The "right" thing to say is that by investing in psychedelic drugs, we are investing in the next evolution of mental health drugs and therapies. Certainly an honorable undertaking. As the legal cannabis market booms, another class of drugs on the horizon is getting closer to legalization, with an impending boom of its own. And that means a whole new place to invest: psychedelics.
What are Psychedelics?
Psychedelics are a subset of hallucinogenic drugs, which are themselves a subset of psychoactive drugs. Whether made in a lab like LSD, or found in nature like psilocybin or peyote, psychedelics are known to cause "trips." When a person is tripping, he/she may have an altered perception of the world around, experience/feel/taste/see/hear things that are not real (hallucinations), feel a greater sense of belonging to the people around him/her experience euphoria, a sense of spirituality and connection to the universe, and a greater sense of self-introspection. A large percentage of the psychedelics is serotonergic, which means that they affect serotonin receptors in the brain, although they can do this in different ways.
Some medications, such as DMT, produce short trips of less than an hour. While other psychedelic drugs, such as LSD, psilocybin and mescaline, can cause thrips that last many hours, as long as eight or ten hours. Sometimes people experience bad trips where negative or even frightening hallucinations are experienced and / or a fast heartbeat, sweating, nausea, disorientation and fatigue occur. There is some evidence that most of these symptoms can be controlled by using the correct dosage. In fact, many therapeutic psychedelic users use the drugs in microdoses.
All are psychedelics Schedule I in the Convention on Psychotropic Substances, a drug scheduling convention that defines the legality of various compounds worldwide. Starting with the Staggers-Dodd Bill in 1968, which made LSD and psilocybin illegal, and ending with the Convention's placement, which made the buying, selling or consuming of any of these illegal with no purported medical value.
Psychedelics have been used around the world for thousands of years, although their use in medicine in the mid-20th century, and the proposed uses today, are generally different from the shamanic / ritual way they were mainly used throughout history.
Medical psychedelic research
Psychedelics, especially LSD, were introduced to modern medicine around the 1938s after Albert Hoffman synthesized the compound in Switzerland in XNUMX. Several psychotherapists at the time, such as Humphry Osmond and Ronald Sandison, came up with the idea and brought these treatments to England and America. Hoffman conducted the Saskatchewan studies, among other research and therapy, and eventually came up with the idea of 'psychedelic therapy' where a single large dose of LSD was given along with therapy sessions.
'Psycholytic therapy' is how Ronald Sandison's version came to be known in the UK, with the difference that Sandison's treatment style was to do multiple sessions with smaller amounts of the drug that equalized to increase during the process. Both doctors were particularly successful with alcohol addiction. How much success? According to the studies in Saskatchewan a whopping 40-45% of the drinkers still did not drink a year after the therapy session.
However, when the drugs were made illegal, all possibility of continuing such treatments ended, and the ability for research into the field was completely hampered and only resumed much more recently. However, to give an idea of the tremendous turnaround that is underway when it comes to psychedelics, keep in mind that the U.S. Food & Drug Administration (FDA) designated both psylocibine in 2019 and MDMA in 2017 as 'breakthrough therapies' for depression and respectively PTSD. Such designation by the FDA is intended to accelerate research and development for products deemed necessary for health.
This indicates the desire of a US government agency to not only test these psychedelic drugs but also market them. And they are all still labeled as Schedule I. An exception to psychedelics, which are all Schedule I, are magic mushrooms. Although the psychoactive components, such as psilocybin, are Schedule I and therefore illegal, the plants themselves are not banned, leaving a gray area in terms of the use, cultivation and production of these mushrooms. This gray area could be very useful in the future.
Investing in psychedelic medicines for the treatment of health complaints
The very real global mental health crisis that keeps getting worse every year - and now made worse by COVID-19 - the idea of being part of an industry that could potentially save millions of lives is, of course, a noble one. With the treatment from anxiety and depression to PTSD and addiction, this is definitely one way into what many call "ethical investing." That is to say, doing good by investing in good things yourself.
But when it comes to psychedelics, it would be unfair to suggest that this is all about altruism. The truth is, while providing the top psychedelic companies with the seed capital needed to market their drugs and treatments, the potential returns and opportunities on these investments actually interest most investors and business leaders.
Think of entrepreneurs and investors such as:
- PayPal co-founder Peter Thiel (net worth: € 5,2 billion)
- Entrepreneur and podcaster Tim Ferris (net worth: € 84 million)
- GoDaddy Founder Bob Parsons (Net Worth: € 1,85 Billion)
Make no mistake: these gentlemen haven't gotten to where they are today by making bad investment decisions. That is not to say that there is no truth in the fact that these people also understand the potential health and social benefits of psychedelic drugs and treatments. Any investor who has done a little research on these developments fully understands how real the benefits of psychedelic drugs are.
However, the reality is that even the most socially conscious investors are looking for more than just feeling virtuous and noble. That is why it is called social - conscious investing - not socially conscious charity.
However you look at it, no one is going to make an investment without the promise of return. And when it comes to the potential return on the right investments in psychedelics, there are few other markets that will deliver such returns at such an early stage that we see in this area.
Despite a recent decline in investment in general, as well as multiple acquisitions in the psychedelics field, many of the big names are stable, worth their money and rising.
The current figures do not say much yet. The companies targeting the psychedelic drug market are only at the very beginning of what they will achieve in the next three to five years. In other words: the big money has not yet been made with these shares.
Make no mistake: many of these psychedelic companies that investors are just now starting to learn about are about to usher in a new generation of drugs and therapies that will effectively treat everything from mental illness to traumatic brain injury to even neurodegenerative diseases.
They are going to help many sick people. But they are also going to help many early investors make a lot of money. And it's for those two reasons that many personally invest (and take advantage of) psychedelic stocks. Note: only invest money that you can spare and make sure you inform yourself before you decide to invest.