Today, we’re shining the spotlight on what colleague Teeka Tiwari calls his “third trillion-dollar trade” – psychedelic medicine stocks.
Studies show that psychedelic compounds have breakthrough potential to treat depression, anxiety, addiction, and post-traumatic stress disorder (PTSD).
The problem is that, for the past 50 years, the feds have driven these compounds underground with senseless prohibition laws.
But the sector just got a boost from a surprising source – the U.S. Drug Enforcement Administration (DEA).
Last week, a DEA memo called for legal producers to ramp up the production of psilocybin (found in “magic mushrooms”), LSD, and MDMA (aka “ecstasy”) for medical use in 2022.
So this week, I (Chris Lowe) talked to Teeka’s analyst, Anthony Planas.
I wanted to find out what this means for the psychedelic medicine sector… and how you can profit from this early-stage megatrend.
It’s all in this week’s update with me and Weekly Pulse host Tom Beal at the top of the page.
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Tom Beal: Not only are psychedelics being used to treat people with anxiety, depression, and post-traumatic stress disorder, but Legacy Research expert, Teeka Tiwari, has said this is possibly the next trillion-dollar megatrend. So helping you grow and protect your wealth at ridiculous levels is a possibility.
My name is Tom Beal, host of The Weekly Pulse, where we break down the biggest wealth-growth story of the week.
I’m here today with the editor of Legacy Inner Circle, Chris Lowe. Chris, how do we kick off today’s conversation?
Chris Lowe: Tom, this week, we’re going to be returning to what I think is one of the most exciting megatrends we track at Legacy Research Group overall. It’s a little bit out there, and it takes quite a while for some folks to come around to this one, because what we’re going to be talking about today is psychedelic medicine stocks.
Now, if you’ve been following along with what we do at Legacy, you’ll know that colleague Teeka Tiwari started a new advisory earlier this year all about the opportunity in psychedelic medicine stocks. He brought on board one of the biggest influencers in the psychedelic medicine space, Mike “Zappy” Zapolin.
This is something Teeka believes is going to become a trillion-dollar industry. Right now, it’s very small. But Teeka sees big things in the future.
That’s because psychedelic medicine – and that includes compounds such as psilocybin from “magic mushrooms”… LSD, commonly known as acid… MDMA, a party drug known as ecstasy… even ketamine, which is another party drug – these all have huge breakthrough potential for treating things from anxiety to depression, addiction, and post-traumatic stress disorder (PTSD).
They’re under study right now. And so far, the results are very encouraging.
We’re talking about psychedelic medicine stocks today because of some very interesting news from the DEA, the U.S. Drug Enforcement Administration. As the name suggests, the DEA, back to 1971, when a lot of these drugs became illegal, have been doing their utmost to stop production of these drugs. They’re an enforcement agency.
But recently, they released a memo calling for more production of some of these compounds.
This is very early days. But we’ve had some big successes at Legacy already with some psychedelic medicine stocks. In fact, one small psychedelic medicine stock called MindMed (MMEDF) was the top-performing stock last year across all the advisories we publish at Legacy.
So the news from the DEA is game-changing. Right now, psychedelic compounds like psilocybin, LSD, and MDMA are Schedule 1 substances. That means they’re highly illegal. You can get in big trouble if you are using these or crossing state borders with these. (Obviously, in states where some of these substances have some more legal footing, they’re okay to use.)
I think we should go to the video I recorded earlier with Teeka’s analyst, Anthony Planas. Anthony is one of the many researchers and analysts at Legacy that aren’t usually in front of the camera. They don’t have their names on publications. But they are the guys doing the deep-dive research. They’re very knowledgeable about what’s going on.
This news from the DEA, as you’ll see from my interview with Anthony, is very big news. Because like I said at the top of this video, the DEA is calling for more production of cannabis, and more production of psilocybin, the compound in magic mushrooms. That’s because of the research that’s going into these. These compounds are needed for that vital research.
So let’s hear from Anthony about the news last week from the DEA.
Chris: Anthony, talk me through this memo that the DEA released last Monday (10/18). As I understand it, it called for more legal production of cannabis and other psychedelic compounds.
Anthony Planas: That’s right. The DEA is basically telling the world that they need more psychedelics. Things likes psilocybin, MDMA (also known as ecstasy), and LSD were some of the biggest increases.
Really, what they’re doing is opening up a commenting period. They know that they have a lot of researchers requesting these compounds. The problem is that because it’s such a tightly controlled class of substances – Schedule 1 for all of these – there’s not very many legal producers within the United States.
So they’re opening up a period for people to comment on what kind of rule changes or permits need to be allowed in order for them to increase the production, to do more studies on these psychedelic compounds.
Chris: Teeka called psychedelics his third trillion-dollar opportunity. What’s so special about these compounds?
Anthony: Most people think of them as a recreational drug that hippies or dropouts might do to get high for a few hours and waste a day. But the really interesting thing about psychedelics is that a lot of psychedelics actually have roots in traditional medicines. They’ve been used all around the world in all kinds of different capacities, oftentimes in ceremonies for healing or rites of passage.
