Psychedelics

Silo Wellness

Silo Wellness Announces LOI for Potentially Largest Psilocybin Retreat Center in Oregon and the World - If November's Election Is Favorable; and an Oregon Real Estate Law and Psilocybin Industry Primer

Silo Wellness Inc. (CSE: SILO) (OTCQB: SILFF) (FSE: 3K7A) ("Silo Wellness" or the "Company"), Oregon's only publicly traded psychedelics company, is pleased to announce it has executed a binding term sheet for a joint venture with New Frontier Ranch in the majestic Green Springs area of Jackson County Oregon, east of Ashland, pending the results of the opt-out ballot measure in the upcoming November 8th election. New Frontier Ranch is a 960-acre property that can potentially accommodate hundreds of guests at a time between the existing log cabins and court-approved campsites.

A one-of-kind destination guest recreation property among Oregon's restrictive and complex land use laws

"This property has an abundance of water rights in this drought-stricken portion of our beautiful state and has court-approved camping spots with room to expand due to a special court decree grandfathering in these property rights years ago," stated Silo Wellness founder and CEO Mike Arnold, an Oregon attorney. "Under Oregon's tough rural land use laws, this property is truly a gem that could allow for scaling for psychedelic retreats rather quickly at a lower price point. Absent full legality and total removal of the dead hand of the government - which is still necessarily present in this emerging market - scaling is the only way to make this industry affordable while ensuring client safety."

"My vision for this property is as a sacred sanctuary for holistic health and wellness," stated David Kaplan, New Frontier owner-operator. Mr. Kaplan has over 45-years' experience in the CPG space involving diet and nutrition, as well as the yoga and meditation space. "This property can truly be the marvel of holistic healing for the mind, body, and soul. Mushroom therapy is just one potential component of a much larger plan for rejuvenation and wellness. Living on this property for several years, I see so much potential for the land to be an eco-village destination location totally sustainable with organic agriculture, energy and building materials. The ranch has 287 days of year of sun per year and the most water in the area with ample wind and wood resources."

The unique property rights history of the ranch were solidified on May 17, 1976, when the Circuit Court for the State of Oregon for Jackson County approved a decree grandfathering in what would now be considered a "destination resort" under today's rules, which are nearly impossible to acquire in Jackson County and much of the rest of the state of Oregon. This historic approval is highly unique. According to the property's land use consultants, there is not another like it anywhere in the state of Oregon whereby a grandfathered-in resort is allowed to continue to develop.

In 2013 the decision went back to court yet again, ultimately to result in a non-expiring ranch resort. According to the site plan there are 34 existing sites which include 16 teepees, 6 wall tents and 12 additional sites. This would allow for an additional 26 sites to be developed to reach the total 60 allowable campground spaces per the decree allowing potentially hundreds of guests at a time. The decree, however, says that the campground can have potable water, bathrooms, showers and laundry facilities including washers and dryers and does not specify a limit on the number of these amenities that can be provided.

A destination lodge, including overnight guest accommodations, could also be constructed within the designated village boundary. It is not stated in the court decree that there is a limitation on the number of rooms that can be allowed.

Cost-Effective Psychedelic and Holistic Wellness Resort

Silo Wellness is the leading luxury psilocybin retreat company in the public markets which has been featured in Bloomberg, Fodor's Travel, The Evening Standard, Men's Health, The Washington Post, and Outside Magazine among others. However, Silo Wellness never intended to enter the luxury retreats space. "That wasn't my vision," continued Arnold. "Our mission is to put psychedelic healing into the hands of those suffering as quickly and inexpensively as possible. Nonetheless, the luxury model was necessary during COVID and has been very good to us and for our clients. However, it is not available to everyone due to the price point, which is a shame and also contrary to our mission.

"With this partnership and our partnership with Go Natural Jamaica," Arnold stated, "Silo Wellness intends to be able to drive down the lodging costs for psychedelic retreats. New Frontier Ranch may allow us to significantly undercut some of the out-of-state competition who may come to Oregon with the goals to make huge margins on expensive retreats. This is the people's medicine and shouldn't be held hostage in pharmacies or by out-of-state interests attempting to upsell Oregon's natural beauty."

