This ain’t your grandpa’s acid trip…

“Microdosing” has been one of the biggest (and largely unreported) trends in Silicon Valley over the last decade.

And like many other Valley creations that once seemed crazy… it is on the verge of going mainstream.

In fact, scientists are now in the process of validating some of the claims made by microdosing advocates.

That could open up significant profit potential for early investors.

But before we get to that, let’s talk about microdosing itself…

The 21st Century Way to Take Psychedelics

As the name suggests, microdosing is the process of taking relatively small amounts of a substance over a more extended period.

The term has come to specifically apply to potent psychedelic compounds known for producing hallucinogenic effects – everything from iboga (derived from a shrub) to psilocybin (the active component in so-called “magic mushrooms”).

Perhaps the most popular choice is lysergic acid diethylamide (LSD), commonly known as “acid”…

A regular user looking for the quintessential trip – replete with altered levels of perception, including visual or auditory hallucinations – might ingest somewhere between 50–200 micrograms in a single dose.

In contrast, a microdoser could take just 8–15 micrograms in a single dose, typically repeating the process on different days over several weeks or months.

The idea is often credited to James Fadiman, a psychologist and psychedelic researcher who came up with a widely-followed microdosing protocol and wrote 2011’s The Psychedelic Explorer’s Guide.

The approach was further popularized to mainstream audiences with Ayelet Waldman’s 2016 book, A Really Good Day, which chronicles the author’s month-long microdosing experiment following Fadiman’s guidelines.

Fadiman and his team are now collecting user-submitted reports through their website,… and some of the anecdotal evidence is promising.

Microdosers report feeling mentally sharper, higher creativity levels, increased satisfaction with their lives, and other positives.

From Bay Area to Major Laboratories

Creative types using illegal substances is nothing new, especially in the San Francisco area.

Steve Jobs famously said taking LSD was one of the most important things he’d ever done in his life.

But cannabis has truly become the gateway drug for wider mainstream acceptance of psychoactive drugs.

In 2019, Denver became the first city to decriminalize possession of “magic mushrooms.” Activists are now expected to introduce a statewide initiative in 2022, and surveys indicate half of voters would support the cause.

Two California cities – Oakland and Santa Cruz – followed suit in June of 2019 and January of 2020, respectively.

And in the November elections, Oregon and D.C. voters became the first to decriminalize psilocybin.

Given the recent changes in Washington, it seems only more likely that this trend could gain wider acceptance at the federal level.

Of course, for psychedelics to gain any real scientific credibility or commercial applicability – including a change in the Schedule I legal status assigned by the federal government – controlled studies are needed.

According to Scientific American, several clinical trials are already underway to test the efficacy of microdoses on creativity… cognitive flexibility… well-being… brain activity… cognitive functions… and mood.

So what’s riding on these studies? For those who are already convinced of microdosing’s powers, probably not much.

But quite a lot is at stake for our broader understanding of the brain and the potential for drugs – LSD or otherwise – to enhance cognitive abilities… Through straightforward pharmacology, microdoses may activate just the right amount of receptors for us to be our better selves.

Others are going straight to the point of developing novel therapies to treat specific mental health conditions.

As Forbes explains it:

The challenges for bringing psychedelic drugs like LSD and psilocybin, which are currently federally illegal substances, to patients are not trivial. Fortunately, this time around, the set and setting appear to be optimal for psychedelic drug development to move forward. Bolstered by strong preliminary research findings, the entities working to bring psychedelic drugs to market enjoy the cooperation of the FDA and a critical mass of philanthropic and investor funding.

Compass Pathways (CMPS) is a prime example.

Originally backed by Silicon Valley legend Peter Thiel, the company went public late last year. The FDA has given its psilocybin-based drug a “Breakthrough Therapy” designation for treatment-resistant depression.

So by all appearances, we are at an inflection point where substances that were once completely derided are now being considered legitimate medicines.

And if we continue following the course that has already been set by cannabis, early investors could end up reaping big profits as this transition plays out.

Becoming a Legitimate Medicine

If you’re skeptical, I completely understand.

It’s almost hard to remember all the way back to the days before cannabis legalization started gaining real steam.

Yet, it was only nine years ago when Colorado and Washington became the first two states to legalize recreational pot.

Today, that number has swollen seven-fold. Another 16 states have decriminalized cannabis. The vast majority have at least legalized cannabis for medical use in some form. In fact, only two states continue to ban cannabis entirely.

Meanwhile, over that same decade, an array of products and niche markets have blossomed…

There are numerous cannabis-related companies available on public exchanges…

Major consumer companies like Altria (MO) and Constellation Brands (STZ) have moved into the space…

And despite plenty of volatility, many early investors have earned thousands of percent in returns.

So yes, psychedelics are currently where cannabis was 10 years ago.

But there are some very good reasons to consider putting a small amount of money into the space right now.

A Single-Shot Way to Play This Trend

Several big pharma and biotech companies have their sights set on this market.

A handful of pure-play psychedelic companies – including the Thiel-backed CMPS – are already trading on public exchanges, too.

However, the easiest way to play this developing story would be through the recently-launched Horizons Psychedelic Stock Index ETF (PSYK).

It gives you a stake in more than a dozen companies targeting the burgeoning market for psychedelic therapies, including CMPS.

Like the growing number of people discovering psychedelics… some “smaller doses” might be the safest way to start investing.

After all, betting on early-stage drug candidates is already a speculative pursuit… and this particular area carries several additional layers of risk.

At the same time, readers of Daily editor Teeka Tiwari have already seen firsthand how well asymmetric bets have worked out in cannabis, cryptos, and private market investments.

Here’s Teeka:

We aren’t even in the early innings of this trend… In fact, the game hasn’t even started yet. That’s why psychedelics will be the next big asymmetric opportunity. Eventually, we’ll find start-ups in this space that can turn tiny grubstakes into life-changing gains.

If Silicon Valley’s current interest is any indication, psychedelics could very well be the next red-hot investment trend to follow that trajectory.

Best wishes,

Nilus Mattive signature

Nilus Mattive
Analyst, Palm Beach Daily

P.S. In the Palm Beach Letter, Teeka and I look for asymmetric opportunities that can turn tiny grubstakes into life-changing gains. And right now, one of the biggest asymmetric ideas we see outside of the psychedelic space is blockchain projects.

Teeka’s put together an entire presentation to discuss this opportunity. Click here to watch it