- The Federal Government of Both the U.S. and Canada Have Green-Lit the Burgeoning Psychedelics Industry While Also Placing Extremely High Barriers to Entry
- Strict Regulations Have Prevented Wannabe Firms from Jumping on the Bandwagon and Oversaturating the Market As Investors Witnessed with Weed Stocks
- These Conditions Have Allowed Sector Leaders Champignon Brands (CSE: SHRM) (OTC: SHRMF) and MindMed (NEO: MMED) to Flourish with Very Little Direct Competition
With the nonstop Coronavirus carnage being broadcast across the mainstream news media, it’s difficult to wrap your mind around the fact that viable investment opportunities still exist. And no, I’m not talking about buying stock in companies that specialize in bulk packages of toilet paper and hand sanitizers. Instead, astute financiers are keying in on perhaps one of the most transformative investments of our time: psychedelic medicine.
First things first, there’s one thing everyone should understand; investing in psychedelics is perfectly legal and won’t involve federal authorities slamming down your door while you desperately attempt to flush your “stash.” Indeed, the federal government of both the United States and Canada are fully aware of this burgeoning industry, greenlighting psychedelic medicine for further trials.
Unlike other alternative therapies, psychedelics have already garnered impressive momentum. Both the U.S. Food and Drug Administration (FDA) and Health Canada have fast-tracked the controlled substances Ketamine, MDMA and Psilocybin (Magic Mushrooms) for research and development, charting the path for robust opportunities in mental health solutions.
Contrary to popular misconceptions, the legal psychedelic industry has nothing to do with recreational drug usage. Instead, participating companies by law are required to produce medical solutions that have viable treatment potential for various ailments and conditions, including depression and addiction. Furthermore, a Scientific American editorial noted the real possibility of incorporating psychedelics for improving quality of life for perfectly healthy individuals.
As well, a small but growing chorus of well-supported organizations have embarked on the exciting challenge of pioneering psychedelic medicine to the mainstream. Among them, Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) (FRA: 496) stands out for its research-driven ethos, which has forwarded remarkable formulations derived from Ketamine, Psilocybin, MDMA and LSD.
Particularly, Champignon is actively pursuing the development and commercialization of rapid onset treatments that can effectively improve net health outcomes for high-profile mental health pressures, including depression, post-traumatic stress disorder (PTSD), and substance and alcohol use disorders.
On April 9, 2020, Champignon announced a blockbuster deal to acquire Canadian Ketamine clinic operator AltMed along with its Health Canada licensed CRTCE clinic. By acquiring AltMed, Champignon now owns the only psychedelics clinic in Canada that’s able to perform Psilocybin doses under Health Canada approval. In the second half of 2020, AltMed plans to open five new Ketamine treatment centres in North America and is targeting key markets such as New York, California and Florida.
Source: Shutterstock
Another publicly-traded company that has captured investor attention is MindMed (NEO: MMED) (OTCQB: MMEDF) (FRA: BGHM). On March 3, 2020, one day after Champignon Brands’ IPO, MindMed became the first psychedelics pharmaceutical company to go public, essentially sparking a radical paradigm shift. For many, MindMed spearheaded the concept of effective alternatives that treat neurological disorders rather than merely masking symptoms from a cloud of artificial concoctions.
The enormous potential of MindMed and the broader psychedelics industry has brought onboard legendary investors Bruce Linton, founder and former CEO of Canopy Growth (TSX: WEED) (NYSE: CGC) (FRA: 11L1), and Kevin O’Leary, best known as Mr. Wonderful from the hit entrepreneurial TV show “Shark Tank.”
Not surprisingly, the usually outspoken O’Leary cut a prominent figure during MindMed’s initial public offering ceremony, stating, “Psychedelics have been under-researched and stigmatized by society. As an investor, I am attracted to MindMed because they are solving health problems through federally-authorized clinical trials, and have no interest in recreational use.”
As I’ll explain below, there has never been a better time to get involved with psychedelics – from an investor’s perspective, just to be clear. Here are five reasons why you should consider revitalizing your portfolio with psychedelic medicine.
You’re Batting at the Top of the Order
For many investors of much-hyped Cannabis Stocks, they are feeling incredible regret not necessarily because the marijuana industry was a sham, but rather, they simply got in too late. As more and more companies piled onto the bandwagon, the supply-demand balance was no longer tenable for most marijuana players.
