Last month, I attended the Benzinga Cannabis Capital Conference in Miami.
I was with former NBA star Lamar Odom. And together, we gave the closing remarks and showed the trailer to our documentary, Lamar Odom: Reborn.
The documentary is about how psychedelic intervention helped break Lamar’s addictions and lifelong anxiety.
Another keynote speaker was Kevin O’Leary from Shark Tank.
If you’re not familiar with O’Leary, he’s an uber-successful venture capitalist, asset manager. Most famously, he’s “Mr. Wonderful” on the TV show Shark Tank.
During his address, he was asked about his thoughts on the psychedelics space.
The multibillionaire and renowned investor replied, “If somebody has the money to do the studies and the clinical research, they’re going to be successful.”
O’Leary has been vocal for the past few years about the opportunity in the psychedelics space to transform people’s lives and make fortunes for early investors.
And he’s not the only billionaire excited by the potential of psychedelic medicines.
Billionaire venture capitalist Christian Angermayer recently scooped up 1 million shares of psychedelic therapy company ATAI Life Sciences.
This shows that smart investors are targeting the most promising companies in this sector.
In addition to increased venture capital funding, we’re seeing promising research take place in the plant-based medicines space.
For instance, in March I was a panelist at the Soho House in Los Angeles. Many other panelists were from MAPS (Multidisciplinary Association for Psychedelic Studies).
MAPS is anticipating receiving FDA approval in 2023 for its MDMA-assisted therapy protocol.
MAPS founder Rick Doblin spoke about the results of MAPS’ Phase 2 clinical trials on MDMA for the treatment of PTSD.
The results were incredible: Over 65% of subjects reported no PTSD symptoms after just two sessions of MDMA-assisted therapy.
Compare that to the only other approved medications for PTSD, Zoloft and Paxil, which are only about 30% effective in treating the symptoms.
Now, I know what you’re thinking: “All right, Zappy, all this good news is coming out at the corporate level and the scientific research level, but the whole industry’s down… What gives?”
And it’s true.
Despite an avalanche of big announcements, the Defiance Next Gen Altered Experience ETF (PSY) is down 56% year to date… and roughly 81% from its all-time highs.
Similar to risk-assets like high-growth tech stocks and cryptocurrencies, the psychedelics sector is getting hammered by market volatility.
But we know that to be both early and right in a massive trend, we have to accept that volatility is going to be the norm…
So, the best thing to do is focus on the adoption and what’s happening behind the scenes.
That’s what I find out through my boots-on-the-ground research. And here’s what I’m seeing this year…
COVID and Decriminalization
COVID restrictions were one of the biggest factors weighing down the psychedelics market last year…
Since the pandemic began, lockdowns and restrictions have slowed patient enrollment in clinical trials… halting progress for many companies that were testing out new therapies.
This wasn’t an isolated incident either…
According to a research paper in the journal Bioanalysis, more than 2,000 trials have seen disruptions to patient enrollments due to COVID-19.
Some people are calling it the “biotech winter” as a nod to the brutal “Crypto Winter” sell-off we saw in cryptos in 2018.
It’s ironic that restrictions used to ensure public health have also delayed over 1,000 studies that could improve quality and length of life…
But I’m confident the easing of restrictions – as we’re starting to see – will result in a bevy of new trials, leading to groundbreaking new treatments.
So, the volatility we’re experiencing shouldn’t concern you. Here at PBRG, we still believe the psychedelic therapy space is a massive, trillion-dollar opportunity.
In addition to psychedelics companies putting out studies and conducting scientific research on the benefits of their treatments… There’s also movement on the rescheduling front.
In other words, the federal recognition of psychedelics as therapeutic medicine.
This catalyst still looks promising… We’ve already seen several states and cities decriminalize these substances, and I believe more will follow in the upcoming election cycle.
One major state considering it is California. If it decriminalizes or legalizes psychedelic therapeutic treatments, the trend is going to unfold like the cannabis industry in the state.
And that’s going to be a massive market.
If California were a country, its GDP would make it the fifth-largest country in the world.
Once a decriminalization initiative happens in that state – and I believe that will happen this year – it’s going to accelerate things in the psychedelics industry in an amazing way.
Every morning, I wake up and my head is spinning from all the positive announcements and research we’re seeing in this space.
So, while the market is undervaluing the psychedelics industry, the best companies in the space will become giants like the pharma companies of the 1920s or the biotech companies of the 1990s.
Now, that’s not going to happen overnight. We still need these catalyst events to happen in order to propel them. But the potential is massive…
A Tipping Point for Psychedelics
Like Crypto Winter, the so-called “biotech winter” will end… and early investors in the space will reap the rewards.
The best psychedelics stocks will rise to new highs… And we already hold many of them in our Palm Beach Special Opportunities portfolio (click here to learn more).
We target the best companies that our research points us to… And we expect to hold them over the long term.
So if you haven’t already added shares of these exciting companies, now is the time to get them at a discount.
And if you want broad exposure to this space, consider the Defiance Next Gen Altered Experience ETF (PSY) I mentioned above… it’s down on the year, but its also a bargain at its current price of about $5.42.
PSY holds a basket of companies working on psychedelic and cannabis-based therapeutics.
That means there’s a risk that some will fail to see their therapies reach the mass market… So the PSY ETF spreads this risk out across many different companies.
Remember, the psychedelics sector is still in its early stages… But between state decriminalization and the easing of pandemic restrictions, the pressure to reschedule is near a tipping point.
It’s only a matter of time before these breakthrough compounds replace antidepressants, pain medications, and addiction treatments.
Once the market awakens to this, it’ll create truly tremendous shareholder returns.