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‘Shroom Boom

Posted March 03, 2023

Matt Insley

By Matt Insley

‘Shroom Boom

On January 1, psilocybin (the psychedelic compound found in “magic mushrooms”) became legal for adult therapeutic use — under the supervision of a licensed practitioner — in the state of Oregon. And residents of Colorado voted yes on a similar ballot measure. 

(Fun fact: Hallucinogenic mushrooms have been legal to grow for personal use in New Mexico since 2005.)

Beyond these states, there’s a groundswell of support to legalize psilocybin across the U.S. — both for medical and recreational use. “Legislation… has also been introduced in states including Connecticut, New Jersey, and California,” says Time magazine. 

Does psilocybin remind you of anything? 

Cannabis is an obvious corollary. An important argument for the legalization of cannabis is the abundance of therapeutic applications — cancer-treatment side effects, pain relief plus many more we don’t have time to list. 

Some other similarities? Cannabis and psilocybin are both Schedule I drugs, meaning they’re controlled substances the federal government determines have no “currently accepted medical use” and a high potential for abuse. 

Of course, with so many states opting to legalize cannabis, the federal government will be forced to revisit and likely change its policy. Eventually.

Why would non-addictive, medically useful psilocybin be any different? 

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Your Rundown for Friday, March 3, 2023...

Magical Thinking? 

So, it’s a reasonable comparison: Psilocybin might be the next cannabis… with similar (or even more) revenue potential.

“Psilocybin’s use in the medical world is still being studied,” says Paradigm’s biotech expert Ray Blanco, “but researchers have already determined some fantastic positive effects from the drug.” 

While cannabis has been found to be effective for pain management, “psilocybin has been found to significantly improve the mental health of patients experiencing depression,” he says. 

In a 2020 study from NYU’s Grossman School of Medicine, for example, researchers found a single-dose of psilocybin, in concert with talk therapy, significantly reduced emotional distress among cancer patients. 

To wit: “The FDA has granted several public psilocybin companies breakthrough therapy status to study the effects of the drug on people with depression,” Ray says. 

“And biotechs big and small are diving into this field to determine psychedelics’ applications.” 

One such company, London-based Compass Pathways (ticker: CMPS) started in 2016 thanks, in part, to cash from American venture-capitalist Peter Thiel. 

According to Compass Pathways co-founder George Goldsmith: “Depression is the leading cause of ill-health and disability worldwide, and treatment-resistant depression affects more than 100 million people.” 

And in 2020, the biotech partnered with researchers at Saint Joseph’s University in Philadelphia “to develop psychedelic therapeutics for mental health,” says The Philadelphia Inquirer. 

So far, the Compass Pathways partnership has yielded a patent application for the approval of “218 novel psychedelic drugs to consumers, each of which could potentially treat a range of mental health conditions.” 

Ray adds: “We’re seeing more money pour into psychedelics. And I expect more and more names to pop up as time goes by.” 

Ray and his team will continue to monitor this trend, and we’ll keep you posted as more opportunities arise. 

Market Rundown for Friday, March 3, 2023

S&P 500 futures are up 0.30% to 3,996.50. 

Oil is down 0.65% to $77.65 for a barrel of WTI. 

Gold is up to $1,851.60 per ounce. 

And Bitcoin’s in the red at $22,318.20. 

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