In case you missed the news, the state of Colorado legalized psilocybin, psilocin, and the magic mushrooms that contain those hallucinogenic drugs.
In addition, the personal use of other psychedelics such as DMT, ibogaine and mescaline was also legalized.
Now other states are considering legalization.
I actually predicted psilocybin and hallucinogenic drugs as a growth industry just three years ago, in my presentation at the San Francisco Money show.
If you are looking for stocks that participating in this industry, there are a few, all of which trade on NASDAQ.
Compass Pathways (CMPS), which has a $468 million market cap, is developing COMP360, a psilocybin therapy for the treatment of treatment-resistant depression, and the treatment of post-traumatic stress disorder. This UK company is debt free, and has $4.47 in cash per share. It is currently generating negative earnings.
Cybin Inc. (CYBN) has a market cap of $76 million. This Toronto based company develops psilocybin based products to treat major depressive and alcohol use disorders. This is a debt free company that has 27 cents per share in cash. Earnings per share growth rate next year is estimated to be 16%.
Mind Medicine Inc. (MNMD), also known as MindMed, is a New York based company that is developing products to treat brain health disorders using LSD and Ibogaine. The market cap is $101 million.
Atai Life Sciences (ATAI) is a German based company that has a market cap of $475 million. The company has been developing pharmaceutical utilizing ibogaine and ketamine.
I very rarely toot my own horn about stocks or industries that I talk about, especially because I never give investment recommendations; however, this time I will talk about a prediction that came through far beyond my wildest dreams. That prediction relates to the industry of psilocybin (Magic Mushrooms) and other psychedelic stocks.
I made the prediction back in 2019 at the San Francisco MoneyShow in a presentation called Stocks of Leading Industries, which can be found below. The section on the psilocybin and the psychedelic pharmaceutical industry was a bonus industry that I covered at the end, and can be found at the 25 minute mark.
If you want to see a pdf of the slides from the presentation, you can go HERE.
Who’s Got the Drugs?
Who would have thought that there would be an industry built up around drugs that are classified as Schedule I under the US Controlled Substances Act? (Schedule I means “with no currently accepted medical use and a high potential for abuse”.)
However, now psilocybin, the primary active ingredient in magic mushrooms is now being tested to treat various mental issues, such as depression, addiction, anxiety, and PTSD.
Even other psychedelic drugs are now being tested for neurological treatments, including LSD, DMT (dimethyltryptamine), and Ibogaine.
Psychedelic Drug Stock Returns
So how have these stocks performed? The only psilocybin stock that was trading a couple years ago, that I mentioned in my MoneyShow presentation, happened to have the name Wuhan General (WUHN). You could have bought the stock last year, up until May 20, for 3 cents a share. Today it’s trading for 90 cents a share.
Then other mushroom companies started to go public, such as COMPASS Pathways (CMPS), which is up 66% over the 12 months, Mind Medicine (MMEDF), up 20%, and Numinus Wellness (LKYSF), up 50%. A Dutch shroom company called Red Light Holland (TRUFF) has doubled over the last 12 months. Field Trip Health (FTRPF) is up 219% over the same time frame.
The interesting thing is, you didn’t have to buy any of these stocks a year ago to make a huge profit. You could have bought Field Trip last week and made a 33% profit. Or Numinus and made a 30% profit.
If you like real low priced mushroom stocks, you could have bought Minerco (MINE) for $0.0015 per share. That’s less than one fifth of a penny. The stock is now at 1.4 cents per share.
Companies Jumping On Other Psychedelics
One of the other psychedelics that pharmaceutical companies are getting into is DMT, a short lasting (15 minutes) smokable hallucinogenic. Two companies that are researching the use of microdoses to treat neurological issues are Entheon Biomedical (ENBI.CN) which currently trades only in Canada, and Algernon Pharmaceutical (AGNBF), which although is a Canadian company, trades in the US on the over-the-counter market.
One company that is exploring the use of MDMA (Methylenedioxymethamphetamine), more commonly refereed to as Ecstasy, X, E, and Molly, is Champignon Brands (SHRMF), in addition to its research into psilocybin and ketamine.
What are Psychedelic Drugs Used to Treat?
Extensive research is being done with health treatment studies on the use of psilocybin and other psychedelics to treat:
•Anxiety disorders
•Major depression
•Addictions
•Drug dependence
•Mood disorders
•Treatment Resistant Depression
•OCD
•PTSD
Where are Mushrooms Legal or Decriminalized?
