The cannabis industry is expanding, moving to offer up different products that fit people’s exact needs. Some are exploring the 100+ different cannabinoids within the cannabis plant, trying to isolate the product and create something that focuses on the effects offered by that individual component.  But as more plant-based psychedelic products are being decriminalized and more clinical studies show psychedelics could have major medical impacts, cannabis companies are trying to get their foot in the door for those markets, too. 

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Cannabis Companies Making the Move

Psychedelics and marijuana have a lot in common, especially in the disorders they aim to treat. They also face similar hurdles in legalization battles, making those already in the cannabis industry better equipped to deal with the psychedelic market, as they’re accustomed to having to navigate tight government regulations. Thus, certain major players in cannabis are starting to transition to hallucinogens. One of the biggest companies in California’s cannabis industry, Cookies, has already expressed interest in psilocybin, the hallucinogen that gives shrooms their psychedelic properties. That company started its business with CBD, expanded to THC, and says it hopes to move to psilocybin once California decriminalizes the chemical. Cookies is already working with non-psychedelic/non-intoxicating, regular-old mushrooms, too. But Cookies feels the properties contained in the fungi are anything but ordinary The brand has a new line of capsules called Caps, which has the cannabinoid isolates CBD, CBG, and CBN combined with mushrooms like lion’s mane, reishi, shiitake, and cordyceps. One blend is meant for daytime, branded as an energy terpene blend; the other is a calm terpene blend intended to be taken at night. 

Caps by Cookies packaging Source:
“While ancient cultures have been harnessing the healing capabilities of mushrooms for generations, modern medicine has only recently dipped into the deep well of organic remedies found in fungi. Caps by Cookies embraces the history and power of mature organic mushrooms to offer a next level experience,” the company avows. Once psilocybin is decriminalized in California, Cookies says it hopes to include “magic mushrooms” into its proprietary blends.  “Our team has been experimenting with plant medicine for years, and we see so much value in what mushrooms can do for consumer’s health and wellness, so it was only natural to go this route,” the company told Forbes. This push isn’t just happening in the United States, however. Another notable cannabis company that’s making the switch is Little Green Pharma, Australia’s first local medical cannabis grower. The business opened in 2018 and is based out of Washington, Australia, where it’s focused on medicinal marijuana. Now, though, the Washington Department of Health has given Little Green Pharma the green light to start producing psilocybin.  That Schedule 9 license allows the company to start exploring psilocybin as a treatment for certain mental illnesses like PTSD and anxiety – which, as we know, medicinal cannabis is also used to treat.
Little Green Pharma's logo Source: @littlegreenpharma
That psilocybin would come directly from mushrooms grown in Little Green Pharma’s own facilities for the time being. Eventually, it could be chemically synthesized in a lab and made into pills.  In South Africa, a company called Cilo Cybin Pharmaceutical Limited is trying to bridge the gap between marijuana and psychedelics as well. The company is that country’s first to be permitted to grow, process, and package cannabis and products derived from it. It’s now cleared worldwide sales. Meanwhile, the company is working to earn a research permit to explore psilocybin’s possible uses to treat depression, PTSD, anxiety, and more. The company’s CEO has said he believes psychedelics will be even bigger than cannabis in time.  

What’s Legal and Where 

The term “psychedelics” refers to a range of drugs that has strong effects on the conscious experience. It includes “classic” psychedelics like LSD, magic mushrooms and peyote; and “entactogens” that affect the release of serotonin, like MDMA. Ketamine is classified in the same grouping but is more accurately described as a dissociative anesthetic.  After psychedelics became popular among the “free love” crowd in the 1960s, the United States government went after them as “drugs of abuse” with no possibility to prove valuable medicinally. That categorization is the same that cannabis still holds at the federal level. Now, just like with cannabis, more and more often, research is disproving that label. Studies both new and old show psychedelics can be immensely effective at treating certain mental illnesses like depression. For instance, Johnson & Johnson has created Spravato, a nasal spray using a chemical similar to ketamine to fight depression.  Oregon was the first state in America to legalize psilocybin, the active ingredient that makes “magic mushrooms” so magical. That happened in the 2020 election, thanks to a 55.8% majority of voters approving it. 

