The pandemic has brought with it spikes in countless tag-on issues exacerbated by isolation and lack of mobility. From food insecurity to domestic violence, many of the problems that Americans have to deal with during the best of times have gotten a lot worse over the last year.
Those same problems, however, represent profit opportunities for many business owners, investors, and developers. After all, when Wall Street sees a need, it's very likely to step in with a profitable solution to that need.
With mental health issues, substance abuse, and suicidal tendencies skyrocketing (the Centers for Disease Control and Prevention reported that 11% of American adults considered suicide in the summer of 2020), companies like MindMed, the most recent psychedelics company to go public, are looking to offer psychedelic solutions to consumers and profitable business opportunities to investors.
Of course, the emergence of psychedelics on Wall Street last year had many people comparing it to the early days of the cannabis market. However, as the cannabis market has slowed, those investors are turning to psychedelics as a new promising recreational and medicinal drug sector. So far, investors in the psychedelic market include big names like Kevin O'Leary, a.k.a. Mr. Wonderful, and Bruce Linton, the founder and former CEO of cannabis company Canopy Growth
The elephant in the room is the fact that psychedelics are considered a Schedule 1 drug by the U.S. government, meaning they have no legal medical uses, much less recreational ones. However, marijuana is also considered a Schedule 1 drug on the federal level. While psychedelics developers are looking for U.S. Food and Drug Administration (FDA) approval rather than state-by-state legalization, psychedelic market hot spots have cropped up in states that are interested in psychedelic reform, namely California, Colorado, Vermont, and Washington D.C.
As psychedelics awareness and education increases, psychedelics insiders foresee the stigma against these sorts of substances fading away, making legalization and decriminalization increasingly realistic. Indeed, Oregon became the first state to legalize psilocybin (psychedelic mushrooms) for medicinal use in 2020.
"We think this is really a voice and the will of the people that we need innovative solutions to mental health, but we believe, ultimately, these become mainstream medicines only with FDA approval," MindMed's co-founder told Yahoo Finance Live.
Rather than pressing for recreational use, companies are leaning heavily into the medicinal side of the market. MindMed itself recommends that its products are used under medical supervision. This medical investment comes in the form of federally-authorized clinical trials on psychedelic use to treat things like PTSD, ADHD, anxiety, depression, and addiction.
"Psychedelics have been under-researched and stigmatized by society. As an investor, I am attracted to MindMed because they are solving health problems through federally-authorized clinical trials, and have no interest in recreational use," O'Leary told The Cannabis Investor.
As investment in these companies grows, they will be able to expand testing and further ramp up their operations, meaning this is likely to only be the beginning of psychedelic development. While MindMed has seen quite a bit of high-profile investors, other companies like Champignon have seen even more promising entrances onto the market.
So far, companies are exploring the medicinal capabilities of psychedelic mushrooms and LSD, including non-hallucinogenic versions of both treatments. This focus on clinical trials and research means that most psychedelic developers have been operating under "significant losses," but developers stress that this is to be expected.
