There are a few things to know about investing in the trending market for psychedelics. First, it’s not just one drug, or strain of drug, like the cannabis market. The field includes dozens of hallucinogenic substances, most of which are still illegal. Second, investors aren’t banking on widespread acid-tripping for recreational use; they’re hoping for a revolution in mental health treatment. And lastly – this business is going to be huge. At least according to some early investors.
“The growth potential is immense. But the social-impact potential, that’s phenomenal,” says Sa’ad Shah, co-founder and managing partner of Noetic Fund, which recently opened their second round of funding, looking to raise $200 million. The Toronto-based venture capital fund invests specifically in new therapeutic treatments, and psychedelics are a big part of their focus. Shah says Noetic has already seen the market grow exponentially in the last year and predicts a market cap into the billions soon. “If you miss a week, you’ve missed a year,” Shah says.
While psychedelics might seem like an under-the-radar industry now, it won’t stay that way for long. Peter Thiel, co-founder of PayPal, backed start-up Atai Life Sciences, which boasted a valuation of US$2.3 billion. Champion boxer Mike Tyson has put his cash behind Wesana Health, which had a market cap of more than $40 million in December. Celebrity investor Kevin O’Leary is also talking up psychedelics, saying in May that the potential of psychedelics “far exceeds the potential of cannabis.”
With one in five North Americans experiencing a mental illness in any given year, a growing crop of investors, companies and researchers are betting on the medicinal future of psychedelics. Currently, there are about 50 publicly traded psychedelic companies globally, most funding, supporting or completing their own clinical research. Some focus on psilocybin (you might know them as magic mushrooms), and others are exploring chemical derivatives such as MDMA, ketamine and LSD. Leading medical research facilities like Johns Hopkins University, Harvard University and Massachusetts General Hospital are dedicating new centres and resources to study the use of psychedelics in treatment. One major Canadian centre, at Toronto’s University Health Network, received a $5-million donation from entrepreneur Sanjay Singhal in October.
Though psychedelics research dates back to the 1950s and ’60s, the U.S. Controlled Substances Act put the kibosh on it, when psychedelics got lumped in with other drugs and possession became a federal crime. One of the longest-running research bodies in the market today is the non-profit Multidisciplinary Association for Psychedelic Studies (MAPS). For more than 30 years, MAPS has led the industry when it comes to studying the use of psychedelics in mental health treatments. It’s recently had a boost from the for-profit sector. In September, Wesana…
Read more:Why psychedelic stocks could take off in 2022 | Corporate Knights