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.
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.
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 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.