At the Horizons Conference, an annual gathering on psychedelics, this past December, the atmosphere was abuzz with excitement. It was a veritable who’s who. Anybody who was nobody (because the self is an illusion) was there.
Like all Horizons conferences, the celebrities were unrecognizable to anyone outside of the academic circles of psychedelic science. Still, this event was somewhat different. There was a manic, frenetic energy in the air — a feeling of being on the homestretch of legalization. Also, there was money, big money.
It was fitting, then, that one anticipated talk was about hypo. Matthew Johnson, a psychedelics researcher at Johns Hopkins, made explicit the implicit vibe at the conference in his talk about hype, harm, and bias. He mentioned that research articles with the terms “psychedelic” or “hallucinogen” in their titles had skyrocketed in the past several years. But research is not the only area of psychedelic research to have skyrocketed in growth.
Source: Screenshot / Google Trends
Psychedelic pharmaceutical companies first became publicly traded only in 2020 and some reached billion-dollar valuations. Immediately, competitors started developing their own psychedelic analogues to treat a vast array of ailments: from obesity to menopause. Psychedelic pharmaceutical companies have been snapping up ailments like hungry hypochondriac hippos. For the more optimism, this is a Cambrian explosion of applications for a promising, novel mechanism of therapy. To the more jaded, it’s a money grab.
Inevitably, the claims of snake oil, charlatanism, and quackery are coming, although the backlash has not fully manifested just yet. The media cycle is still favorable toward this astonishing new treatment and there has yet to be a modern analog of the Dianne Linkletter story — a tragic death ascribed to psychedelics that could sway public attitudes.
Icarus Getting Too High
We’ve seen this before. Psychedelics were studiously and scientifically investigated in the 1960s as therapeutic drugs before they erupted into counterculture conflagration. As Timothy Leary once observed: “LSD is a psychedelic drug which occasionally causes psychotic behavior in people who NOT taken it.” Psychedelics were polarizing then, and they could be again today. The backlash after legalization could even conceivably lead to re-criminalization.
Whether it’s cryptocurrency, real estate, or pets.com, economic bubbles can burst in a dramatic, damaging way. The crash and burn can take out participants and bystanders alike. Similarly, on a psycho-social level, if you rise to popularity too quickly, the public loves to tear you down. Sometimes public ambivalence borders on bipolarity.
But a gradual decline? A slow descent? That may just be a needed market correction.
The Psychedelic Hangover
Since their public market debut, psychedelic pharmaceutical stocks have been in steady decline, losing approximately two thirds of their value in less than a year. Some are worried the psychedelic stock market is Cannabis 2.0. However, these are not retail stocks. This is the pharmaceutical industry, where trials take time. A decline in stock price is no crash.
It looks like psychedelic euphoria has reached a fever pitch, but that fever may be breaking. Perhaps the cure for the public’s psychedelic fever is a nice, cold, wet blanket. It’s important to acknowledge that psychedelics are not a panacea. Psychedelic therapy has its limitations. It may not be particularly useful for younger populations whose members are already blessed with neuroplasticity. Especially when used outside of a therapeutic context, psychedelics can occasionally cause paranoia and deep distress. Also, put in layman’s terms, some people just don’t like to get high.
Perhaps investors and the public alike are realizing we may be further out from legalization than previously thought. Bubbles can act like echo chambers. Amid all the hallucinogen hysteria, it can be easy to forget that 450,000 people were incarcerated for drug offenses in the US as of 2020. Just last month, the DEA moved to criminalize five psychedelic research compounds, some of which are currently being studied by pharmaceutical companies.
Perhaps the public is realizing that the market is saturated with pharmaceutical competitors. Perhaps the cure for a bubble is self-awareness that one is, in fact, in a bubble.
When They Go Low, You Get High
“The next several years will likely be a tumult of mergers, acquisitions and volatility,” says William Leonard Pickard of JLS Fund, a plant-medicine investment fund. Companies will jockey to establish predominance for certain ailments or psychedelic treatments.
Hopefully, this is a pruning process both economical and cultural. The trend-chasers will be weeded out. The “gurus” will get day jobs and their groupies will go home. And if all goes well, one day psychedelics will become as “boring” as airplanes and the internet.