- Surging Investor Demand Continues to Be Concentrated into a Limited Number of Psychedelic Stocks
- As the Psychedelics Industry Continues to Blossom, the Current Circumstances Have Created a Situation for Investors That Has Enormous Potential Upside
- As More Companies Attempt to Enter the Burgeoning Space, Investors Would Be Wise to Focus Their Investment Dollars on the Proven Sector Leaders Such as Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) and MindMed (NEO: MMED)
Even before the coronavirus cratered the stock market, finding explosive investment opportunities was already a challenge. With valuations on stodgy industries stretched to the limit, it was only a matter of time before a correction came. Frankly, the Covid-19 pandemic likely just accelerated the process. But what one person considers a crisis, another sees as a prospect for profitability. As we’ve seen throughout history, every major economic crisis also brings with it great opportunities for investors. This present environment looks to be setting up a once-in-a-blue-moon moment in the form of psychedelic stocks.
Similar to marijuana-based publicly traded companies, psychedelic medicine represents a transformative investment in how we approach and address chronic conditions, ranging from mental health issues to physical ailments. Unlike the “green” industry, though, psychedelics have garnered enormous credibility through extensive, peer-reviewed research, clear visions for responsible expansion and integration, and sustainable fiscal backing.
Another contrast to the stammering missteps of the broader cannabis sector is that there are no shell organizations involved with psychedelic medicines. While the number of competitors is relatively few, they are the ones that are committed to developing this burgeoning market. Some high-profile pharma names such as GW Pharmaceuticals (NASDAQ: GWPH) (FRA: GW2A) stand to benefit from psychedelic innovations, but it’s the smaller companies making huge strides in the space like Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) (FRA: 496), MindMed (NEO: MMED) (OTCQB: MMEDF) (FRA: BGHM) and Revive Therapeutics (CSE: RVV) (OTCPK: RVVTF) (FRA: 31R) that are primed for growth and offer investors enormous potential upside.
Nevertheless, it’s easy to appreciate why skeptics abound. After all, you might forget some of your investment wins, but you never forget your steepest losses. However, here are two key reasons why psychedelic stocks will rise above the painful lessons learned from the cannabis boom.
Marijuana Was Simply Too Much, Too Fast
Prior to the legalization of recreational marijuana in Canada and cannabidiol (CBD) in the United States, several analysts claimed the birth of the green market as a pivotal transition. It still is. For the first time in a long time, government agencies demonstrated that practicality could help determine policy.
Where the situation went awry for cannabis, though, was the low barrier of entry. Primarily, this enabled an avalanche of competitors to flood the scene. Of course, the backlog of cannabis-related business application requests in Canada didn’t help matters. But eventually, this supply chain imbalance appeared destined to occur given the deluge.
Immediately, this contrasts with psychedelic medicines. While a healthy number of competitors exist in the space, it’s not enough to upset the supply-demand balance of a developing economy. For instance, COMPASS Pathways and ATAI Life Sciences are among the direct participants in psychedelics, specializing in research for medical applications. However, these are two names, not two hundred.
A second critical difference between psychedelic stocks and the cannabis market is that the former is not burdened with bad actors like the latter was during the same developmental stage. Unfortunately, when you lower the barrier of entry, you invariably lower standards. Particularly, these so-called “cannabros” gave their underlying industry a bad name. From unrealistic or poorly planned strategies to self-centred, almost narcissistic agendas that conflicted against shareholder and business expectations, cannabros sabotaged a promising movement.
Today, we recognize that what were considered attributes – such as aggressive expansion – are now liabilities. This sad scenario put many cannabis firms behind the eight-ball as they desperately dumped assets for pennies on the dollar.
However, such circumstances aren’t likely to play out with psychedelic stocks as the players in the field are focused on medicinal rather than recreational applications. For example, Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) (FRA: 496) recently announced it is acquiring the California Wellness Clinic of Orange County, which owns and operates a state-of-the-art ketamine infusion treatment center located within the Mission Hospital’s Laguna Beach campus. This process has been extensively peer-reviewed, demonstrating the exciting potential for addressing depression, anxiety, post-traumatic stress disorder (PTSD), fibromyalgia, and certain other pain disorders.
In addition to Ketamine infusion therapy, the Ketamine Wellness Clinic of Orange County is also a certified Spravato treatment center. Spravato is a nasal version of ketamine (Esketamine) that can only be administered by a certified treatment center in a medically supervised healthcare setting. Spravato Esketamine nasal spray has been approved by the U.S. FDA for treatment-resistant depression.
