Like marijuana before it, psychedelic drugs, once considered illicit, are now going mainstream. Although the substances, their effects, and the chemical compounds at their core are quite different, psychedelics—specifically psilocybin—have followed the trail blazed by marijuana to mainstream acceptance and Wall Street excitement.
The psychedelic market just took a massive step towards legitimacy in the eye of corporate America. Earlier this month, the U.K.-based pharmaceutical company Compass Pathways became the first psychedelic company to break into U.S. markets. The news is a big step towards the legitimacy of the legal psychedelic marketplace—which is forecasted to be nearly a $6.9 billion business by 2027.
Other psychedelics aren’t far behind. The Biotech company HAVN Life which creates both lab and retail products, went live in the Frankfurt Stock Exchange earlier this month. In March, Toronto-based MindMed became the first publicly traded psychedelic company. The upward momentum suggests a similar pattern that was seen upon the move towards the legitimatization of cannabis years ago as companies like Tilray, Aurora Cannabis, and Canopy Growth popped up in the marketplace.
At this point, marijuana and psychedelics both have been accepted by most in the medical community as robust treatment options for patients. Most agree that cannabis offers a number of positive benefits, like anti-inflammatory properties, while psychedelics like psilocybin are increasingly being used to treat severe, drug-resistant depression.
In 2018, the Food and Drug Administration first granted Compass Pathways a breakthrough therapy status, which accelerates the clinical study process, to study psilocybin particularly for parents struggling with Major Depressive Disorder. Since then the FDA has embraced the drug, granting similar designations to Compass and other large companies such as pharmaceutical giant Johnson & Johnson, but also smaller competitors such as Mind Medicine and Numinus Wellness.
The rise of these treatment options comes alongside some sobering news from the Centers for Disease Control. According to a recent survey, one out of four adults ages 18-24 considered suicide in June, while 10 percent of adults overall reported suicidal ideation.
There is, however, an uphill battle for the recreational market. Michael Auerbach of Subversive Capital, an early investor in Compass Pathways, sees no robust path for psychedelics. “There is less of a diversified recreational market for psychedelics as there is for cannabis as it is used in a massive swath of consumer products,” Auerbach tells Observer.
At the same time, there is no shortage of companies launching psychedelic-tinged products that they hope will appeal to the consumer marketplace. Canadian Better Plant Sciences is developing a variety of consumer products, including the development of mushroom-infused coffee blends announced last month. Alphamind brands is developing concentrated powder, teas, and chocolate. Alphamind’s parent company, Hollister Biosciences Inc, developed similar products in the cannabis space.
Red Light Holland, which just launched a pure truffle product, has applied to uplist on the OTC markets.
Red Light Holland’s latest product also allows potential users to try a VR headset, which will help give users an understanding of what the drug feels like and if it something they want to try.
“With the trajectory stateside, it’s only a matter of time before we break into the U.S. market for recreational use,” Todd Shapiro, the CEO of the Amsterdam-based psychedelic company, says. “Think of us as the over the counter-alternative to what companies like Johnson & Johnson have in the works. We hope to see this following the path of Cannabis in Canada; where it was medical first, then recreational adult-use second. But of course, that can take a long time! And ultimately, information and education plus responsible use is key.”
Psilocybin is following marijuana in legalization pattern, too, as more cities and states move to decriminalize the substance. Last week Ann Arbor, Michigan, the city council voted unanimously to decriminalize magic mushrooms. This comes after the May 2019 election that saw Denver became the first city to decriminalize psilocybin. Oakland soon followed with its own law, decriminalizing and plant and fungi psychedelics.
Psychedelics are on the ballot in DC this November. Last month the DC Board of Elections approved a measure to decriminalize a variety of psychedelics in the district. In Oregon, the legalization of psychedelic mushrooms is on the ballot. If it passes, the legalization is a huge indicator of what’s to come. Oregon has long been ahead of the curve on U.S. drug policy. It was the first state to decriminalize cannabis.
“The changing laws really justify new market opportunity,” Garyn Angel, the CEO and Founder of Magic Brands, tells Observer. Magic Brands a wellness company that historically focused on CBD products, with recent intentions to expand into the psychedelic space on the heels of the emerging marketplace. “Changing sentiment really opens up the potential for healing psychedelics can provide without the stigma some feel the product has,” Angel adds.
Medical experts leading the research on the clinical benefits of psychedelics as a medical treatment are very skeptical about the recreational marketplace.
“The credible companies that I know about that are interested in psychedelics are developing them as medicines through established regulatory pathways like the FDA or international equivalents, rather than for a recreational marketplace. Psychedelics have very real risks, and these can be appropriately mitigated with the types of safeguards that we use in research and medical settings,” Dr. Matthew Johnson, Professor of Psychiatry and Behavioral Sciences at Johns Hopkins University, tells Observer.
“The so-called ‘bad trip’ can sometimes lead to harm when such safeguards are not in place. However, some people find such challenging experiences to be clinically beneficial,” he adds. “With the right safeguards, psilocybin has been given to healthy people with no disorders, and people with a variety of disorders like depression, whether or not the depression is treatment-resistant, and various substance use disorders.”
Whether the decriminalization and budding marketplace will have a net positive effect is still an open question. There is a massive historical precedent with a growing number of the municipalities adjusting their laws on the decriminalization and legalization of recreational marijuana largely in recognition that prohibition does not work for a myriad of reasons—good news for proponents of the psychedelic marketplace.