About New Frontier Ranch

The New Frontier Ranch contains a 100-acre spring-fed meadow off of Highway 66 four miles from Tub Springs State Park and eight miles from the Cascade-Siskiyou National Monument. The three private log cabins feature knotty wood interiors, vaulted ceilings and decks with views. In addition to full kitchens, there are living rooms with wood-burning fireplaces and laundry rooms. Canvas tents and tipis are also available in three campground areas. The Great Western Hall is a grand barn with reclaimed wood walls, plank floors and a cathedral ceiling. Massive doors at each end open to bring the outdoors in. The upper mezzanine level has a private dressing room, and two large balconies overlooking the main floor. The Great Western Hall provides seating for up to 250 guests. There's also access to a water slide connected to a swimming and fishing pond and a rustic, barn-style banquet hall. "We caught six bass in six casts the last time we were there," Arnold said. "This property has unending recreational opportunities for nature retreats."

Meeting psychedelic clients where they are

"So many business models that are being pitched to me in Oregon are premised on the market being exclusively urban Portlanders or the psychedelic savvy," stated Arnold. "We believe that a significant part of the market will be from out of state and more culturally conservative than the traditional psychedelic consumer. Our real-time consumer research in the legal market over the last two years has shown that folks in the flyover states and in rural areas aren't typically looking for some 'new agey' encounter. They are already scared about the medicine but are also, quite frankly, afraid of Oregonians - or what they perceive to be Oregon, thinking that these services are run by crystal carrying pseudo-science hippies. That's just not universally going to be the case. This is largely a medically- and science-influenced industry as illustrated by our team at Silo Wellness, which includes leading experts in the space.

"At Silo Wellness we attempt to meet people where they are. Many of our clients come from more culturally traditional areas of the Midwest and Southeast. The New Frontier Ranch gives us many opportunities to provide services that meet their diverse backgrounds without a dogmatic approach to the medicine, including meditation areas, a hike to Mount Shasta views, yoga, and an industry leading Calvary cross Christian meditation trail. This property checks all the boxes for our retreat model: affordable lodging, Oregon nature, water access, nearby whitewater rafting, and spaces for spiritual growth to contemplate personal purpose and the 'whys and hows' of conscious awareness and existence."

Oregon's real estate problem: A significant barrier to entry for psilocybin service centers

A major barrier to entry in Oregon is the supply of psilocybin-ready real estate and the capital to achieve it. Psilocybin companies cannot operate on either federal land or on any property with a bank mortgage due to it being Schedule I and illegal federally; additionally, all traditional mortgage contracts preclude violating federal law. "From Oregon cannabis we learned that most of the attractive real estate in the premier areas is expensive and traditionally financed, often relegating early commercial dispensary operations to the dregs of the cities and strip malls to buy outright or to lease from unleveraged properties," stated Arnold.

"Psychedelic therapy is all about set and setting and strip malls do not necessarily fit the bill in the metro areas, making desirable space in short supply there. For retreats in beautiful areas, most of Oregon's wild areas are owned by the federal government and the rest are very expensive due to the rarity of commercial spaces in rural Oregon due to our Urban Growth Boundaries and preferential treatment for agriculture and forestry zoning."

One potential problem for Oregon psilocybin businesses, is that the longer a company waits to secure a property, the more of the margins/value will be realized by the landowners rather than the operators, as was seen in cannabis. Hence, the REIT model working out so well in the capital markets for cannabis investors. They owned the land and leased it to the operators. "We believe that Silo, as the first legal mover in Oregon psychedelics operationally and in the public markets, is well positioned with boots on the ground in Oregon," Arnold said.

Location, Location, Location: Jackson County as a potential leader in the psychedelic retreat space

This potential psilocybin retreat center location is less than an hour drive from the Medford airport. It's approximately an hour flight from Portland, a little over an hour from San Francisco and Seattle, and 4-hour drive from Portland and Sacramento. It borders BLM wildland and is near a national monument wilderness area. This allows patrons to access thousands of acres of wildlands with rare biodiversity. This area is the home to an extraordinary array of plants and animals in a rich mosaic of forests, woodlands, grasslands, wet meadows, and ponds. On a day hike it is possible to experience each of the distinct ecoregions and find plants and animals you cannot see anywhere else in the world. It is rare, vibrant and vital. New Frontier is also in the middle of the country's best whitewater, surrounded by several different watersheds (Scott, Cal-Salmon, Illinois, Rogue, Klamath, Smith and Umpqua), all within driving distance. It is also in the county that is the leading cannabis producer in Oregon and host of the world-renowned Shakespeare festival.

November's Opt-out Election: Voters' perceived harm by legal cannabis rollout

Jackson County capitalizing on the influx of psychedelic wellness tourism and having access to nearby psychedelic retreats is dependant on the November election. The County Commission referred an opt-out measure to voters due to an allowance for county and municipal prohibition under 2020's Ballot Measure 109. The County may end up opting out as it was a very close election in 2020 with only 51.19% voting yes. The under vote was only 3% of the total votes cast, illustrating the interest in this particular ballot measure.

