Every day it seems we’re hit with yet another breathless press release about how much investment some psychedelic-themed company has attracted. (By the way, thanks for ruining my google news alert for psychedelics; this used to have actual articles in it, not just a constant churn of press releases.) Even if you try to avoid them as I do, the waves of excitement set off by major announcements that spread rapidly through social media will still reach you.

Numinus offering oversubscribed!

MindMed applying for uplisting on the NASDAQ!

Compass Pathways: Market capitalization of $1.34 billion.

So much money, OMG! In no time at all, we'll be having our insurance-covered visits to tastefully decorated psilocybin clinics. And I can't wait to pick up my monthly supply of capitalism-I mean, productivity-enhancing LSD microdoses from the local pharmacy. 

Sorry folks, if you’ve gotten caught up in this hype, I’m here to slow your roll. 

Wisdom of markets?

The amount of money people are willing to throw at these enterprises doesn’t actually mean much. People are greedy, credulous, and easy to manipulate with the promise of high returns on investment. Here are two examples of when investors got it spectacularly wrong:

Theranos – you remember them, right? At one time, they were going to revolutionize blood testing and healthcare in general. With Elizabeth Holmes at the helm, they collected hundreds of millions in investments and were valued at $10 billion. As it turns out, their fantastic technology didn’t exist, investors lost basically everything, and Holmes has been indicted for multiple counts of wire fraud.

How about BitConnect? The infamous cryptocurrency pyramid scheme had a market cap of $2.6 billion at its peak. People paid up to $432 for the BCC coin. When the founders pulled off the exit stage of the scam, the token’s value plummeted. People who had been so convinced that they sunk their life-savings into it were left with nothing. (Side note: It’s worth remembering that the total value of all publicly listed psychedelic companies is probably less than any of the top five cryptocurrencies – so it’s worth keeping some perspective). 

None of this is to imply that any of the psychedelic companies mentioned above are scams. Instead, it's to illustrate just how mistaken people can be when assessing whether or not something is worth investing in. If you want to invest, learn all the other ways to decide where you should put your money – hype is not a good measure by itself. The truth is that the psychedelic companies issuing these stocks and raking in VC cash could fail before selling any product. 

Meanwhile, back in the real world

All of this is before even looking at the considerable regulatory challenges that must be overcome before psychedelics can be legally used in even the strictest clinical settings. Suppose governments in major economies choose to keep a tight rein on psychedelic therapy, and insurers choose to not cover it. In that case, the market for products and services will stay small, and the much-vaunted potential profits will simply not be realized. This could stifle further investment, making commercially available psychedelics even less likely. 

And don’t even get me started on connecting all this market hype to utopian fantasies of corporate-driven drug-law reform. Even if a company succeeds in making money from synthesizing psilocybin and treating patients in its chain of clinics, do you honestly think they have any interest in letting anyone grow their own Psilocybe mushrooms? This is like expecting Johnson and Johnson to lobby governments to let you grow your own opium poppies.  

Doing the work

Companies will only advocate for reform of non-clinical use of psychedelics if they feel it is in their commercial interest. This is why it's so essential for activists and advocates to remind them that it's not just investors who are impacted by their decisions. Imagine that we're still being thrown in jail for a sheet of acid. At the same time, corporations make billions selling some bullshit isomer to affluent clients. If that's happening, we're going to make life very difficult for those profiting from this system.

But, in even talking about this, I feel we’re getting way ahead of ourselves. It will likely be years before any psychedelics have FDA approval (and then even more years before similar permission is granted in other countries). That's plenty of time for a business to go under, especially during a period of economic uncertainty. If companies get that far, there's no guarantee this will lead to widespread therapeutic access, let alone something like decriminalization. 

There's research that suggests psychedelics can help us stop avoiding unpleasant feelings and confront the truth. Well, here's one truth we need to focus on: no matter how much money gets thrown at sexy psychedelic stocks, if we want to shape the world in specific ways, we will have to do the work.

Author: Sam Douglas, PhD