In the predictable cycle that has emerged since Tweed Marijuana became the first Canadian cannabis company to win a license from Health Canada to sell weed to Canadians legally, promoters have pounced on the latest botanical to emerge from the darkness of prohibition – psilocybin, or magic mushrooms.
I was not entirely surprised to see an email this morning from a company that his planning to bring psilocybin to the retail market in the Netherlands (initially) as possible the next formerly Schedule 1 drug to get the red carpet treatment from investors.
Psilocybin is the active ingredient in psilocybin cubensis and psilocybin cyanacens (those are the Latin names), two species of “magic” mushrooms that occur naturally in Canada and the US.
Orthogonal Thinker, founded by David Nikzad, is a company that is creating compounds extracted from psilocybin cubensis for use in mental health therapeutic regimes.
Long a favorite of psychonaut enthusiasts, psilocybin is probably one of the most widely enjoyed hallucinogenic plants to grace the menu of illegal recreational substances, thanks to its organic origin and relative safety if consumed in the right dose and in the right environment.
So far, I have encountered a half dozen companies organizing their business around the far out fungus. My associates at Canaccord advise that their phone is ringing non-stop with new psychedelic deals every day.
And it should come as no surprise. The wave of tolerance and public curiosity that has replaced moral outrage and fear as the default response of society at large to the 2,000 plus psychotropic plant universe comes as a natural progression from the seminal embrace of cannabis as a medical ingredient.
So what are the medical implications for psilocybin?
As you might expect, they are principally concerned with issues of mental well-being.
The psychedelic journey induced by mushrooms, cactus, vines and leaves of various botanical species are reportedly beneficial for sufferers of PTSD, anxiety, addiction, schizophrenia, depression, dementia, and Parkinson’s disease, to name but a few.
But could psilocybin be the next cannabis for investors?
There are a number of companies raising money from investors at present. None are yet public. They range from the high brow Compass Pathways, backed by Peter Thiel, to lesser known players who are fixtures in Canada’s public company scene no matter what the hot sector of the day happens to be. None of them have filed documents with regulators in the US or Canada at this point.
Legally, mushrooms are Schedule 3 in Canada, making it illegal to possess or consume outside of government authorized research projects. And unlike cannabis, there is no driving social agitation to give politicians an incentive to champion the cause of psilocybin. The city of Denver approved decriminalization of psilocybin use and possession for private purposes, but don’t let that pass as a sweeping endorsement like that which drove cannabis into the public’s consciousness.
Also unlike cannabis, which can be consumed without interrupting you schedule for work and play, psilocybin, in psychedelic doses, tends to be an all-consuming experience when it kicks into high gear, though there is a “micro-dosing” movement afoot that advocates for taking non-psychedelic doses of psilocybin for general mental health preservation.
The common theme is “for profit”, which immediately throws into doubt any altruistic motive for pursuing medical regularization of psilocybin laws to improve access for patients in need. It is unlikely that psilocybin will be thrust into legality like cannabis was however. The intensely cerebral and reality-altering nature of psilocybin in its higher dosage format will more than likely present a much higher barrier to lawmakers trying to wrap their heads around the clinical upside.
And if there is anything to be learned from the cannabis experience, it is that the early scarcity of investment opportunities – and thus their high valuations – will ultimately morph into a deluge of deals to choose from, each of which will suffer from the same cannabis valuation correction as the proliferation of shares in the public market drive prices lower.
So yes, there will likely be some fortunes made in the space. But those will come, like all stock market fortunes, at the expense of those who bet and lose.