What psychedelics has got right that the cannabis industry hasn’t

“Psilocybin products may be unregulated and even illegal in many markets, but producers of psilocybin are more conscious of the consumer than the cannabinoid industry appears to be.”

Every sporting career is doomed to failure. Every sportsman and woman will one day meet (or refuse to meet) their match. In a world of contests, there will always be, in the future, someone fitter, younger, more adept and better than you.

The world of private equity has parallels with the world of sport. While teams and individuals want to win the next prize, investors are engaged in a constant contest to back the next big thing. And it is up to those ‘things’ to make themselves attractive to investors as well as consumers.

On the face of it, the market for CBD products is young, exciting, and has a great future. There are already verticals pushing up fast alongside it. As an investor in cannabinoid brands, I believe the cannabis industry has a lot to learn from an even younger product group: those coming from magic mushrooms.

For most, magic mushrooms deserve its place as (the UK calls it) a class A drug. Occasional bad experiences should relegate the magic mushroom industry to the regulatory naughty step.

However, this new industry has been cleverer than that. It has identified the active ingredient it needs to market. It is learning to use the cultural positives of magic mushroom heritage, and it is adopting to the language of the regulatory regime that will one day administer it.

The active ingredient of magic mushrooms is psilocybin. Look at psilocybin and you may realise how painfully tentative the cannabis industry is. CBD and THC brands have failed to grasp the regulatory nettle in the way even illicit psilocybin brands are already beginning to.

While cannabinoid brands have been busy trying to compete in a market that has yet to exist, using spurious claims which while not without merit have yet to show the level of proof required for regulators to feel comfortable; psilocybin producers are focusing on user experience by providing dosing information, sourcing information and recommended use.

Psilocybin products may be unregulated and even illegal in many markets, but producers of psilocybin are more conscious of the consumer than the cannabinoid industry appears to be.

Take the label on a tin of Get Psilly gummies. It’s illegal in all but a handful of countries, which include the Netherlands, Nepal, Canada and the Bahamas, but its labelling includes dosage, ingredients and even nutritional information. Federally illegal in the USA, its legalisation in states such as Oregon can only be helped by clear guidance.

We are in a market that is seeing wave after wave of deregulation, and forward-looking British MPs such as Crispin Blunt are already beginning to put their political weight behind further research into psilocybin.

Psilocybin should be easier to regulate than Cannabis because the Cannabis plant may have as many as 125 different cannabinoids.  While isolating cannabinoids such as THC and CBD has given investors access to a burgeoning market there is much left to untangle. On the other hand, there are only a handful of mushrooms that contain psychoactive ingredient psilocybin and mushrooms which contain therapeutic properties similar to CBD, such as Reishi and Lion’s Mane, are naturally occurring and legal the world over already.

Another reason to see psilocybin as the new CBD is the pattern of market activity around it. The nascent psilocybin industry is attracting investment in the same way the early cannabis industry did. Investment bank and financial services company Canaccord Genuity is now in psilocybin. Mental healthcare company and psilocybin investor Compass Pathways is listed on NASDAQ. Cannabis companies are not currently eligible to list on NASDAQ.

As with CBD products, the pharmaceutical industry is taking the lead. However, the pharmaceutical value of and market for psilocybin is smaller than that for cannabinoids. Psilocybin’s main pharmaceutical value is as an anti-depressant.

Its value in other areas of discretionary spend is relatively high, especially as psilocybin products flaunt the value of non-psychoactive additives such as extracts of Lion’s Mane. Not only does this attract shoppers, but also garners investment. The psychoactive components of psilocybin teases demand just as the notoriety of cannabis did, and does, for CBD and THC products.

The cannabis and psilocybin industries could share agendas. All the industries will compete for the share of wallet as alcohol and other premium discretionary spend habits. It would be a mistake, however, to look on psilocybin products as naive just because they are newer. In the race to get investors, psilocybin is ahead of cannabis.

Adrian Clarke
Chief commercial officer and co-founder
Tenacious Labs

Adrian Clarke

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