Why Investors Are Bullish About Psychedelics – Forbes

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Like cannabis, the psychedelics industry has been growing at a locomotive pace. A key reason has been an intriguing trend within the mental health community: the evolving acceptance of psychedelic drugs for treating depression and other mental disorders. Noting this development, market researcher Data Bridge recently projected that the psychedelics sector could bring in a whopping $6.85 billion by 2027.

No surprise that investors are gravitating toward the emerging sector with an appetite that rivals what many had (and still harbor) toward cannabis. An example is JLS, an early-stage plant medicine venture fund that has made a number of key investments in psychedelics companies and research. Managing Partner Lindsay Hoover said JLS is seeking to raise $50 million for a new fund and is fielding keen interest from high-net worth investors, successful cannabis entrepreneurs and family offices that focus on mental and brain health.

Although there may be parallels between the psychedelics and cannabis industries, Hoover insisted there are differences. Also, she was quick to add, perhaps to counter the knee-jerk objections of critics and detractors who may feel otherwise, that “everything we look at is legal.” (Right now, Oregon is the only state in the country to have legalized psilocybin, otherwise known as “mushrooms” to aficionados, since the last election; And, four jurisdictions—Oakland and Santa Cruz, California; Denver, Colorado; and Somerville, Massachusetts, have decriminalized possession as of January 2021.)

Recently, Hoover discussed why investors are bullish about the space.

This interview has been edited for conciseness and clarity.

Iris Dorbian: You said the psychedelics sector is similar to cannabis but different. How?

Lindsay Hoover: It will follow the FDA regulated path first. Cannabis didn’t do that. If you think about the explosion and research into oncology, it feels like psychedelics are going to become the next big darling of the central nervous system. People are looking at holistic ways of surviving and thriving. COVID has only exacerbated this. There’s a big crisis out there and that’s one of the reasons why we felt the time was right—the zeitgeist, the political, economic pressures—there are a lot of factors.

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Dorbian: What criteria does JLS use when evaluating potential investments?

Hoover: [We conduct] due diligence for drug development. What kind of patents has the company delivered? Who is the team? Do they have experience doing this not only from a scientific standpoint but also operational? For this sector to develop and thrive, you have to have effective therapeutics than the current solutions.

Dorbian: How do you deal with the legal issues?

Hoover: We are investing in companies that are legal and not involved in any illegal research. There are research programs that are being conducted, not recreationally, that the FDA is monitoring and granting breakthrough studies for testing. 

If these drugs can be game changers, they have to be accessible to a wider population than the tourists who can go to Costa Rica for a $10,000 vacation to reset their minds. Until these are available for people who really need them, it must follow a well-trodden regulatory and clinical path to get to the broadest population and do the most good.

Dorbian: Looking through your crystal ball, where do you see the future direction of this industry?

Hoover: I think there’s optimism that there will be less uncertainty about the path to regulation that these substances can take. There’s optimism that if there’s mental health treatments for anxiety and depression, rational heads will prevail. There’s optimism that there is no reason to stop this experiment particularly when there are studies conducted by Johns Hopkins and top-tier academic institutions the last few years. The decriminalization movement is also an indicator of popular opinion. It feels like things are coming together in a nice congruence of different forces.

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