Forget Pot Stocks – It’s Time to Cash-In on the Psychedelics ‘Shroom Boom
I came of age in the late ’60s and early ’70s, which means I’m no stranger to recreational drugs, from pot to psychedelics. Like, I’ve seen things, man – and could tell you some stories. And I was so fascinated by what I saw that I got with the program, and dug deep into the story behind the story.
LSD was still legal. Research was going full bore. And I understood these drugs had promise – real promise.
That all ended in October 1968, when the U.S. made it illegal to possess the hallucinogen. And thanks to that, the research slowly died.
But psychedelics are making a comeback. And I’m groovin’ on all the hip research and FDA trials, and the crazy number of publicly traded companies chasing riches in the psychedelics rainbow.
Can you dig it? You should. There’s evidence psychedelics have the potential to arrest – and maybe even cure – a host of disorders from depression to brain trauma. And if these drugs work – and if you’re into the right stocks – you could end up on the trip of your life, and watch as your portfolio gets high … and I mean really high, man.
If you’re watching the markets and looking at this “new biotech,” you’re no doubt hearing about the tremendous promise of the marijuana legalization, the cannabis market – and the pot-stock boom.
Maybe you missed the pot-stock run the first time around. Or maybe you can’t bring yourself to invest in something that’s been maligned so much for so many years.
Don’t sweat it – because here’s the heavy truth: The real opportunity is with psychedelics.
Call it the Shroom Boom.
And I’m going to lay it on you here …
Making a Market
For me, psychedelics are so alluring because the potential is widespread, impactful, and easy to quantify.
We’re talking about potential treatments for mental health disorders such as PTSD, treatment-resistant depression, drug-and-alcohol abuse, eating disorders, and end-of-life anxiety.
The top institutions are going in on psychedelics research. For instance, John Hopkins, NYU, and Imperial College London are funding programs to study the efficacy of using psilocybin, lysergic acid diethylamide (LSD), and MDMA (3,4-methylenedioxymethamphetamine) as treatment options for those struggling with their mental health.
Frankly, it’s about time.
Take anxiety. Globally, 284 million people are afflicted – and the lost productivity alone costs us $1 trillion. The outlays for drugs used to treat this malady add another $4.7 billion to that tally.
The treatments for depression, ADHD, and addiction are just as expensive, costing an additional $9.6 billion, $9.5 billion, and $5.8 billion, respectively, on a worldwide basis.
That’s some serious coin – and on treatments that frankly aren’t doing such a hot job easing the suffering of family members, friends, co-workers – or even ourselves.
That’s where psychedelics enter the scene.
A lot of research was being done – back in the day – on the benefits of psychedelics. The last of that ground to a halt in the very early 1980s.
The Shroom Boom has jump-started that research. More and more research has come forward to reveal the benefits of these drugs on a broad spectrum of mental health problems.
In 2017, the Multidisciplinary Association for Psychedelic Studies (MAPS) was granted
Breakthrough Therapy Designation for MDMA-Assisted Psychotherapy for PTSD, on Special Protocol Assessment for Phase III clinical trials. Breakthrough Therapy is a special U.S. Food and Drug Administration designation that accelerates the development of drugs with the potential to leapfrog existing treatments.
Early last week, The New York Times reported results of the MAPS-sponsored MDMA-assisted therapy study. The results found that 88% of those taking the MDMA-assisted treatment experienced a clinically significant reduction in symptoms. In fact, 67% of them no longer qualified for PTSD diagnosis after three MDMA-assisted therapy sessions, compared to just 32% in the placebo group.
Barring any change in the trajectory of the research, we could see FDA approval of MDMA to treat PTSD in the relatively near future – with approval for psilocybin to treat various conditions, following that.
And this is just one example – of a potentially huge market.
According to Data Bridge Market Research, the market for psychedelic drugs could grow from about $2.01 billion last year to $6.86 billion in 2027 – a compound-annual growth rate (CAGR) of 16.3%.
Other forecasts are even more upbeat.
ResearchAndMarkets Inc. says this opportunity will zoom from $4.75 billion last year to $10.75 billion in 2027.
From all the years I’ve spent doing this, I can say one thing with confidence: In paradigm-shifting markets like this one, forecasts of this kind often understate the upside and the growth-rate potential.
