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- Californian lawmakers are set to vote on a bill to legalise the possession of psychedelics in a major step forward for the United States’ ongoing decriminalisation of recreational drugs
- The legislation would remove the penalties for the possession of psychedelic drugs like LSD, psilocybin mushrooms, MDMA and more
- If approved by the Senate, the bill will head to the Assembly after which it will potentially land on the Governor’s desk
- ASX-listed Creso Pharma (CPH) is in a unique position to benefit from the fresh legislation with its focus on the psychedelic market
- The company’s future subsidiary Halucenex develops and licences psychedelic compounds for the pharmaceutical and nutraceutical markets
- Further to this, Creso appointed John Griese as Director of U.S. Business Development in April to help the company solidify its place in the U.S. market
- With the global psychedelics market forecast to be worth US$10.75 billion (around A$13.9 billion) by 2027, Creso and Halucenex are taking proactive action to create an immediate path to revenue in the new market
- Creso Pharma shares are trading at 16 cents each in a $176 million market cap
Californian lawmakers are set to vote on a bill to legalise the possession of psychedelics in a major step forward for the United States’ ongoing decriminalisation of recreational drugs.
The legislation is sponsored by Democrat Senator Scott Wiener and last week moved through the Senate Appropriations Committee in a five-to-two vote — meaning it will be voted on by the full Senate within the next two weeks.
The bill would see California remove criminal penalties for the possession of psychedelic drugs like psilocybin mushrooms, dimethyltryptamine (DMT), lysergic acid diethylamide (LSD), methylenedioxymethamphetamine (MDMA) and more.
If approved by the Senate, the bill will then head to the Assembly, which would be the final step of the process before it lands on the Governor’s desk.
While there’s no guarantee the bill will be passed, the fact that it has made it to the Senate floor is an indicator of a change in tone from the U.S. Government around recreational drugs.
Further to this, it highlights a major upcoming investment opportunity for businesses and investors.
On the ASX, cannabis specialist Creso Pharma (CPH) argues it is in a unique position to benefit from the fresh legislation through its future subsidiary, Halucenex, and the recent appointment of John Griese as Director of U.S. Business Development.
The opportunity
Creso Pharma’s soon to be acquired Halucenex business has a strong focus on developing and licencing psychedelic compounds for the pharmaceutical and nutraceutical markets.
The Canada-based company has been drawing on growing scientific literature around the benefits of this type of medicine when coupled with traditional psychotherapy for treating alcoholism, anxiety, depression, post-traumatic stress disorder (PTSD) and more.
Creso flagged its plans to purchase Halucenex in March this year, with CPH Strategic Advisor Bruce Linton highlighting how public policy towards psychedelics is rapidly shifting.
“We are witnessing a massive regulatory wave which will change the way that mental health disorders are treated,” Bruce said at the time.
The upcoming vote in California is a prime example of this shift in public policy and a breaking down of the stigma around psychedelic drugs.
In light of all this, Creso brought John Griese on board in April to help the company solidify its place in the U.S. market.
John brings almost 30 years of experience in sales, consumer package goods (CPG) and supply chain management to the company and will help Creso expand into the States, with potential expansion to Mexico and South America on the cards as well.
Creso said should the Californian psychedelic drug bill be made law, the new leader will be a key instrument to helping Creso and Halucenex progress opportunities in the state.
“Recent legislative shifts in California highlight the massive market opportunity that Halucenex and Creso have and this agreement is going to provide a strong foundation for us to capitalise on a highly lucrative and emerging market segment,” Halucenex Founder and CEO Bill Fleming said.
Why the psychedelics market?
The proposed bill to decriminalise possession of psychedelics is reminiscent of the United States in 2012 when Washington and Oregon became the first two states to legalise the recreational use of cannabis.
This launched a domino effect that has seen cannabis legislation relaxed in several other states over the following years, as well as in several other countries.
Hundreds of cannabis-focussed companies have also popped up over the past decade as a reaction to the changing laws and sentiment around cannabis.
With the potential for the psychedelics bill to spark a similar domino effect, Creso and Halucenex are taking proactive action to create an immediate path to revenue in the new market.
When other businesses see the potential opening up in the psychedelic drug market, Creso states it will already have an established brand, product and customer base to ensure it is ahead of the trend.
Further to this, evidence of the psychedelic market’s potential already exists.
A December 2020 report from Research and Markets pegged the global psychedelic drugs market at US$4.75 billion (around A$6.15 billion) in 2021, with expectations for the market to expand at a compound annual growth rate of 12.36 per cent to US$10.75 billion (around A$13.9 billion) by 2027.
Market research firm Data Bridge predicts similar stats, forecasting the U.S. psychedelic drugs market alone to be worth US$6.4 billion (around A$8.3 billion) by 2028.
With the growing acceptance of psychedelic drugs to treat mental health disorders and the breaking down of the stereotypes and stigma around the treatment, the market opportunities are vast.
Creso Pharma shares are trading at 16 cents each in a $176 million market cap on May 24.