In the 1950s, scientists really started to get interested in these compounds and do studies. And they found that a lot of psychedelics, like LSD and psilocybin, were effective in treating things like depression, anxiety, and addiction.
But everything went awry during the 1960s and the whole “flower power” and hippie movement. So they got blacklisted.
And because psychedelics were Schedule 1, they were deemed to have no medicinal value. So effectively, there was no research done on them for the past half-century.
All of that is starting to change. Right now is the perfect time for it to change because one in five Americans has a mental health disorder. That’s a 50% increase from the early 2000s. And now, especially with COVID, we’re seeing rates increase even higher.
And what we’re finding is that traditional mental health-based medicines just aren’t cutting it. Most of them were developed in the 1970s and 1980s, and we haven’t seen a lot of big breakthroughs.
Psychedelics offer a really big, promising opportunity. It’s a $3 trillion opportunity, if you can crack the code and bring a new medication or a new form of medication that can better treat these mental health disorders to market.
Chris: So how can folks watching this play this set up, Anthony? I know you’ve got picks in Palm Beach Special Opportunities, the new advisory Teeka set up. But for folks who are not yet a member of that advisory, how can they just dip a toe into this market?
Anthony: All of these companies are in the biotech or biomed space. They’re banking on coming up with a therapy that passes the FDA’s rigorous controls and barriers for studies.
[The United States Food and Drug Administration (FDA) is a federal agency of the Department of Health and Human Services. It is responsible for the control and supervision of prescription and over-the-counter pharmaceutical drugs (medications), vaccines, biopharmaceuticals, blood transfusions, and medical devices.]
That means Phases 1, 2, and 3, and then eventually Phase 4 as well, once they start to be used.
That’s really tough for a lot of companies. Even if you have a great product, it does not mean you’re going to get all the way through it. It’s also really expensive, upwards of $50 million, to push a compound through the three phases of study. So that, in and of itself, is very risky.
That’s why a basket approach like an ETF is really the way to go. We have one ETF I really like. It’s the Defiance Next Gen Altered Experience ETF. It’s a mouthful, but the ticker symbol is PSY.
It buys a bunch of the different companies in here and gives you a shot at all of them. Some will fail; some will succeed. But the idea here is that the winners will outweigh the losers. And overall, you’re connected to this trend and into this big, explosive $3 trillion market upset.
Tom: Wow, Chris, that is very insightful. It opens my eyes to where this is going. It’s understandable why Teeka and others are saying this is the next trillion-dollar opportunity. This is ahead of the curve.
Knowing about this through Legacy Inner Circle, through The Weekly Pulse, can put this on your radar to possibly look into it and make some moves that could have some large returns in the near future. So I see it as super-exciting.
Chris: And we’re at the very beginning of this trend. The DEA, for 50-odd years, has been dedicated to eradicating these substances. Now, it’s turning around and starting to call for more production.
And Anthony believes, as do Teeka and Zappy, that this is the beginning of the move from Schedule 1 down to Schedule 3, which would be a huge opening up for psychedelics.
It’s a little bit like what happened with cannabis, when that started to become legal in states. And now, we have a booming cannabis business in the U.S. Canada and Mexico recently legalized it.
So I’m very excited about this. Anthony mentioned that ETF with the ticker PSY. It’s a very straightforward, easy-to-buy ETF. It gives you broad exposure to this trend.
Obviously, Teeka, Zappy, and the team over at Palm Beach Special Opportunities are digging in a lot further. They’re finding small, best-in-breed psychedelic medicine stocks. So if you’re already a subscriber, you can follow those individual recommendations here.
But for folks who are just watching this and starting to have this megatrend on their radars, that PSY ETF is a good place to start.
That’s it for this week, Tom. But we will be coming back to this trend. Because I can see big things happening in the future, especially when that Schedule 1 designation moves down to Schedule 3. And I can just see this whole area exploding when that happens.
Tom: This is why I love what you bring to The Weekly Pulse, Legacy Inner Circle, and the experts from Legacy Research Group bring to the entire subscriber base – opportunities to put minimal in and receive, in due time, major (ridiculous in some people’s eyes) returns, because it’s so far ahead of the curve.
Chris: That’s right, Tom. With these more speculative opportunities – and by that, I mean, they are still risky because it’s still early on in the game – the potential rewards are massive. They’re asymmetric opportunities.
That’s a word you’ll hear us use a lot at Legacy. It simply means that the amount of money you put at risk is a lot less than the amount of money you stand to gain. That’s where the asymmetry comes in.
For something like this, a small position size, no more than 1% of your portfolio. And don’t use money you’re going to need in the future. Never bet more than you can afford to lose, as they say.
And expect some pretty heavy volatility.
Tom: Who knows where this one’s going to go. But as Chris mentioned, don’t invest what you need. But if you have a few hundred or a few thousand dollars, take a look, wait a few years and see if there are significant returns like that.
Chris, thank you for bringing this information to us today. As always, we appreciate that here at The Weekly Pulse. And we’re looking forward to more insights on this and other megatrends in the near future.
Chris: Thanks, Tom.
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