Lucy in the Sky with Diamonds

1. John and the other Beatles (but mainly John) were doing a LOT of acid at the time.
2. Rock stars were getting busted a LOT around this time for possessing drugs.
3. Society was starting to pay a lot of attention to the decadence of the drug culture that was coming into being at the time.
4. Brian Epstein was still alive.
5. John was a savvy capitalist and the financial success of the Beatles was very important to him.
6. John was still smarting from the financial and professional damage done to the Beatles by his "bigger than Jesus" comment.

Okay, lets combine the elements into this stew:

John was very excited about the pleasurable and mind expanding effects of LSD and wanted to write about it to a) spread the word and b)write a song that would be great to trip to (as most of the songs on Sgt Pepper were). Plus, the Beatles would have had a great laugh over the LSD initials in the title. After having written and recorded this masterpiece, they played it for Brian Epstein, their manager, who promptly flipped out told them that they must never never never admit that this song has anything to do with drugs or LSD, else another shitstorm of controversy would fall on them similar to the one caused by John's "bigger than Jesus" statement. Or even worse, it could draw the attention of Scotland Yard who were busting pop stars left and right at the time in response to conservative British society's outcry over blatant drug use and endorsement by the youth movement and their spokesmen, pop stars.

The "admit nothing" strategy worked very well and the Beatles continued their incredible commercial success. John DID get busted for drugs, but let off with a slap on the wrist. "Society" moved on to easier targets

The origin of the name of the song may or may not be factual, but one thing is for sure...you can NOT trust John's statements that it wasn't about acid. John knew it was about acid and the people he was writing to knew it was about acid. Everybody else had to be content with the "Julian's drawing" story.

John was a genius, and this event proves it...he writes the best song ever for (and about) acid tripping and is smart enough to know that to admit what it is really about would be a financial and professional disaster, so he concocts and maintains the big lie that keeps everybody happy. The song was great and the lie was great and everybody got out their wallets. Lennon smiles.