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                                                                    EXHIBIT 10.2

                       THIRD AMENDMENT TO PROMISSORY NOTE

      THIRD AMENDMENT TO PROMISSORY NOTE dated as of the 6th day of January,
2000 by and between RAYMOND C. KUBACKI, JR. ("Kubacki") and PSYCHEMEDICS
CORPORATION (the "Company").

      WHEREAS, Kubacki and the Company entered into a Promissory Note dated
January 6, 1997, (the "Note") in the original principal amount of Two Hundred
Nine Thousand Eight Hundred Ninety-two Dollars ($209,892.00); and

      WHEREAS, the due date of the Note was extended pursuant to a First
Amendment to the Note dated January 6, 1998 and a Second Amendment to the Note
dated January 6, 1999; and

      WHEREAS, the principal amount outstanding as of the date hereof under the
Note, as amended, is $198,838.02; and

      WHEREAS, Kubacki's obligations under the Note as amended are secured by a
pledge of shares of Common Stock of the Company pursuant to a Pledge Agreement
dated January 6, 1997 (the "Pledge Agreement");

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:

      1. AMENDMENT. (a) The Note as previously amended is hereby further amended
by deleting the first three paragraphs thereof and inserting in lieu thereof the
following:

                "FOR VALUE RECEIVED, the undersigned RAYMOND C. KUBACKI, JR.
      hereby promises to pay to the order of PSYCHEMEDICS CORPORATION, a
      Delaware corporation (the "Company"), in accordance with and subject to
      the terms and conditions set forth herein, on or before January 6, 2001,
      the principal sum of ONE HUNDRED NINETY-EIGHT THOUSAND EIGHT HUNDRED
      THIRTY-EIGHT DOLLARS AND 02/100 ($198,838.02), or so much thereof as may
      from time to time be outstanding, and to pay interest on the unpaid
      portion of such principal amount at the rate of 6.13 % PER ANNUM until
      such principal amount and all accrued unpaid interest thereon shall have
      been paid.

                Interest accrued on the unpaid balance of principal from time to
      time outstanding shall be payable together with payment of principal. Each
      payment made under this Note shall be applied first to interest then due
      and then to principal.

                This Note is secured by a pledge of certain shares of Common
      Stock of the Company owned by the undersigned more particularly described
      in the Pledge Agreement dated January 6, 1997 (the "Pledge Agreement") by
      and between the undersigned and the Company. The Pledge Agreement is
      intended to provide additional security to the Company for the obligations
      of the undersigned under this Note and is not intended to limit in any way
      the obligations of the undersigned under this Note which is a full
      recourse obligation of the undersigned."


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      (b) All references in the Pledge Agreement to the Note shall be deemed to
refer to the Note, as modified and amended hereby.

      2. RATIFICATION. (a) The terms and provisions of the Note, as modified and
amended hereby, are hereby ratified and confirmed by Kubacki in all respects and
the Note shall remain in full force and effect in accordance with its terms as
so modified and amended.

      (b) The obligations of Kubacki to repay to the Company all indebtedness
under the Note, as modified and amended hereby, and to pay and perform all of
its other obligations to the Company are and will continue to be secured by the
Pledge Agreement and the Company is and will continue to be entitled to the
benefit of all of the rights and remedies thereunder.

      (c) Nothing herein is intended or shall be construed so as to discharge,
release, terminate, or otherwise limit or modify any indebtedness, obligations,
or liabilities of Kubacki or any collateral security therefor.

      3. MISCELLANEOUS. This Third Amendment to Promissory Note shall be
governed by the laws of the Commonwealth of Massachusetts, shall be construed as
a sealed instrument, and shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.

      Executed as a sealed instrument as of the date set forth above.

                                     PSYCHEMEDICS CORPORATION


                                     By: /s/ Peter Monson
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                                         Peter Monson, Vice President

                                         /s/ Raymond C. Kubacki, Jr.
                                         ---------------------------------------
                                             Raymond C. Kubacki, Jr.