Cannabis 2.0 or Just a Fad?
Today, MindMed (NASDAQ: MNMD) became the second “shroom” stock to go public on the U.S. markets.
And with this IPO, we’re seeing a continued trend of money pouring into the psychedelics markets.
Is now the right time to get into psychedelic stocks? Or is this just a fad that will pass?
I first wrote to you about this trend last month. At the time I showed you a backdoor way for you to get into the psychedelics market through the Canadian exchanges.
(If you missed it, click here.)
First let’s address the elephant in the room.
The goal of these psychedelic companies is not to send people into a trance.
The magic mushrooms we’re talking about here contain psilocybin, an active ingredient that is a powerful psychedelic.
But they are approximately 100 times less potent than LSD.
Even still, because of this active ingredient, it’s considered a Schedule I drug by the DEA.
As defined, Schedule I drugs are “substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.”
This should immediately raise a bunch of red flags, right?
The short answer is no.
Look at cannabis for instance. Cannabis is considered by the DEA a Schedule I drug, even though 36 states have medical marijuana programs and 17 states have legalized it altogether for adult consumption.
Thousands of research studies and papers have been published detailing the positive effects of cannabis from treating chronic pain to helping with nausea in cancer patients dealing with chemo.
As medical and recreational use of cannabis started to legalize state by state, the public opinion of legalization began to shift.
Especially over the past decade we saw a major increase of support for the drug, as shown in the graph below:
And I believe that magic mushrooms are on a similar path.
The two major things that are eerily similar to marijuana are the support for medical use of magic mushrooms and the slow adoption of recreational use.
With mushrooms, their use in the medical world is still being studied, but already researchers have determined some fantastic positive effects from the drug.
Unlike the benefits of pain reduction like those found in cannabis, though, psychedelic mushrooms have been found to significantly improve the mental health of patients experiencing depression.
In a study last year, for instance, through NYU’s Grossman School of Medicine, researchers found that a single-dose treatment of psilocybin combined with psychotherapy significantly improved emotional and existential stress in people with cancer.
The FDA has already has given several public “shroom” companies a breakthrough therapy status to study the effects of psilocybin on people with depression. And biotechs big and small are diving into this field to determine the effects.
Thus far, there’s been nothing but good things to say.
The second part of this trend that is mimicking that of cannabis is the trend of governments passing recreational use into law.
First came with decriminalization of shrooms in cities like Denver and D.C.
Next came with the legalization of recreational use in the state of Oregon last November.
As more and more research comes out about its medical benefits…
And more governments see an opportunity to capitalize on the tax revenue they can get from legalization…
We’ll see a shift in public opinion on the drug just like we did with cannabis.
The public stocks are already trickling in with names like MindMed (NASDAQ: MNMD).
And I expect more and more names to pop up as time goes by.
As always, I’ll be here following each one and give you the research you need to stay on top of the game.
Stay tuned, as there’s a lot of excitement coming out of this space right now.
To a bright future,