Psilocybin and magic mushrooms have been decriminalized or legalized in:
–Denver, Colorado (May 2019)
–Oakland, California (June 2019)
-Santa Cruz, California (January 2020)
–Austria (possession decriminalized 2016)
–Brazil
–Iceland (fresh mushrooms only)
–Jamaica
–Netherlands (legal as truffles)
–Portugal (decriminalized)
–Samoa
–Spain (decriminalized for personal use)
–Vietnam
When I first made this prediction, I figured there would be maybe three or four of these companies. Never did I think that there would be over two dozen psychedelic companies.
If you have owned any of these stocks, because of the huge gains, you may want to lock in some profits on some of your holdings. I have no idea which way these stocks will go in the future, but I like to take gains on partial holdings when shares increase dramatically. Who knows? These stocks may get really high or they may have a bad trip downwards.
Disclosure: Author owns CMPS, MMEDF, TRUFF, MINE, and AGNBF.
It was one year ago at the San Francisco MoneyShow that I gave a speech called Stocks of Leading Future Industries. In that presentation on August 16, 2019, I covered seven leading industries, plus one bonus industry.
The bonus industry was Legalized Hallucinogenic Drugs, primarily the legalization of psilocybin and the industry around its use for therapeutic purposes.
First Public Psilocybin Stock
At that time, there was only one publicly traded stock involved in researching psilocybin, Wuhan General (WUHN), which had a division, M2BIO, that was exploring the medical use of psilocybin for treatments of various conditions.
I didn’t recommend the stock during the speech, (I never make any recommendations, I only come up with suggestions for you to research), but I did say that one of these days, this stock will start to move up, other psilocybin companies will go public, and these stocks could take off just like the cannabis stocks did in the past. I told the audience to watch this stock and the industry. You can see my speech below. The section on the psilocybin and psychedelic pharmaceutical industry is at the 25 minute mark.
If you want to see a pdf of the slides from the presentation, you can go HERE.
The Alert About Psychedelic Stocks
So why was it important to keep an eye on this stock? From November 20, 2019 to May 20, 2020, the stock traded between 2 cents a share to 4 cents a share. The next day, the stock almost doubled to 7 cents a share. It then traded at 8 cents a share for a couple days, and jumped by 50% to 12 cents a share the next day. After that, it really started to move.
So there were exactly six months that you could have picked up the stock for, let’s say, 3 cents a share, halfway between the trading range. The stock closed at 33 cents on Friday (actually 32.75 cents but I rounded to make the calculation easier).
This works out to a 1,000% profit on Wuhan. In other words, if you had invested $5,000 at 3 cents per share, the shareholdings would now be worth $50,000. Actually the stock has even traded above 42 cents since May.
The movement of the shares should have been an alert to investors and traders.
Why the Potential for the Psychedelic Drug Industry
In my presentation, I discussed how extensive research is being done with health treatment studies on the use of psilocybin to treat:
•Anxiety disorders
•Major depression
•Addictions
•Drug dependence
•Mood disorders
•Treatment Resistant Depression
•OCD
•PTSD
I also mentioned that psilocybin and magic mushrooms have been decriminalized or legalized in:
–Denver, Colorado (May 2019)
–Oakland, California (June 2019)
–Austria (possession decriminalized 2016)
–Brazil
–Iceland (fresh mushrooms only)
–Jamaica
–Netherlands (legal as truffle)
–Portugal (decriminalized)
–Samoa
–Spain (decriminalized for personal use)
–Vietnam
Since then, Santa Cruz has decriminalized psilocybin in January of this year.
Is There a Precedent for Using Hallucinogenic Drugs Medically?
There have actually been examples of hallucinogenic drugs being used for medical purposes. One example is Lorcaserin [BELVIQ], which is a hallucinogen, but has been marketed for weight loss in very low doses. The Schedule I hallucinogen psilocybin has the same mechanism of action as Lorcaserin, according to the U. S. Government National Institute of Health. Arena (ARNA) markets the drug in the U.S. and South Korea, and Eisai Co Ltd (ESALY) manufactures and distributes the drug.
Another example is Spravato, which is a derivative of the psychedelic ketamine, and is being used for depression. It is produced by Johnson & Johnson (JNJ).
What’s Happening Now with Psychedelic Drugs and Stocks
On Friday, September 18, 2020, Compass Pathways (CMPS) went public, trading on the NASDAQ. The company’s IPO was priced at $17 per share, up from a range of $14 to $16, due to the huge demand.
Once it started trading it skyrocketed to $29 a share, an increase of over 70%, and putting the market cap at almost a billion dollars.
The company, which is based in England, is doing therapeutic research on the use of psilocybin for depression.
There are now over a dozen stocks involved in the psilocybin and psychedelic drug industry. To see a list of these stocks, click HERE.
Maybe some of these stocks will get higher and higher.
Disclosure: Author owns a very small amount of CMPS (less than 10 shares) at the time the article was written.
