The Psychedelics Sector and Capital Markets

By March 9, 2021 No Comments

An emerging market sector that has recently been subject to increased investor attention has been psychedelics.  Generally speaking, this refers to businesses focused on the potential medical, therapeutic and recreational uses of psilocybin, which is the naturally occurring hallucinogen that is found in certain mushrooms, and ketamine, a synthetic compound primarily used as an anesthetic.

Both psilocybin and ketamine are designated as controlled substances under Canada’s Controlled Substances and Drugs Act.  Similarly, both of these psychedelics are deemed controlled substances governed under the Controlled Substances Act in the United States.  However, certain other countries don’t regulate these substances in a similar fashion, notably in the Caribbean, which provide additional opportunities for therapeutic and recreational uses.  Some companies also provide mushroom extracts do not contain psilocybin and are therefore considered a food product and not subject to subject to applicable controlled substance or drug legislation.

Depending on the applicable regulatory regime, various business opportunities may arise for companies wishing to operate or expand in this sector.  Among the possibilities are medical research into the potential benefits of psychedelics, therapeutic retreats involving either ketamine or psilocybin and the sale of psilocybin based products for recreational purposes. Canada’s capital markets have also proven to be an effective vehicle to raise funds for emerging market sectors in recent times and for companies operating worldwide, following in the footsteps of earlier global expansions by its  mining and oil and gas companies.

Like other recent high growth sectors such as cannabis and blockchain related enterprises, the psychedelics sector seems poised for a period of rapid growth.  Whether it be through raising capital in either the public or private markets, mergers and acquisitions opportunities or partnering with companies seeking to offer their products and services, market participants will have the chance to participate in the growth of this sector for the foreseeable future.

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