"As advocates we may be spending too much time addressing the merits of psychedelic therapy and not focusing enough on the operational impact on these rural communities," Arnold opined. "Based on the conversations we have had with local voters, the efficacy of mushrooms is not their point of contention. They are most worried about the impact on their neighborhoods.

"Jackson County voters often feel that they were sold a bill of goods with the previous two controlled substances ballot measures. They were told that Oregon's recreational cannabis laws would help curtail black market trade. That ended up not being the case as we have seen with the recent cartel activity and the potential forced labor trafficking resulting from it."

Rural residents also didn't see much of the economic benefits promised beyond employment, since Oregon's recreational cannabis ballot measure didn't allow county governments to tax cannabis farms. They could only be taxed at the dispensary level. Since most dispensaries are located in cities, they received most of the law enforcement hassle with the farms and the increased vehicular traffic on rural roads and the now ubiquitous smell, but little of the tax benefits.

Fast forward to the implementation of Oregon's ground-breaking BM 110, which decriminalized hard drugs such as cocaine, meth and heroin. "Since Oregon has been slow to implement the treatment that was promised in that ballot measure, many rural Oregonians believe they have suffered from increased crime resulting from the now more open and notorious use of hard drugs in their communities," stated Arnold. "They often believe that the increased demand resulting from the decrease in legal risk from consumption has led to an increase in supply and the criminal consequences of that trade. The increased supply to meet this increased demand has to come from somewhere and it isn't some bucolic farm - it's from drug dealers with organized crime connections.

"Fortunately, these fears are not applicable to BM 109. First of all, this is a services industry not a product industry. The mushroom cultivation will be small and indoors with no smell, marginal water consumption, and no impact on the neighbors. Furthermore, there's no incentive for black market growers to seek a license since it would draw unwanted attention to them. You can already grow undetected in a closet in a rented apartment. Contrast this to cannabis grows which require lots of space, lots of water, lots of staff, and lots of sunshine or electricity. Also, black market operators using Oregon's cannabis law as cover were sending surplus or chemically tainted product out the backdoor to the black market. This simply is not a feasible business model for BM 109.

"Additionally, our experience operating legal retreats in Jamacia is that these have about as much community impact as a yoga or quilting retreat. They are centered around introspection through meditation, self-reflection, journaling, and group integration. The community impact is just not comparable to the effects of cannabis."

Urban Dilemmas: Set and Setting

Urban areas for psychedelic therapy can be a problem for two reasons. First, properties are expensive with dense commercial locations meaning you often can't get the beautiful expensive property as a tenant since it is mortgaged by the bank that cannot do Schedule I controlled substance business. Oregon is just a typical property-owning framework where real property is often leveraged. This means you have to own the property free of bank financing or lease the property from someone in that situation.

The second issue with urban areas is that the best practice for psychedelic therapy is set (mind set) and setting (location). Silo Wellness believes that the main differentiators for psychedelic retreats are price, experience, and location (setting). "Our market research from speaking to actual clients leads us to conclude that there's not a lot of people who can afford to travel to Oregon for therapy that are going to be staying at a Motel 6 and commuting to three sessions in a white walled doctor's office to take mushrooms," explained Arnold. "You couldn't pay me to do that. That sounds horrible. These are fully immersive experiences that are life changing and deserve to be done in the beauty of nature.

"Have you ever been on a vacation locked in a hotel room in downtown Random City that was life changing, where you were considering buying a vacation spot? Most people's experience in lifechanging trips involve beautiful locations close to nature (beaches, mountains, rivers, lakes, etc.). They sell timeshares to those folks because their mindset has changed due to their setting. This is even more so for psychedelics where the connection to nature is an essential part of the experience."

In order to make retreats affordable, the Silo hopes to leverage the ranch's campground as well as sponsor sliding scale rates with the margins subsidizing those in need or a scholarship model.

A Primer on Oregon's Land Use Laws and the Scarcity of Rural Retreat Properties

"The working assumption for the last few thousand years is that psychedelics are done in nature," stated Arnold. "And we are talking deep dives here: The transformational trips that people pay to travel to the only legal places in the US."

