Chris Wood at RiskHedge is selling one of his higher-end newsletters, Project 5X ($2,497 for the first year, 30-day refund period), by teasing that he will reveal “My #1 Play of the Psychedelic Medicine Revolution”… largely because, like many pundits, he believes that psychedelic drugs might follow the path worn by marijuana over the past few decades… beginning evidence of medical benefit, decriminalization and legalization for medical use as consumer demand and evidence pile up, then mainstream use by medical professionals and full legalization as recreational drugs.
Will that happen? I don’t know, but it’s definitely a theme among investors these days — one thing investors love to do is look for the “next” — what’s the “next Apple” or the “next GE” or the “next China” … or, in this case, what’s the “next marijuana?” Maybe it’s the broad range of popular psychedelic drugs, from MDMA to LSD to psilocybin, or maybe it’s one of those.
Here’s a little taste of the ad:
“The Psychedelic Medicine Revolution
“When you think about psychedelic compounds like LSD, ecstasy (MDMA), and magic mushrooms (psilocybin)…
“You might picture hippies running around Woodstock.
“But the latest science is showing psychedelic compounds are likely some of the most effective medicines in the history of mankind.
“World-renowned Johns Hopkins University recently launched the Center for Psychedelic and Consciousness Research to study these compounds…
“And so far, the results are stunning.
“They found psilocybin to be 4X more effective at curing depression than commonly prescribed medications.
“One study published in the prestigious journal, Nature Medicine, found 67% of participants who received just three MDMA-assisted therapy sessions were effectively cured of PTSD.”
That evidence has been building for a while, particularly in the ability of various psychedelic drugs, usually in very small doses and/or as part of psychotherapy sessions, to help with depression, PTSD and addiction disorders… much like the evidence built for a while about the value of marijuana compounds like THC and CBD in treating addiction or epilepsy, or even just pain for cancer patients. And I guess it’s also still true that there’s a social stigma attached to psychedelic drugs, just as there still is with marijuana in a lot of communities, and the erosion of those stigmas can also have a big impact, sometimes, on the investor enthusiasm for a particular sector (we’ve sure seen that with marijuana and online sports gambling).
Will that lead to a wild move in the stock market for the companies who are trying to research, develop and commercialize psychedelics-based drugs, or perhaps even to distribute those drugs for self-medication or recreational use as legalization makes progress? Maybe. Certainly lots of folks are using the marijuana stock price speculation blueprint to look for the next wave, and those moves were dramatic during the previous booms in various pot stocks — especially the big penny stock pot boom of 2014, which created paper fortunes before evaporating very quickly, like most penny stock bubbles, but also the later mainstream drama when pot stocks got big and some huge moves were made in 2017-2019 or so, particularly among the big Canadian pot stocks (Tilray, Canopy Growth, etc.). Almost all of those stories have ended in tears for at least some people, the folks who bought during the market mania, but a lot of those companies have also survived and created a new generation of pretty big and perhaps sustainable marijuana companies.
If psilocybin and other psychedelics are going to become big legal markets, either therapeutically or recreationally, then we’re just in the very early days. There is only one state to have legalized psilocybin for therapeutic use (Oregon, in last year’s elections), and there are a handful of cities around the country that have decriminalized psilocybin… but, like marijuana, it’s still fully illegal at the federal level (and unlike marijuana, the average person has little to no exposure to psychedelics, so there isn’t that comfort level yet that has e