May has been a transformational month for Champignon Brands. The company made many important announcements, which we’ve highlighted below:
- Champignon appointed Dr. Roger McIntyre as its new CEO. Dr. McIntyre is regarded as the world’s most recognized psychiatrist in relation to mood disorders.
- Dr. McIntyre is the founder and operator of the CRTCE clinic (Ketamine and Psilocybin), which Champignon recently purchased when it acquired AltMed.
- Champignon added MediPharm Labs (TSX: LABS) Founder, Chairman and CEO Pat McCutcheon to its board of directors. McCutcheon was instrumental in creating one of the cannabis sector’s only profitable pot stocks.
- Champignon announced a new deal with a major Canadian pharmacy chain to dispense its ketamine treatment.
- Champignon reported a new $10 million bought deal private placement, which will provide the company with plenty of capital to continue its impressive growth as well as accelerate its North American psychedelics clinic expansion.
- Champignon assembled a task force to oversee its plans to open or acquire at least five new clinics in 2020. Talks are ongoing with revenue-generating clinics in New York, California, Florida, Pennsylvania, Texas and Missouri.
As you can clearly see, psychedelic medicines feature a high barrier of entry, permitting only the most well-funded, and therefore the most responsible players.
Psychedelic Stocks Could Be Grossly Undervalued
Essentially, psychedelics are the opposite of cannabis from an economic perspective. Rather than facilitating supply for supply’s sake, the emphasis here is on sustainable demand. As a result, several analysts have pegged a potential market value for psychedelic medicine at $5 billion, which might be too low.
For perspective, some cannabis experts have forecasted that the U.S. CBD market will hit a blistering $20 billion by 2024. Some of this success is due to the size of the CBD market. But the mere existence of supply doesn’t guarantee demand – otherwise, central banks can always print themselves out of recessions.
Specifically, an education gap still stymies psychedelic medicines and may do so for some time. For instance, a 2017 poll revealed that 53% of American adults supported the use of illegal psychedelic substances for medical research purposes. Contrast that to about 61% of Americans supporting the legalization of marijuana in October 2017. It will take additional effort for psychedelics to achieve similar acceptance rates, but with awareness surrounding the emerging industry continuing to accelerate, things are trending in the right direction.
However, this education gap is also an opportunity. Once more people recognize the potential of psychedelic medicine, the demand for investments in the sector will only increase. Moreover, younger generations are politically and ideologically progressive relative to older demographics, likely catalyzing the longer-term narrative for psychedelic stocks.
Finally, the coronavirus pandemic, which forced most states in the U.S. to impose stay-at-home orders, is an organic marketing opportunity for this expanding market. Obviously, mental health pressures are serious concerns as millions of Americans were suddenly denied access to their social networks. Thus, psychedelic medicines should see increased demand, even as people come out of quarantine.
Let’s face it – if it’s not a health crisis pressuring folks, it’s an economic one. Both can be devastating for mental stability.
Champignon Brands benefits here because of its multi-varied businesses. In addition to psychedelic therapies, the company has broadened its scope to include beverages and edibles infused with natural ingredients found in mushrooms. With millions of people still stuck at home, Champignon has organic marketing potential that will likely resonate for years to come.
SHRM Stock Price Action + Chart, YTD Performance & Research Links
Shares of Champignon Brands (CSE: SHRM) is currently in the midst of a much-needed correction following the stock’s incredible breakout. After reaching a new all-time high of $2.40, SHRM is experiencing a healthy pullback, which is an important and necessary part of any bull run.
Essentially, a pullback allows the stock to reset after a major rally and is usually a time when traders lock in their gains. New investors can also take the opportunity to enter the stock at a more attractive price and psychologically feel satisfied with the entry point rather than if they had rushed in while chasing the stock during the previous run-up. Corrections can be a win-win situation for investors that play their cards right.
Champignon Brands has emerged as a clear leader in the psychedelics sector and because the new industry is in its infancy, SHRM’s run has likely only begun. As the story continues to unfold, investors should expect more upside from here with healthy pullbacks in between breakouts.
Champignon Brands (CSE: SHRM) | YTD Performance:
- Mar 2/2020 | Open: $0.195
- May 21/2020 | Close: $1.85
- YTD Gain: +848.72%
- 52-Week High: $2.40
- Potential Max Gain: +1,130.77%
Due Diligence – Research Links:
Chart Source: Barchart (View Interactive SHRM Chart)
Champignon Brands is a paid client of The Cannabis Investor. The Cannabis Investor holds a position in Champignon Brands.
This report/release/profile is a commercial advertisement and is for general information purposes only. We are engaged in the business of marketing and advertising companies for monetary compensation unless otherwise stated below.
The author of this article owns shares of SHRMF and MMEDF.