Some doctors won't prescribe any scheduled drugs. I think they're jerks who don't want to take the least little chance on their reputation to help their patients. It's obvious he doesn't believe or care about the seriousness of your sleep problems. If that's his "reasoning" then maybe he'll prescribe you a small dose of Seroquel (25-100mg). It works beautifully and it's not a controlled drug. Keep looking for a different psychiatrist though.

(I wouldn't think a general doctor would prescribe sleeping pills when he knows--or guesses--that your psychiatrist won't).