Additionally, it didn’t help matters that the Canadian market – which legalized marijuana in 2018, becoming the first major world economy to do so – failed to feed demand efficiently. Let’s face it – growing weed isn’t exactly rocket science. Thus, to attain profitability, you’ve got to deliver volume where demand is the highest.
Instead, Canadian provinces that typically featured the least number of adult cannabis users opened the highest number of stores per 100,000 residents. This created a bottleneck on top of already existing administrative and supply chain logjams.
Chart source: Author
Based on simple economic principles, inventory piled up while demand for those products plummeted. And in this circumstance, it was just not feasible for all these Cannabis Stocks to survive.
On the other hand, psychedelics won’t have that problem. Currently, very few investments are available to the public. As previously mentioned, Champignon Brands went public in early March, and MindMed followed IPOing the very next day.
You really couldn’t be in earlier unless you were an insider. Plus, with heavy hitters like Kevin O’Leary in the mix, you’d be crazy not to consider this groundbreaking opportunity.
It’s Not Recreational, Which is a Good Thing
When Canada legalized marijuana, it sent a wave of anticipation among American cannabis users. Up to that point, individual states had legalized the controversial green plant to various degrees. Later that year, the U.S. signed into law the landmark Agriculture Improvement Act of 2018, better known as the Farm Bill.
In particular, the Farm Bill was significant because it legalized across the nation cannabidiol or CBD. Levering only 0.3% of the psychoactive compound tetrahydrocannabinol (THC) or less, CBD provided most of the purported medicinal benefits of cannabis but without the high or mental/emotional impairment. Therefore, CBD was ideal for those wanting to try cannabis for therapeutic reasons but without the stigma associated with marijuana.
Clearly, this was a huge boost for “botanical” advocates. But further efforts to fully legalize recreational marijuana in the U.S. have failed. In part, the opioid crisis that has plagued several states makes passing legislation on an addictive recreational drug politically unpalatable.
That said, psychedelic medicines are in the opposite camp. As far as anyone knows, they will never enter the realm of recreational usage. Interestingly, a Wall Street Journal report indicated that O’Leary wouldn’t invest in MindMed unless he received assurances that the company wouldn’t pursue recreational ambitions.
Initially, such a request appears to impede upside opportunities unnecessarily. In reality, it’s a brilliant move. By being associated only with legal, medicinal projects, MindMed and similar organizations such as Champignon Brands acquire something that money can’t buy: credibility.
Source: Shutterstock
Extremely High Barriers to Entry
Back when the cannabis investment sector was an exciting novelty, the market featured relatively few players. At the time, financial institutions refused to support green entrepreneurs due to the tricky legal backdrop.
Stateside, marijuana falls under Schedule I classification. Even though many states like Colorado and California legalized weed, under federal purview, this was illegal. Theoretically, then, the feds could crack down on legal users, as state laws cannot override federal mandates.
Of course, no federal agency was going to travel that route. Nevertheless, the possibility of such draconian action was enough to send a chill to bankers.
Gradually, developments such as the introduction of CBD and other initiatives fostered a greater willingness to consider funding cannabis businesses. Additionally, the rise of alternative funding mechanisms emboldened entrepreneurs who wanted to strike it rich.
One by one, the competitors came, initially sparking enormous enthusiasm. However, troubles started to brew when several publicly traded weed companies failed to meet fiscal targets. As it turned out, legalization was a double-edged sword. When it became easy for anyone to join, they did.
That left a smaller pot to feed an increasingly larger audience.
With psychedelic investments, the opposite is true. The pot of opportunity is only getting bigger, but those qualified to sit at the table are few. Moreover, because of stringent federal regulations, this market is not for everyone.
This dynamic helps ensure that the psychedelic sector is limited to an elite, competent few that are genuinely focused on advancing human health.
Public Sentiment Will Likely Shift Favorably
Immediately, one of the factors that could cause hesitation towards investing in psychedelic stocks is longstanding social stigma. Just hearing the term psychedelic conjures up images of hippies in a forest babbling incoherently from a bad mushroom trip.
Obviously, a recreational component exists within this burgeoning sector. But as many powerful financiers have mentioned, they refuse to endorse organizations that are considering this path. As such, avoiding psychedelics due to the actions of a few makes as much sense as criticizing nuclear power as a legitimate energy source because the underlying substance is also used in war machinery.
