Psychedelic Stocks a Great Opportunity for Cannabis Investors
Once-taboo psychedelic mushrooms have finally gone mainstream, with the recent initial public offerings (IPOs) of Mind Medicine Inc (OTCMKTS:MMEDF, NEO:MMED) and Champignon Brands (CNSX:SHRM). Both stocks officially began trading in the first week of March.
Mind Medicine Inc, also known as MindMed, began trading on the NEO exchange in Canada on March 3. It had a very active opening day, trading in excess of 14.2 million shares. (Source: “Real Time Market Data: MMED,” Aequitas Innovations Inc, last accessed March 16, 2020.)
In the U.S., where Mind Medicine stock trades over the counter, it closed out its first day of trading at $0.23 per share.
Many cannabis investors are aware of Mind Medicine Inc because the company raised $24.2 million in a pre-IPO financing round that included Kevin O’Leary of Shark Tank and Bruce Linton, founder and ex-CEO of Canopy Growth Corp (NYSE:CGC). (Source: “Psychedelics-Drug Startup Raises $24 Million Ahead of IPO,” The Wall Street Journal, February 27, 2020.)
Other investors included Bail Capital, Cannell Capital LLC, and Grey House Partners.
Lesser known is Champignon Brands, although it has the distinction of being the first psychedelic stock to go public.
Its shares were first listed on the Canadian Securities Exchange (CSE) on February 27 but trading was halted since the company hadn’t completed its IPO. After closing on its $2.8-million IPO, Champignon Brands stock resumed trading on March 2.
In its first two weeks of trading, Champignon Brands stock traded as high as $0.35 and as low as $0.30. (Source: “Champignon Brands Inc. (SHRM.CN), Yahoo! Finance, last accessed March 16, 2020.)
In addition to trading in Canada, the Vancouver-based company is looking at listing in the U.S. and Germany.
Why Psychedelic Drugs?
There are a lot of different psychedelic substances that have been attracting attention from the scientific community. Studies have shown that psilocybin (the chemical in psychedelic mushrooms), lysergic acid diethylamide (LSD), methylenedioxymethamphetamine (MDMA), and ketamine can be used to treat people suffering from conditions such as anxiety, depression, addiction, and post-traumatic stress disorder (PTSD).
The recreational use of psychedelics is not legal in North America, but, like with cannabis, there is a groundswell of support in states like California, Colorado, Vermont, and Washington D.C. to decriminalize that usage.
It’s not illegal, however, for companies to do research on psychedelic compounds. And it’s not just smaller companies like Mind Medicine Inc and Champignon researching the medical benefits of psychedelic drugs.
In September 2019, a number of private donors gave $17.0 million to start the Center for Psychedelic and Consciousness Research at the renowned Johns Hopkins Medicine, making it what is thought to be the first research center of this kind in the U.S. and the largest in the world. (Source: “Johns Hopkins launches center for psychedelic research,” Johns Hopkins University, September, 4, 2019.)
Much of the early research at Johns Hopkins will be on psilocybin and its effectiveness against conditions including Alzheimer’s disease, anorexia, Lyme disease, opioid addiction, and PTSD.
You can’t invest in Johns Hopkins University, but Mind Medicine Stock and Champignon Brands stock are two psychedelic stocks doing similar research. Over the coming months, it is expected that other private companies doing research on psychedelic compounds will be going public.
MMED Stock Overview
MindMed is a startup company that develops psychedelic-based medicines to treat a number of mental health issues, including attention deficit hyperactivity disorder (ADHD) and addictions to alcohol and opioids.
It is actually currently preparing two separate phase II clinical trials. The first is focused on using LSD to treat ADHD and the other is a phase II FDA clinical trial for opioid addiction.
In addition to its own inhouse operations, the company is expected to grow through acquisitions, joint ventures, and collaborative agreements. It will be easier for MindMed to do this than most cannabis companies in the u.S. because MindMed’s research is entirely legal, meaning it has access to institutional capital.
SHRM Stock Overview
Champignon specializes in the development and distribution of medical mushroom and consumer packaged goods. Its product portfolio includes organic and non-genetically modified mushroom formulations such as “Vitality Superteas.” (Source: “Champignon Brands,” Champignon Brands, last accessed March 16, 2020.)
Champignon has also entered into a research and development (R&D) and product formulation deal with Drip Coffee Social Ltd. to infuse Champignon’s mushroom extract blend into cold brew coffee products.
In the third quarter of 2020, Champignon expects to advance its research into psilocybin mushrooms through clinical trials, ultimately assembling an intellectual property portfolio, clinical pipeline, and drug development platform.
The company is planning on scaling up the production of its pharmaceutical-grade psilocybin, which it can then use for clinical trials.
Just like MindMed, Champignon has attracted interest from deep-pocketed investors. In August 2019, Roadman Investments Corp (OTCMKTS:RMANF, CVE:LITT) invested in Champignon Brands. (Source: “Roadman Investments Completes Strategic Investment Into Craft Mushroom Distributor and Formulator,”GlobeNewswire, August 20, 2019.)
Psychedelic stocks like Mind Medicine Inc and Champignon Brands could be a whole new avenue for investors to explore. Psychedelic substances like those found in psychedelic mushrooms are gaining acceptance, and some cities (e.g. Denver and Oakland) have passed ballots decriminalizing psilocybin.
As mentioned earlier, exciting scientific discoveries are showing the untapped potential of psychedelics on conditions including PTSD, anxiety, and depression. By all accounts, 2020 could be a watershed year for psychedelic stocks.