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Will Investors Experience a Quicker High in Psychedelics as Cannabis Creates the “Model”?
Will the legalization of psychedelic drugs for medical and recreational use unfold rapidly, similar to states where marijuana laws have changed? This is a question many investors, business owners, would-be business owners, stressed, and would-be recreational users are asking. There are already definable hints as to the answer to this question; many of them are presented here.
Short History of Legalization
A number of U.S. cities decriminalized the possession of plant- and fungi-based psychedelics, including psilocybin mushrooms, just a couple of years ago (2019). The first was Denver, CO, in 2019. The first state to legalize psilocybin “magic mushrooms” for therapeutic use was Oregon. This was a voter lead move during the 2020 November election. When all the ballots were counted, voters had approved the psychedelic substance and also approved a separate measure to legalize possession of all drugs. California may soon follow Oregon. On June 1, their state Senate approved a bill that would allow possession and personal use of various psychedelic substances which include: psilocybin, LSD, ketamine, DMT, MDMA, mescaline, and ibogaine. The measure has not yet been voted on by the state Assembly. Whether it will be approved by the Assembly and then signed by the Governor is not certain.
The impetus for this new momentum in psychedelics is twofold.
First, there is solid science and growing data identifying therapeutic uses for psilocybin and other psychedelic drugs. The progression and results of the data are such that the Food and Drug Administration (FDA) has granted psilocybin “breakthrough therapy” status. This designation provides a green light to those looking to research its use for “serious conditions.” This led to Johns Hopkins University, in late 2019 to launch the “Center for Psychedelics and Consciousness Research.” The Center studies how psychedelic compounds affect our brains.
Second, decades of fighting the “war on drugs” has done little to reduce drug use, while it has filled prisons. It can be argued that prison time genuinely ruins lives, while the impact of some drugs they are doing time for is still unknown. The “First Step Act” signed by President Trump in 2018 brought attention to this as the act reduces sentences for certain drug crimes.
Changes Around the U.S.
While the California Senate and a majority of Oregon voters have taken the most notable steps, other states have been experimenting with the idea of reducing the burden on their legal system while potentially opening the door to breakthrough therapies. The path forward for these states is largely in the early stage of “studies” to determine position. The more significant steps by states are outlined below:
- New York - Assemblywoman Linda Rosenthal introduced a bill on June 1 to create a “Psychedelic Research Institute.” Its initial findings are due by Dec. 1, 2021.
- Connecticut - Governor Ned Lamont signed a bill on June 7, 2021 to permit psilocybin research in his state. The bill calls for the creation of a “working group” charged with reporting its findings to the Connecticut general assembly by Jan. 1, 2022.
- Texas – Governor Greg Abbott allowed a bill authorizing the study of psilocybin to become law without his signature on June 7, 2021. One driver of the decision is the preliminary findings that psilocybin has been effective in treating military veterans with post-traumatic stress disorder.
- New Jersey - Governor Phil Murphy signed a bill in February 2021 lowering the penalties for possession of up to one ounce of mushrooms in his state.
- Maine - the House of Representatives on June 17, 2021, approved a bill to decriminalize possession of all currently illicit drugs. That measure has not yet gone to the state Senate for a vote.
Will Psychedelics Be the “New Cannabis” for Investors?
Investors got their first dose of once illicit substances with cannabis and recognize the potential highs. For speculators to view psychedelics in a similar vein and anticipate desirable results would seem to follow – and the numbers are somewhat exhilarating.
A study, released in June 2020 by Data Bridge Research, predicted that a new “psychedelics sector” could grow at a CAGR of 16.3% and continue to become a $6.85 billion industry by 2027. Considering there is no indication as to whether the California or Maine legislation will move beyond its state’s Senate and be signed makes such predictions seem dubious. However, it is certain that there is a higher level of acceptance by today’s leaders and the public at large. It is also expected that like other new industries, moving from “counterculture” to mainstream will be a long strange trip full of unexpected realizations and maybe substantial reward.
Acceptance of Psychedelics for Wellness and Recreation
The Future of Cannabis Crosses Many Industries
The Future of Cannabis Crosses Many Industries
Managing Investment Portfolio Risk
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