"Oregon has some of the nation's best (or worse, depending on your point of view) land use laws. First, we have urban growth boundaries that prohibit urban expansion. Any time in the last fifty years if you flew into an airport, the farmland nearby is still mostly farmland. Oregon's Willamette Valley (where 70% of the state lives) is some of the best farmland on planet earth due to a geographical freak accident in the last few ice ages. The Willamette Valley stole a lot of its topsoil from Idaho and eastern Washington when ancient glacial Lake Missoula's ice dam broke. During the ice ages, glaciers blocked the Rocky Mountains and periodically the dam broke scourging the bad lands in Idaho and ripping down the Columbia River. The last ice age flood was so devastating that it filled the Willamette Valley with water hundreds of feet high (you can see the vegetation line at the top of Mary's Peak near Corvallis) and roared upstream (uphill) along with all the topsoil (and icebergs clad in Rocky Mountain basalt).

"When the water receded back to Portland and then on to the ocean, it left behind up to 200 feet of soil in places. Hence, we have some of the best soil with some of the best irrigation and disease- and weather-free growing seasons on the planet. Oregon state laws jealously protect this non-renewable natural resource.

"What this means is we don't pave over farmland in Oregon, and we can only grow communities upwards into the air or closer together (through densely packed mixed zoning residential/commercial urban zoning and multi-family dwellings) within the urban growth boundaries. This is why property prices grow and grow in Oregon, because there is no more substantial development without legislative change. And in Blue State Oregon, this likely is not going to happen."

Mushroom Cultivation: A services industry versus product industry

Silo Wellness began legally harvesting mushrooms in Jamaica in 2019 and cultivating shortly thereafter. "We came to Jamaica to cultivate mushrooms out of necessity and then saw the writing on the wall regarding commoditization," explained Arnold. "We then taught a local family how to cultivate mushrooms and began partnering with other locals as they entered the space.

"I have heard a lot of entrepreneurs talking about their plans to be mushroom growers under Oregon law, which is concerning given how quickly this market may commoditize. The room you are in right now can almost grow enough mushrooms to dose an entire Oregon county. Five grams of dried biomass is often way too much for some people in a session and you can stack boxes or grow bags vertically. This will commoditize much faster than what it took for cannabis. That's a race to the bottom. You need a small room or outbuilding to grow enough mushrooms for an operation. Growing mushrooms is not the land grab issue like growing cannabis. You will not be seeing early-cannabis-like business valuations based on grow space square footage. This is about locations for the services, the team to safely conduct them, and the brand and marketing to attract clients."

Federal and State Government Property Rights

"That leaves you with finding a property that consumers want to visit (hence the above analysis about setting). Here's the rub in Oregon: 53% of the state is owned by the fellas that print the money (the Federal Government) and can't be used for cannabis or mushroom operations (federal crimes and state law prohibition). However, much more of the wildlands and beautiful spots are owned by the feds. This is great for preserving the outdoors but not so great for commercial operators, unless you won the family lottery ticket of owning one of these properties for generations. Also, the coast is owned by the state of Oregon up to the highwater lines. Additionally, the rivers are often bordered by residential ag/forestry or the feds.

"This is why New Frontier Ranch is such a unique gem."

Silo Wellness Requests Other Oregon Property Owner Expressions of Interest for Collaborating on Psilocybin Licensing

"Over the past months we have been touring properties with owners and realtors and have really turned up our search for properties that may be suitable for Oregon psilocybin as we await the final rules from the Oregon Health Authority and the outcome of the local opt-out elections," Arnold continued. "However, I also know that there are many property owners who may believe they are sitting on an ideal property for a facility with no interest in selling, but they may not have the legal expertise, network, or capital to make it happen. It is our goal to leverage our platform to help empower Oregonians who may each have a piece of the puzzle - facilitation experience, business experience, property, capital, or a passion for the medicine - and bring them together to help make this industry by Oregonians for Oregonians."

Parties who may be interested in entering the Oregon psilocybin industry are encouraged to contact Silo Wellness at oregon at silowellness dot com.

Terms of Agreement

The binding term sheet sets forth the intent of the parties for a potential joint venture between Silo Wellness and New Frontier. The parties intend to co-brand and market a resort/retreat location at the New Frontier Ranch, 16799 Hwy 66, Ashland, OR 97520 (the "Property"). The parties intend to finalize terms to potentially rebrand the Property or a portion of the Property to "New Frontier Ranch by Silo Wellness." The joint business plan is to market the Property or a portion of the Property being used for the "New Frontier Ranch by Silo Wellness" as the world's largest psychedelic ecotourism resort and retreat center for psychedelic therapy and the psychedelic curious. Additionally, the agreement sets forth that the parties may decide to pursue a purchase agreement, which would be dependent on financing. Additionally, binding terms include a "no shop, no solicit" clause and a prohibition against assignment.

