Essential oils have an effect on the brain via two routes: olfaction and essential oil absorption. The olfactory bulb, which is just above the top of the nose and actually a part of the brain, extends from the 'limbic system'. The name comes from Latin, Limbus, meaning border because, comprising several structures, it forms a ring like base to the cerebral cortex. It is the home of our emotions, sexual feelings, memory and learning, and with olfaction these can be evoked. - even subconsciously. The limbic system is a link between left and right brain. Essential oils connect directly into this system through the olfactory bulb. As for the science of olfaction, it's like a huge jigsaw made up of many pieces, a few of which we have. These tell us something, but not how olfaction works.
One thing we know is that benzodiazepene receptors are located all through the human brain, and it is on these that drugs such as Valium and librium work. But these receptors were put in the brain long before chemists invented drugs, presumably because there are substances in nature that do the same thing. We also know that benzodiazepene receptors are found in large quantity on the olfactory bulb of rats and, it is thought, humans. Perhaps we were designed to receive tranquillizers through the nose - in the form of aroma molecules from plants.
The circulatory system has devised structures that prevent large molecules passing the brain - this is ' the blood-brain barrier'. Presumably because of the small size of certain essential oil molecules and their lipophilic nature, they pass the blood-brain barrier and thus enter the brain.( as do many chemical drugs) Essential oils get into the blood -stream in many different ways - through the capillary system at the top of the nose, through the delicate mucous membrane of the mouth and respiratory tract, through the vagina and anus if given in pessary or suppository form, through the digestive system if given orally, and through the skin if applied through massage. Although the brain only accounts for 2 percent of our body weight, it gets 15 percent of the blood supply.
The simple answer to the question 'how do essential oils work on the brain?' is 'we don't know'. Because human beings rely so totally on plants for their sustenance and well-being, and because the chemistry of plants and humans is so similar, they might be thought of as a set of keys for turning on the body's mechanisms - whether this is thought of in terms of chemistry or stereochemistry ( the shape of the molecule). There are many different ways drugs can affect brain chemicals - they can block the synthesis of a naturally occurring chemical, or block its transport down an axion, its formation into vesicles its release into the synapase, its attachment to the receptor and so on. Science does not often exactly understand which mechanisms are at work. It seems un reasonable, therefore, to expect us to know how essential oils work.
Reference: The Fragrant Mind: V A. Worwood
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