Psychedelics replace pot as the new favourite edgy and ‘get-rich-quick’ investment
But there’s a fear the market could see a bubble just like cannabis did
Cannabis is only on the cusp of many investors’ comfort zones, but the family offices and high-net-worth individuals hungry for early stage, edgy investments have already moved on to psychedelics. «People see this potentially as a get-rich-quick mechanism, just like you saw in the early stages of cannabis,» said Sa’ad Shah, who runs Grey House Partners GP Inc. ’s Noetic Fund, which has invested in more than a dozen psychedelics companies. While Shah’s background is in asset management, he said lots of VCs in the psychedelics space have recently come from marijuana. «They feel they don’t want to have another FOMO situation here,» he said, referring to a «fear of missing out,» like they did with early-stage cannabis plays.
Psychedelics, which can involve intense, side-effect-plagued trips, aren’t predicted to have the widespread recreational appeal of marijuana.
Bronner’s Magic Soaps, both of whom were known names early in marijuana, are two high-profile players in the hot-but-edgy realm of hallucinogenic drugs. Psychedelics have just recently been decriminalized in a handful of U. « There are already a few strong cannabis fund managers,» said Bek Muslimov, a co-founding partner at London-based venture firm Leafy Tunnel. Leafy Tunnel is building a portfolio of around 15 companies, investing only in seed and Series A rounds with a 50–50 split on global psychedelic firms and cannabis companies based only in Europe, where he says the marijuana sector is less developed than in the U. He said the fund is taking a long-term view on the psychedelic industry with a 10 to 15 year horizon. Current investments include Atai Life Sciences AG, backed by Thiel, and Synthesis, a psychedelic retreat in the Netherlands.
In Pot’s Footsteps
As with marijuana, there’s already a thriving black market for psychedelics that speaks to their popularity. And attitudes are changing, thanks in part to Michael Pollan’s 2018 book on micro-dosing and a designation from the Food and Drug Administration the same year that fast-tracked a psilocybin-based treatment for depression from Compass Pathways based on preliminary clinical evidence. Investors noticed. While such substances are federally illegal in Canada, companies can seek government authority for research, and a recent citizen’s petition has called to decriminalize so-called «entheogenic» or spiritual, plants and fungi, citing their potential for therapy and personal growth.
His JLS Fund has invested around US$10 million in 12 psychedelics companies and is currently raising another US$50 million. The long history of Indigenous and black market use make it easier to predict success compared to novel drugs, he said.
So far, there haven’t been any high-profile investor run-ins with the law, though companies continue to warn in registration statements about the risks of being in a federally illegal industry.
He is currently only in one well-known cannabis-investment, Method Man’s Tical, because he’s decided to go otherwise all-in for psychedelics. An investment in one company gave him around 1,000 times his money in less than a year, he said. «I’ve seen the best returns in any industry,» Schnapper said.
Source: Bloomberg News — Tiffany Kary | Financial Post