ABOUT SILO WELLNESS

Silo Wellness is a growth-oriented holding company focused on psychedelic opportunities that benefit from a unified ecosystem and exceptional leadership. Founded in 2018 in Oregon and headquartered in Toronto, Silo Wellness has a presence in both Jamaica and Oregon. Silo Wellness is a publicly traded company on the Canadian (CSE: SILO) and Frankfurt (FSE: 3K7A) exchanges and trading on the OTCQB Venture Market (OTCQB: SILFF).

For more information about Silo Wellness or to book a Jamaican psychedelic retreat, please visit www.silowellness.com. For more information about Silo's recent acquisition, Dyscovry Science, visit www.Dyscovry.com.

Silo Wellness Company Contact:

Mike Arnold, President
541-900-5871
IR at silo wellness dot com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking information may relate to anticipated events or results including, but not limited to the ability of the Company to finalize definitive documents and close on this potential partnership or transaction; the Company's ability to satisfy the Oregon licensing requirements and achieve a license in Oregon; the Company's ability to successful launch an Oregon operation, including hiring of qualified staff and getting access to mushrooms to sustain operations; and the Company's ability to fund operations as well as the company's pre-existing capital requirements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, regulatory, political and social uncertainties and the potential impact of COVID-19. Such risks and uncertainties include, among others, the risk factors included in Silo Wellness's continuous disclosure documents available on www.sedar.com. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Readers should not place undue reliance on the forward-looking statements and information contained in this news release. Silo Wellness assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Source

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When psychedelics were first studied more than 50 years ago, researchers discovered that they were useful in assisting people in exploring a greater sense of self. After a half-century hiatus, scientists are once again investigating psychedelics and other mind-altering substances such as MDMA, psilocybin, and ketamine as treatments for depression, PTSD, anxiety, and other mental health conditions.

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FREE 2023 Psychedelics Investor Report

FREE 2023 Psychedelics Investor Report

Find out what is in store for psychedelics in 2023!

The Investing News Network (INN) spoke with analysts, market watchers and insiders about which trends will impact psychedelics in the year ahead.

✓ Trends        ✓ Forecasts       ✓ Top Stocks


Table of Contents:

  • Psychedelics Market Update: H1 2022 in Review
  • Psychedelics Market 2022 Year-End Review
  • Psychedelics Market Forecast: 3 Top Trends That Will Affect Psychedelics in 2023
Psychedelics Outlook 2022



A Sneak Peek At What The Insiders Are Saying

"I think right now and into the next year will be a great market for new (psychedelics) investors."
— Maria Velkova, Tabula Rasa Ventures

“We've now seen a real focus (among psychedelics companies) in prioritizing what is really going to create value."
— Payton Nyquvest, Numinus Wellness


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Psychedelics Outlook 2023

Psychedelics Market Update: H1 2022 in Review

Click here to read the latest psychedelics market update.

While the first half of 2022 didn't bring forth the clinical trial approvals investors are eager to see, psychedelics companies continue to move along as the market gears up for this milestone.

The industry's progress has been stunted, however, by the increasingly difficult market conditions caused by a global economic downturn that is affecting all industries.

Here the Investing News Network (INN) provides an update on the state of the psychedelics investment market at the halfway mark of the year with commentary from experts.

Psychedelics market update: 2022 prediction panning out

Coming into 2022, INN asked Andrew Charrette, director of regulatory affairs and psychedelic advisor with KGK Science, if change in the market would require a significant regulatory approval.

“It'll be difficult, and it's going to be difficult for even the best companies as they're still flying blind right now,” he said at the time. That projection has panned as 2022 has brought market difficulties across the board.

It's clear that the macroeconomic conditions affecting virtually every sector in the investment landscape are impacting the current financial reality for psychedelics stocks.

Jim Gilligan, chief scientific officer and interim CEO at Tryp Psychedelics (CSE:TRYP,OTCQB:TRYPF), said a variety of companies, including his own, have seen significant valuation declines “despite making advances,” explaining that these drops have been based on nothing coming out of company pipelines.

“There have been changes in market dynamics in biotech and psychedelics in particular that are sort of outside of our control,” Gilligan said. He was referring to the immense pressures created by the poor economic conditions at large, which are sending markets across the board into a decline.

Payton Nyquvest, founder and CEO of Numinus Wellness (TSX:NUMI,OTCQX:NUMIF), told INN he has seen several cycles of new capital coming into the market. Right now he is encouraged by what he described as a new level of knowledge. From his perspective as the founder of one of the first psychedelics firms to hit the public market, investors are more educated now than they were during the initial wave of hype.

That rush led to “not completely clear business plans,” which according to Nyquvest have fueled a consolidation trend in the space. “We've now seen a real focus in prioritizing what is really going to create value,” he said.

