The Case for Investing in Psychedelics
Updated: Mar 8
In the last few years psychedelic drugs have started to enter main stream conversations. The reason for this is that psychedelics can revolutionize mental health (more on this later) and the studies are pouring in to prove it. As the science points to the tangible benefits of psychedelics, new companies and financial investments have been pouring into the space at a similar pace to the Cannabis sector a decade prior.
First off. I want to get this out in the open before you read any further. I have never done psychedelic drugs before. I have however, had the pleasure of multiple concussions only days apart, bedridden in a dark room for weeks, so I know how important a good working brain is! I am coming at this subject from a purely academic perspective. That said, let us dive into the case for psychedelic drugs in our society and subsequently, why I think the industry will be a burgeoning investment opportunity in the years to come.
The second I even mention the word psychedelics, already there is a huge stigma/ negative stereotype associated with the word and the subject matter. For the record, I am not suggesting psychedelics be used to jazz up Coachella! I am talking about the benefits of micro-dosing (small amounts) psychedelics from a mental health and healing standpoint. The mental and spiritual benefits of psychedelics in small doses appears to have positive mental benefits and has been well documented by academics as of late. What I find interesting about psychedelics is almost everyone who has a strong opinion against psychedelics typically has: A) never tried them before, and B) never read the subject matter beyond high school and elementary school health classes. My conversations with others about psychedelics are eerily similar to Bitcoin conversations from years prior.
Now, as a disclaimer, I understand the logic that you do not need to take a drug to know it’s bad for you. If a drug is highly addictive, harmful to your body (organ damage or neurotoxicity) you obviously do not need to try it to know it’s bad for you (see Heroin, Opioids, Cocaine, etc…). Yet, when I googled (serious research) the 15 most dangerous drugs, Alcohol is #2 (88,000 people die from alcohol-related causes annually). Psychedelics were not on the list. I want to state that I am not against alcohol, but why is one (alcohol) legal when its #2 on the list, while the other (psychedelics) is strictly outlawed?
Brief History of Psychedelics
To me, psychedelics, and their negative perception in modern society, appear to be directly associated with the ‘War on Drugs’ which officially began in the 1970’s (arguably dates back much earlier in the 1900’s). The clinical study of psychedelics dates back to the 1960’s. Prominent advocates on the subject include Terence McKenna (Food of the Gods), Aldous Huxley (The Doors of Perception), Timothy Leary (Harvard Psilocybin Project), Carl Ruck (The Road to Eleusis) and Rick Strassmen (DMT, The Spirit Molecule) to name a few. The 1960’s are considered the ‘psychedelic era’, with the use of psychedelic drugs prevalent (though, often used recreationally).
In the 1970’s when the ‘War on Drugs’ began, suddenly these substances were banned and so too were their clinical studies. Hard to imagine where the industry would be today without the void of the last fifty years. Presently, Joe Rogan, Graham Hancock (Supernatural), as well as Brian Muraresku (The Immortality Key) are actively brining this field ‘back’ into the public light once again. In fact, Brian’s research hypothesizes that Alcohol 2,000 years ago was not known for its alcoholic content as we know it today, but rather a ‘spiked’ drink consisting of many components (toxins, spices, perfumes and plant herbs) designed to produce ‘altered states on consciousness’ (psychedelics). Even the word ‘Alcohol’ comes from the ancient Arabic words ‘Al-Kuhl’, meaning body eating spirit. Going further down the rabbit hole, the term ‘spirit’ in reference to alcohol stems from Arabic ‘Al’chemy. Alchemy defined at its root word means to ‘alter’ or ‘transform’. I won’t go down this hole any further, but my point is there is a strong case to be made that psychedelics are not a new phenomenon and that we are just re-discovered now what has been known for some time.
