Everything You Need to Know About Investing in Psychedelics

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Dennis Hammer is a writer and finance nerd with six years of investing experience. He writes about personal finance for Wealthsimple. Dennis also manages his own investment portfolio and has funded several businesses in the past. Dennis holds a Bachelor's degree from the University of Connecticut.

As the cultural and legal landscape changes, several companies are researching ways to use lysergic acid diethylamide (LSD) or psilocybin (“magic mushrooms”) for commercial and therapeutic use.

Here we’ll talk about the legality of these investments, why investors like these kinds of stocks, the top companies in the space, and how you can start investing in psychedelics.

Yes. It is legal to invest in psychedelics in Canada, but only in companies who have a legal exemption by the Minister of Health to possess psychedelics.

Health Canada regulates psychedelics under the Controlled Drugs and Substances Act (CDSA). Lysergic acid diethylamide (LSD) and psilocybin are both Schedule III controlled substances. This means that the sale, export, import, production, and possession is prohibited.

However, under Section 56(1) of the CDSA, the Minister of Health has the power to grant exemptions to these restrictions if he/she deems them necessary for a medical or scientific purpose, or otherwise in the public interest.

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In 2020, The Minister of Health granted exemptions under Section 56(1) that allow cancer patients to access psychedelics for end-of-life care, as well as other medical purposes. Countless companies and healthcare providers have since sought exemptions to possess psychedelics to treat their patients. Furthermore, as of August 2021, Health Canada is considering revising its Special Access Programme to permit the use of psychedelics in psychotherapy.

Will Canada continue on this journey toward medicinal acceptance and, perhaps someday, decriminalized possession for personal use? It’s hard to say. But Canada isn’t the only country on this path. The trend of using psychedelics to treat a variety of medical conditions is occurring all over the world.

Why are people investing in psychedelics like mushrooms and LSD?

While no stock is a sure bet, the projections for psychedelic stocks are promising. Ground-breaking studies of magic mushrooms, LSD, and similar products are extremely promising. Psychedelics can be used to treat depression, anxiety, and addiction, their efficacy often surpassing traditional treatment methods.

Psychedelics are exciting stocks for investors because they represent entirely new markets. There is a tremendous amount of room for companies to grow, in both the medicinal and personal use spaces.

Furthermore, psychedelics offer a response to the opioid epidemic that’s currently ravaging Canada and the rest of the world. The world needs more non-opioid solutions to pain and mental health disorders.

Finally, some investors are excited for psychedelic stocks for more than financial reasons. Many strongly believe in the potential for psychedelics to play a key role in the treatment of physical and psychological issues. They want these substances in the toolboxes of professionals who can improve the lives of suffering patients.

Mushroom and LSD stocks to watch out for

The following is a list of companies who are dabbling in psychedelics, either LSD or mushrooms (sometimes referred to as psilocybin). Which company represents the “best pick” in psychedelic stocks is up to you.

Compass Pathways

Compass Pathways is developing a synthetic psilocybin to address treatment-resistant depression. Studies show that psilocybin can have a remarkable effect when treating depression. The company is farther ahead than most in this space and aims to prove that psychedelics offer tangible therapeutic benefits.

Mind Medicine

MindMedicine is a biotechnology company working on microdose LSD-based treatments for anxiety, ADHA, and addiction, as well as LSD-neutralizers that eliminate hallucinogenic effects in less than 30 minutes. They are also partnering with the University Hospital of Basel to develop LSD therapies for cluster headaches. The company is backed by Bruce Linton, the former co-founder of Canopy Growth.

Cybin

Cybin is a clinical-stage Canadian pharmaceutical company whose flagship product is a psilocybin-based drug that treats depression, anxiety, and addiction. It is also partnered with neurotechnology company Kernel to quantify psychedelic experiences. Its goal is to understand how psychedelic molecules affect the brain to find ways to treat neurological disorders.

Numinus Wellness

Numinus Wellness, a leader in psychedelics-focused research, was the first public company in Canada to be granted a cultivation license to produce and extract psilocybin to treat post-traumatic stress disorders and substance abuse. It also has licenses to export, import, extract, and distribute other psychedelics, such as DMT, psilocybin, and MDMA, and generate some revenue from third-party cannabis testing.

Field Trip Health

Field Trip Health is another company using synthetic psilocybin molecules to treat mental health disorders. Its drug is supposedly just as potent as real psilocybin, but with a shorter period of psychoactivity (meaning less of a hallucinogenic effect), which would make it preferable for treatments. The company recently opened its Field Trip Natural Products Limited Research and Development Laboratory for Psychedelic Fungi, the world’s first legal facility exclusively for psychedelics research. The stock currently trades on the TSX exchange in Canada, but may be listed on Nasdaq soon.

Mydecine Innovations Group

As of August, 2021, Mydecine is preparing to enter clinical trials with a psilocybin-based therapy for PTSD, substance abuse, and smoking cessation. Investors are optimistic that this therapy will be lucrative because it’s a strong candidate for insurance coverage. Additionally, the company is active in psilocybin cultivation, including the first-ever international experts of psilocybin “magic mushrooms.” Currently, Mydecine is a cheap way to enter the psychedelics market for a company with a relatively advanced drug.

Revive Therapeutics Ltd.

Revive is a life sciences company that was originally focused on cannabinoid pharmaceuticals but moved into psychedelics with the purchase of Psilocin Pharma Corp. Its psychedelic-based therapies aim to treat rare disorders and infectious diseases.

How can I buy psychedelic stocks?

Investing in psychedelic stocks is similar to trading any kind of stock. First you’ll need to open an account with a brokerage, which is a financial institution that gives retail investors a platform to buy and sell stocks and other securities. After opening an account, you will need you deposit some funds to trade with.

Next, choose which psychedelic companies you would like to own. Do your research carefully and make an informed decision. If you are unsure which company to buy, consider purchasing a psychedelic ETF, such as Defiance Next Gen Altered Experience (PSY) or Horizons Psychedelic Stock Index (PSYK).

Before making a purchase, decide how many shares you’d like to own. Divide the total amount you want to invest by the share price. For example, if you’re willing to invest $5,000 and your chosen stock costs $25 per share, you can afford to buy 200 shares. ($5,000 / $25 = 200).

Finally, execute the trade through your broker’s platform. Your broker will deduct the funds from your account. The shares should appear soon.

Please keep in mind that like all securities, trading psychedelic stocks comes with some risk. Never invest more than you can afford to lose. It’s smart to diversify your portfolio with many different kinds of securities to reduce the risk of losing your savings.

Last Updated September 7, 2021

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