Psychedelics market update: Not all companies will be winners

Evan Levine, CEO of PsyBio Psychedelics (TSXV:PSYB,OTCQB:PSYBF), told INN he is worried about the value proposition of the entire psychedelics sector based on how little time companies have been around.

“A lot of these companies were formed just using the word 'psychedelic,' in my opinion,” Levine said.

Investors will have to be more cautious than ever before with the names they pick in psychedelics, according to the PsyBio executive. “Do I think our sector is a screaming buy? No, I don't,” he said. “I think that there's a few companies out there that have a real shot at succeeding within our industry.”

Levine agreed with Gilligan’s assessment that macroeconomics are having a significant impact on the progress and valuation of the psychedelics category.

“There's not a lot of value in a lot of the companies out there,” Levine said.

Psychedelics market update: 2022 studies show market progress

The psychedelics industry has grown thanks to the progress of clinical trials, which are adding to the medical promise of substances that were previously thought of as dangerous.

The development of these studies has become pivotal for the overall health of the market, with players on the sidelines looking forward to the first approval just as much as drug makers themselves.

Experts have previously told INN that the market is expected to see a slew of new studies launch this year. And when it comes to the studies everyone is watching in 2022, some have already brought promising data readouts.

Gilligan and Levine both told INN they are keeping a close eye on the progress of COMPASS Pathways' (NASDAQ:CMPS) primary study evaluating the company's lead psilocybin candidate.

In May, COMPASS shared an update on its Phase IIb study at the American Psychiatric Association's annual meeting, and said it plans to begin the critical third phase in H2 2022.

Psychedelics market update: Regulatory progress updates

Nyquvest told INN there’s never been more clarity when it comes to the psychedelics industry and regulators.

Aside from medical regulators who oversee the progress of clinical studies with substances like MDMA and psilocybin, there have been more changes for regulation at the policy maker level. The Numinus executive pointed to moves from the states of Oregon and Colorado, as well as new policies from Health Canada.

For his part, Gilligan told INN he is hoping for an efficiency upgrade over the application of rules by federal regulators in the US, the home of the most prominent psychedelics studies.

The Drug Enforcement Agency (DEA) and US Food and Drug Administration play key roles in the progress of psychedelic medicines, and with the recent explosion of companies launching studies, there’s been a need to adjust the previous understanding surrounding these substances.

“They're becoming more comfortable with the administration of psychedelics,” Gilligan said.

The executive said there are still frustrations with the licensing lag created by the DEA’s role when it comes to psychedelic studies. “Performing clinical studies that involve a multitude of states, you need to have a multitude of DEA approvals … and there's tremendous variability in state to state.”

The executive remains hopeful that thanks to the uptick in studies, the DEA is becoming more comfortable with the rules surrounding psychedelics.

“What we're hoping is that there'll be this realization that they really should not be scheduling (drawings), and that will facilitate and make it much easier to do your clinical research,” Gilligan said.

Psychedelics market update: Investor takeaway

The psychedelics investment proposition finds itself in a unique place right now as the market anticipates the eventual arrival of massive catalysts by way of drug approvals.

While investors wait, there has been a drag in valuations and stock prices that is also connected to current market pressures at a bigger level outside of just biotech and pharmaceuticals.

Investors are more educated than ever when it comes to psychedelics, and will have to use those skills regularly as they try to pick winners while watching out for companies that may be on the way out in 2022.

Don’t forget to follow us @INN_LifeScience for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on investing in psychedelics stocks — FREE

Psychedelics Market 2022 Year-End Review

After a promising beginning, the psychedelics investment story may be facing fatigue until major catalysts hit the market.

The psychedelics sector continued to wait for its first major drug approval in 2022, while at the same time macroeconomic factors put pressure on investments in this up-and-coming drug development industry.

Here the Investing News Network (INN) offers investors a recap of the most significant psychedelics events of the year.

Investors switch to long-term mindset

The first publicly traded psychedelics company reached the capital markets in 2019, and shortly after that the industry saw a significant burst of new players declare their intentions to focus on the space.

These psychedelics stocks came onto the scene near the end of the "green rush," a period when cannabis companies saw significant valuation jumps. Although the two industries are vastly different in many ways, the success initially seen in cannabis created unrealistic expectations in the psychedelics investment community.

According to one expert, those expectations affected the early stages of the psychedelics market, but now there has been a real change of guard when it comes to knowledge of the space. “I've seen a shift, and I've seen the majority transition, yes,” Najla Guthrie, CEO of Wellbeing Digital Sciences (NEO:MEDI), told INN at this year's Wonderland conference.