That’s certainly possible with the Shroom Boom.
If you take the drug markets for just the four maladies we talked about a moment ago, you’re talking about an aggregate opportunity of $29.6 billion – a total that’s more than double the ResearchAndMarkets forecast.
To understand how the Shroom Boom is going to get us there, let’s take a trip – to see where we’ve been.
A Long, Strange Trip
Fascination and experimentation with psychedelics isn’t new. Caves in North Africa and on the Iberian Peninsula, dating back to 4000 BC, were decorated with drawings of animals and mushrooms, which anthropologists say were likely “magic mushrooms.”
From 1300 AD to 1521 AD, Mexico’s Aztecs incorporated psilocin and baeocystin-laced mushrooms, which they called “flesh of the Gods,” in rituals and ceremonies.
In 1897, Swiss chemist Albert Hofmann isolated mescaline from peyote, which North and South American Indian tribes had been familiar with for centuries. In 1901, Jean Dybowsky and Edouard Landrin isolated ibogaine, a naturally occurring psychoactive that’s now being researched as a cure for drug addiction.
Laboratory-derived psychedelics originated in 1912 when German chemist Anton Kollisch created MDMA, which now goes by the street names “molly” and “ecstasy.” In 1938, Hofmann synthesized LSD – and discovered its hallucinogenic properties five years later. In 1958, Hofmann discovered psilocybin in dozens of mushrooms belonging to the genus psilocybe, hence the name.
By the early 1960s, psychedelics were a counterculture mainstay – especially in California. Underground LSD factories, the road-tripping Merry Pranksters, and San Francisco’s “The Psychedelic Shop” promoted the use of these drugs and dramatically raised their visibility. This exposure, along with counterculture exaltations to “turn on, tune in, drop out” created hard pushback on hallucinogens.
In 1966, California criminalized LSD. Two years later the 1968 Staggers-Dodd bill made possession of psychedelics illegal. Then, in 1971, the United Nations categorized LSD, MDMA, and DMT as “controlled substances.’
Taking its cue from the U.N., Washington enacted the Controlled Substances Act, mandating the Drug Enforcement Agency’s (DEA) “scheduling” of controlled substances along with legal drugs. Schedules are based on a drug’s medical value and its potential for abuse. If a drug can be abused, it’s put on a schedule.
Heroin, LSD, magic mushrooms, ecstasy, and, yes, marijuana, are Schedule I drugs. Schedule II drugs include cocaine, meth, oxycodone, Vicodin, Ritalin, and Adderall.
The Schedule I designation of hallucinogens essentially stopped what had been a few decades of robust research into possible beneficial medical uses of the entire class of psychedelics.
In the last few years, however, the renewed interest in these drugs has jump-started research.
In 1980, according to data derived from the FDA, Health Canada, Psychedelic Research Publications, and the Special Education Data Reporting Application (SEDRA), there were 50 papers published on psychedelics.
Research has really ramped up since then – zooming to 700 research papers last year.
What we know about psychedelics is that they come in two forms:
- Lab-derived “synthetics” like MDMA (ecstasy or molly), ketamine, PCP, and LSD, synthesized from fungus that grows on grains.
- And “entheogens” – psychedelics derived from plants.
What we don’t know about psychedelics – and what researchers are thankfully looking into now – is how effective they can be in addressing a multitude of emotional, mental, and physical disorders and illnesses.
Jennifer Mitchell, a neuroscientist at the University of California, San Francisco, and a researcher involved with the PTSD study I talked about earlier, said “this is a wonderful, fruitful time for discovery because people are suddenly willing to consider these substances as therapeutics again, which hasn’t happened in 50 years.”
It’s also a wonderful time for investors.
And in the next installment of my report on the Shroom Boom, I’ll give you a handful of psychedelics stocks to put on your personal “Watchlist.”
But until then, I want to hear from you about the stocks you’re interested in. Every Friday, I’m answering your questions in the BS.H, where I tell you whether a stock is a buy, sell, or hold.
If you want a second opinion on stocks on your “Watchlist,” drop me a line! You can reach me and my team at firstname.lastname@example.org or in the comments below.
Until next time,