Benefits of Psychedelics
In the last few years, interest in psychedelics has been steadily growing in western society. As interest grows, so are the numbers of clinical studies. Recent studies reveal incorporating psychedelic drugs like LSD and Psilocybin (active ingredient in magic mushrooms) into therapeutic treatments has significant benefits. Clinical trials have been actively taking place at New York University and John Hopkins. Initial results from these trials have found that psychedelics can help improve overall mental health (mood), alleviate Post Traumatic Stress Disorder (PTSD), anxiety, depression (4 times more effective than antidepressants), assist in metabolic diseases such as diabetes, heart disease, cancer, Alzheimer's, arthritis, asthma and multiple sclerosis, as well as reduce dependency on drug addiction (addictive drugs). To clarify, it is not just the stand-alone drugs, but the drugs ‘combined’ with therapy (support staff/ guides while you are on the drug), which produce these tangible benefits. What’s more, these are permanent solutions, which go to the root of the illness. These are not prescriptions that require someone to take a pill 3 times per day in perpetuity. Once these trials progress further the research more thoroughly documented and shared with the general public, these studies will inform evidence-based medical practice. Once the evidence exists and adopted by mainstream medicine, the growth potential in the industry can be far reaching.
Negative Aspects of Psychedelics
I want to stress that these psychedelic benefits do require work. Psychedelics are an inward journey and can often be uncomfortable when forced to reflect and confront personal issues. Most describe their journey on psychedelics as very challenging at times. Psychedelics should also be taken in moderation (micro dosing) and infrequent.
How to Invest
Despite the difficulty of these experiences, the long list of benefits shown in the medical research field by using psychedelics has caused bioscience companies (and a lot of private capital) to quickly enter the industry. To me, the psychedelic market today mirrors the early stages of the Cannabis industry a decade prior (early 2010s). Similar to Cannabis 10 years ago, restrictions on psychedelics are loosening as clinical trials progress. In fact, as of today, several cities and states have begun decriminalizing Psilocybin and Magic mushrooms. In 2012, Cannabis legalization was achieved in the states of Washington and Colorado, almost a decade prior. Now the timelines aren’t exact, but the similarities between the two industries are worth noting. If we were to chart this on a stock like Canopy Growth (WEED) we are 1,500% returns ago. Point being, the psychedelic industry is in its infancy.
It’s tough to predict which companies will make it big and those that will flounder. I’m sure similar to the Cannabis boom and the Dot Com boom before it, a few of the companies will do very well, and others not so much. Fortunately, there is a stress-free ETF (Exchange-Trade Fund) solution. Horizons ETF (PSYK) seeks to replicate the performance of the North American Psychedelics Index TR. The main companies listed within the index are as follows:
COMPASS Pathways Plc (CMPS), MIND MEDICINE INC. (MMED), Empower Clinics Inc. (CBDT), Field Trip Health Ltd (FTRP), Numinus Wellness Inc (NUMI), Seelos Therapeutics Inc. (SEEL), Champignon Brands Inc. (SHRM), Red Light Holland Corp (TRIP), Revive Therapeutics Ltd. (RVV), Minerco Inc. (MINE), Hollister Biosciences Inc. (HOLL), Mydecine Innovations Group Inc. (MYCO), HAVN Life Sciences Inc. (HAVN), BetterLife Pharma Inc (BETR), Mindset Pharma Inc. (MSET), Novamind Inc (NM), Mind Cure Health Inc. (MCUR), Phramadrug Inc. (BUZZ) , Psyched Wellness Ltd (PSYCF), Graph Blockchain Inc. (GBLC).
A whole breakdown of all companies in the space can be found here: https://investingnews.com/daily/life-science-investing/psychedelics-investing/psychedelics-stocks-to-watch/
As the science continues to uncover the empirical medical benefits of psychedelics, I hypothesize the restrictions around the use of these drugs will also lessen. This industry is in its infancy. Even prior to COVID pandemic mental health issues were on the rise, I can only imagine where the data will be post pandemic. Psychedelics can help in this regard. If this industry continues to follow the parallels of the Cannabis industry, the future will be very bright.
Disclaimer: This article should not be taken as legal investing advice; I am wrong 100% of the time. The choice is yours whether to invest in any asset or not. I do not own anything psychedelic stocks at the time of writing this article.
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