Guthrie was referencing a change in psychedelics investors from people with an interest in day-to-day trading to more established market participants with their eyes on the long-term outlook for the industry.

One sign of this change was the publication of the first note on the space by Morgan Stanley (NYSE:MS). While the firm has not begun coverage on any companies, its broad sector observations point to a positive outlook on the industry.

“You're still going to have, you know, that fringe element that still thinks it's going to be … like cannabis, but I think those are the minority today,” Guthrie explained to INN.

The expert said she is encouraged by the data being produced by the top drug makers in the psychedelics space.

“I'm looking forward to seeing a lot of those come through the pipeline,” Guthrie said. “I'm very, very excited and encouraged about where we're headed, and how we're transitioning.”

Economic headwinds cause psychedelics stocks to drag

Despite a recognized shift in the psychedelics investor base, this year has been a real test for stakeholders.

As of November 30, the Horizons Psychedelic Stock Index ETF (NEO:PSYK), which includes some of the biggest psychedelics companies, along with pharmaceutical stocks connected to the industry, was down 56.54 percent.

Companies like ATAI Life Sciences (NASDAQ:ATAI), COMPASS Pathways (NASDAQ:CMPS) and Cybin (NYSEAMERICAN:CYBN), standard bearers for the market, have all seen share price declines of over 50 percent each.

Before allowing panic to settle in, one expert told INN that investors need to recognize how much broad world events have impacted most industries, especially emerging sectors.

“Macro forces are not only affecting psychedelics, but all kinds of early risky assets,” Maria Velkova, managing partner at Tabula Rasa Ventures, told INN during the Wonderland conference.

The financial expert said the previous hype cycle seen in psychedelics will play a role in determining what the downturn will amount to. “I think (the downturn is) fitting well with the natural progression of the hype downturn as well,” she said.

Clinical data affecting psychedelics investment story

This past year offered a substantial amount of new clinical data and progress for the biggest psychedelics studies.

As these studies become more prominent and regulators engage with more of them, an added level of comfort has been created surrounding psychedelic substances and potential drug products.

Velkova told INN that regulators are in charge as strict overseers of the data produced from these studies.

“The data is the data,” Velkova said. “This is why the (US Food and Drug Administration) was set up — to ensure that companies that are developing medicines are collecting the right data.”

Velkova spent a decade in the pharmaceutical industry before stepping into psychedelics.

When asked for a theme indicative of the capital market's progress in 2022, Guthrie said it’s been very difficult.

“It's been a painful transition for a lot of companies in the sector; (they) have lost a lot of their value,” the expert explained, adding that this is a symptom of where the capital markets are right now.

Guthrie told INN that a lot of the initial capital raised for the sector came with “unrealistic expectations” for the drug pipeline timeline. In addition, the market has taken a beating from the effects of inflation in the global economy, supply chain problems affected by lingering COVID-19 issues and the aggravated results of the war caused by Russia’s invasion of Ukraine.

Velkova also thinks companies listing at early stages will affect the current flow of psychedelics companies. The expert expressed reservations about early stage drug development companies going public, a trend seen in the psychedelics space.

“But you know, people have made decisions,” she said. “And now they're trying to kind of deal with the consequences of the market forces, which are outside of their hands.”

Velkova told INN she has seen a slowdown in investment momentum alongside a stabilization in valuations. “I do think that they were way out of proportion before; there's still a lot of unanswered questions, and a lot of uncertainty in the space,” she said.

She doesn't doubt the effectiveness of these substances as novel drugs, but when it comes to the investment storyline, the expert questions whether there have been complete answers about the commercial rollout of these potential drugs.

Investor takeaway

There are clear signs that the psychedelic drug market is on the way to potentially revolutionizing the entire medical industry. But until that day begins to materialize, there will still be down periods, with even the biggest companies seeing severe stock losses.

Experts in the space have said this waiting period can offer opportunities to investors, but patience will be needed before the industry takes off in a significant way.

Don’t forget to follow us @INN_LifeScience for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on investing in psychedelics stocks — FREE

Psychedelics Market Forecast: 3 Top Trends That Will Affect Psychedelics in 2023

Pull quote was provided by Awakn Life Sciences. This article is not paid-for content.

Before the psychedelics industry can deliver on the promise of its potential, the sector will need to overcome challenges and achieve milestones, with drug approvals currently at the top of the list.

What does 2023 have in store for stakeholders in this up-and-coming drug industry?

Here the Investing News Network (INN) presents a look at what may be on the horizon for the psychedelics investment market, with expert opinions on trends and key catalysts to watch in the next year.

