that diagnosed schizophrenics are able to comfortably
ingest peyote.  This strongly suggests that mescaline and psychedelics do
not cause psychotic episodes directly but at best trigger episodes through
some stress-related mechanism.  After all, if psychedelics directly inter-
acted in a negative manner with whatever neurosystems go awry in psychosis 
and schizophrenia, then we would expect them to increase the symptoms of 
these disorders.  This conclusion is in keeping with that of Rick Strassman's
literature survey on the subject (which I have repeatedly quoted on the
net and can e-mail copies of those postings to interested parties).