A mexican man holding a button of peyote Source: Shutterstock
In that same election cycle, the District of Columbia decriminalized magic mushrooms, plus other psychedelics. Those include the active ingredients in ayahuasca and peyote. That move doesn’t legalize the substances, but does make enforcement of their use a non-priority for police, and makes the punishment for being caught with small amounts of them a mere slap on the wrist.  Oakland, California and Denver, Colorado beat those two areas to the punch, however. The Oakland City Council passed a resolution in June of 2019 that decriminalized use of entheogenic plants, which includes shrooms, cactuses, and iboga, all of which can give a psychedelic “high.” Just before that, Denver became the first city in the nation to allow psychedelic mushrooms. Now, an entire industry surrounding the product has emerged, from trip guides to therapists, to lawyers and “fungal cultivators.”  Right now, the states of New York and California are each working on bills to make the use of certain psychedelics a virtually non-punishable offense across their entire area, rather than in specific cities. Certain countries like Jamaica, Brazil, and Portugal have all known to be quite relaxed when it comes to psychedelics. In the Netherlands, you can even purchase “magic truffles” – a different part of the “magic mushroom.” 

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Potential Impacts

A banking firm called Canaccord that’s based in British Columbia estimates the psychedelic market could amount to a $100 billion global business. The firm Research and Markets, whose name explains its focus quite clearly, estimates that growth could happen faster than we think. In 2020, psychedelics were a $4.75 billion industry; Research and Markets expects that’ll be $10.75 billion by 2027. That company also thinks the pandemic, which worsened feelings of depression and anxiety, will only lead to a deeper interest in treatment of those conditions with psychedelics.  The companies that will emerge as the winners, according to Cannacord’s analyst for Capital Markets, Tania Gonsalves, "will have deep pockets, patentable products and a well-thought-out reimbursement strategy."

Companies to Keep an Eye on

The psychedelic industry seems to attract some of the same investors as those interested in cannabis. Both are used to treat similar conditions like depression, anxiety, pain, and other mental health conditions.  The cannabis market has been booming, with the global impact of medical use reaching $12.9 billion and the recreational market surging to $16.5 billion across the world. Stocks for companies involved in psychedelics seem to follow the same path as the dips and spikes that cannabis sees. However, it could be quite a while before psychedelics are as profitable as marijuana.   Those companies that do involve themselves in psychedelics are, at their core, health and pharmaceutical businesses. Some are growing rapidly, with stocks showing notable growth. ATAI Life Sciences, which develops drugs from psychedelic substances like ketamine and ibogaine, is worth $2.7 billion. That company was rated as most valuable in the young space in 2019. Compass Pathways, focused entirely on a psilocybin therapy called COMP360, is already worth $1.4 billion. That company is on track to be the first legal provider of psilocybin, and may even have a monopoly on it for a while. ATAI is Compass Pathways’ largest investor. 

Psilocybin pills used to treat depression Source: Shutterstock
Another drug focusing on psilocybin, CYB001, is already in its clinical test stages. Cybin Inc, the biopharmaceutical company that makes that drug, is worth $410 million. It has a few other drugs in the works, too, with 15 total patent filings, and is only growing from here. Mind Medicine, a psychedelic medicine biotech company based out of New York, is now worth a clean $1 billion, according to its market cap. It’s also been seeing a comfortable rise in its stock price. That’s thanks to three drugs in their clinical stages, one of which uses ibogaine and two of which focus on LSD. Seelos Therapeutics has four clinical-stage programs and is testing out the delivery of ketamine through the nasal passageways. The lead program is tackling acute suicidal ideation and behavior in depressive disorder; another hopes to fix amyotrophic lateral sclerosis. The company‘s market cap sits at $223 million.  Numinus Wellness is still small, with a market cap of just $137 million, btu the therapy centers it operates show promise. The mental health care company is working to create therapeutics using MDMA and psilocybin.  Field Trip Health Ltd. boasts the world’s first legal research facility dedicated solely to plant-based psychedelics like psilocybin. The company enjoys a $112 million market cap as it researches synthetic psilocybin with a similar potency to what you’d find in the plant-based variety, but with a shorter period of psychoactive. 

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