Beyond that argument, we’re rapidly moving toward a far more progressive society that would more than likely embrace legal, medicinal psychedelics. For example, the Pew Research Center noted that support for marijuana legalization didn’t waver that significantly between the 1970s through the early- to mid-2000s. Most Americans wanted marijuana to remain illegal.
However, that sentiment shifted during the Obama administration. And even when President Trump took the White House, the dynamic reversed from what it was for decades. Now, a majority of Americans support marijuana legalization.
Further, not only did mainstream pharmaceutical companies fail to address the raging opioid crisis, many actually caused it! We’re still reeling from the impact of pharmaceutical medicine gone wrong. Thus, it’s not much of a stretch to assume that a younger and more progressive audience will support viable and effective mental health solutions, irrespective of their prior social stigmatization.
Source: Shutterstock
The Coronavirus Effect
As I mentioned at the top, the mainstream media has never once failed to maximize the drama associated with the Coronavirus pandemic. While indeed real economic pain abounds, many retail investors are also panicking out of their positions based on this hysteria. Unfortunately, this environment may continue for some time.
It is, in many ways, a self-fulfilling prophecy. At the same time, it’s also a profound opportunity for those willing to take a step back and breathe.
Healthy individuals should be glad that the masses are feeding into the frenzy. That’s because the heightened emotions have created pockets of irrationality which have capped the nearer-term trajectory of transformative investments like psychedelics.
Frankly, if we didn’t have the Coronavirus to talk about, most investors would discuss the main fundamentals driving the markets. For psychedelic medicine, those fundamentals revolve around the national opioid crisis. Indeed, opioids were a huge topic during last year’s Democratic debates. With study after study bolstering the case of psychedelics for mental health treatment, names like Champignon Brands and MindMed could be set to launch into the stratosphere.
Thanks to the 24/7 COVID-19 coverage, both stocks, Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) (FRA: 496) and MindMed (NEO: MMED) (OTCQB: MMEDF) (FRA: BGHM) are still very affordable. Let other people’s hysteria be your gain.
*Article updated on May 2, 2020
Technical Analysis: SHRM v MMED
On Friday, May 1, 2020, shares Champignon Brands’ CSE listed ‘SHRM’ stock experienced another major breakout soaring over 10% to close the day at $0.98 per share. During Friday’s breakout, Champignon became the first psychedelics firm to see its stock cross the $1 mark after shares of SHRM rose as high as $1.06 during intraday trading.
MindMed (NEO: MMED) narrowly missed reaching the $1 milestone in early March when MMED stock hit $0.99 but has since pulled back to $0.60 as of May 1, 2020.
Both companies went public this year in early March. SHRM was the first to IPO after its shares commenced trading on March 2, 2020. MMED went public the following day, with both stocks experiencing a strong first week of trading.
After roughly two months of trading, here’s how the top two psychedelic stocks have performed up until this point.
*YTD data as of market close on May 1, 2020
Champignon Brands (CSE: SHRM) | YTD Performance
- Mar 2/20 | Open: $0.195
- May 1/20 | Close: $0.98
- YTD Gain: +402.56%
- 52-Week High: $1.06
MindMed (NEO: MMED) | YTD Performance
- Mar 3/20 | Open: $0.60
- May 1/20 | Close: $0.60
- YTD Gain: 0%
- 52-Week High: $0.99
For investors interested in learning more about Champignon Brands and MindMed, we’ve included due diligence links and technical stock charts for both companies below.
Learn More About Champignon Brands:
- 🇨🇦CSE: SHRM | 🇺🇸OTCQB: SHRMF | 🇩🇪FRA: 496
- Website | Investor Deck
Learn More About MindMed:
- 🇨🇦NEO: MMED | 🇺🇸OTCQB: MMEDF | 🇩🇪FRA: BGHM
- Website | Investor Deck
*Chart data as of May 1, 2020
Champignon Brands (CSE: SHRM) v MindMed (NEO: MMED) 2-Month Chart Comparison
Source: Barchart
Champignon Brands (CSE: SHRM) | 2-Month Chart
Source: Barchart
Learn more about Champignon Brands: Website | IR Website | Investor Deck | Investor Group | SHRM Chart
MindMed (NEO: MMED) | 2-Month Chart
Source: Barchart
Learn more about MindMed: Website | IR Website | Investor Deck | MMED Chart
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