1. If a psychedelic drug is approved, what's next?

Clinical trials have a gigantic role to play in the progress of the psychedelics business. These trials are set to essentially make or break the industry's viability, and have the potential to generate huge momentum for publicly traded companies.

Right now, the industry is waiting for companies to receive their first approvals so that they can move past clinical trials and forward to the next stage of drug development: commercial availability.

Maria Velkova, managing partner at Tabula Rasa Ventures, told INN a lot of uncertainty is still present in the story for psychedelic medicines. The investment expert, who has a decade-long background in the pharmaceutical industry, said since so much attention is paid to drug development, commercial rollout can be cast aside despite being just as important.

“Most people in the space have never launched a drug before or haven't worked in Big Pharma,” Velkova said.

She expects the rollout of psychedelic drugs to be the biggest challenge yet for the industry.

When asked if difficulties caused by a lack of experience in drug rollout could be eased by acquisitions from pharmaceutical corporations, Velkova said the Big Pharma model has morphed into a commercial engine rather than a drug development model.

“I think Big Pharma is really waiting for us to build out the entire infrastructure, because this is a completely new infrastructure … there are so many aspects of the psychedelic-assisted therapy process that are not just a drug,” she told INN.

Broad questions about the psychedelic drug business model remain, according to the expert, such as how insurance payments will work. “We're literally building out novel ways of stakeholder alignment that haven't naturally been seen in the past,” she said.

Anthony Tennyson


2. Psychedelics legality making progress, but still murky

The psychedelics industry is also facing uncertainty when it comes to the legality of medicines.

Top regulators like the US Food and Administration (FDA) have drugs under examination, which may open the doors to limited access to these substances, but broader framework changes are in the works as well.

Both the US and Canada have seen recent political adjustments geared at getting a better understanding of the work being done within the psychedelics industry. As part of this year's US midterm elections, the state of Colorado voted to decriminalize the use of psychedelic mushrooms in drug centers for people 21 and older.

The policy will come into effect in 2024, and an advisory board may add more psychedelic drugs to the legal system in 2026.

Colorado will join Oregon to become the second state to allow the medical use of psychedelic substances.

One drug policy lawyer told INN that a grassroots state-by-state approach to psychedelics policy will be vital, but federal policy will also be needed at some point. “It is going to take change at the federal level, but I don't think we can get there … without this local grassroots movement,” Courtney Barnes, a partner and lawyer with Barnes Caplan, said.

The lawyer said there could be a domino effect as states approach legalization programs for psychedelic drugs, and this could lead up to federal change. “I'm very grateful that we have a state regulatory pathway available,” she told INN.

3. Expert wants psychedelics industry to band together

Najla Guthrie, CEO of Wellbeing Digital Sciences (NEO:MEDI), told INN she wants to see more advocacy within the psychedelics space. In Canada, she hopes to build a coalition to unify a variety of interested parties.

“We need the regulatory framework to happen responsibly,” Guthrie said. The expert hopes for this coalition to lobby the Canadian government for “evidence-based change” as the market continues to grow.

When asked how comfortable regulators and the Canadian government are with the use and administration of psychedelic substances, Guthrie explained that these authorities are looking forward to receiving official data; however, the groundwork is being laid right now when it comes to their future actions.

“I think the government is looking for some guidance on what makes the most sense,” the expert said.

That’s where she hopes her association can come in and represent the sector as a whole. “I think we as an industry need to do a better job of having one voice, or being on the same page and being aligned with what we want to see happen,” Guthrie said.

Investor takeaway

Psychedelics investors have been impacted by 2022's broad financial downturn, but there's light on the horizon in 2023.

“I think there are deals still being done, depending on the opportunities that are out there … (a) different type of investor is now at the table,” Guthrie said, referring to more established players with longer-term views.

For her part, Velkova told INN that due to the economic downturn, many companies are desperate for new capital to come into play. “I think right now and into the next year will be a great market for new investors to come.”

Don’t forget to follow us @INN_LifeScience for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on investing in psychedelics stocks — FREE

Keep reading...Show less
person using psychedelics treatment

Psychedelics Market Forecast: 3 Top Trends That Will Affect Psychedelics in 2023

Pull quote was provided by Awakn Life Sciences. This article is not paid-for content.

Before the psychedelics industry can deliver on the promise of its potential, the sector will need to overcome challenges and achieve milestones, with drug approvals currently at the top of the list.

What does 2023 have in store for stakeholders in this up-and-coming drug industry?

Here the Investing News Network (INN) presents a look at what may be on the horizon for the psychedelics investment market, with expert opinions on trends and key catalysts to watch in the next year.

Keep reading...Show less

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