The Psychedelics Boom

Cross-border Magic Mushroom & Cannabis stocks

Globally, magic mushroom & cannabis stocks have been in the spotlight after regulations favoured bringing psychedelics into the economy, particularly for medical use

As many countries start to ease restrictions on psychedelic medicines, this created an opportunity for growth in many, if not most, companies globally.

With an estimated value of billions of dollars in the coming years, the psychedelic industry has brought investors an appetite for alternative investments in their investment portfolios. With small to large companies redirecting their focus to the cannabis pharmaceutical industry, investors could benefit from this growing industry.

And while the industry shows signs of reaching new highs to companies dealing with cannabis & magic mushroom, we investigate three stocks across our EasyWallets: 

EasyZAR
Labat Africa Limited (LAB)

South Africa, Considered the fourth largest cannabis country, with a cannabis market estimated at R28 Billion in value, Labat Africa is setting itself to capitalize on the South African cannabis market. The company continues to expand its focus as the latest July announcement shows. Labat aims to vertically integrate Labat Healthcares’ operations, intensely focusing on cannabis, from seeds to medical products.

Despite the losses reported in the company’s interim results for the six months ending 28 February 21, with revenue down by 90% to R21 403 000 vs. the previous corresponding period (pcp) of R219 490 000, the company is in the process of repositioning itself, as it disposes of no core assets and right-sizing its current investments.

To set a tone for greener pastures, Labat Africas’ acquisitions for the CY20/21 included 70% CannaAfrica, 75% Leaf Botanicals, with the company furthermore negotiating to acquire 100% of an Eastern Cape-based pharmaceutical business.

“Notwithstanding the Covid-19 pandemic, which has hit the South African economy harshly, we are confident that the group is currently well-positioned to take advantage of the ‘new economy – medicinal and pharmaceutical cannabis.” the group said

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EasyUSD
Mind Medicine (MindMed) Inc (MNMD)

Mind Medicine (MindMed), a New York-located psychedelic biotech company, aims to develop psychedelic treatments as regulations in the US start to ease. After considering it effective on mental illness and chronic pains, the psychedelic industry started to find its way into the health sector. The company has several projects on the pipeline in Europe and the US, with various pain, addiction, and Psychiatry Franchise products. MindMed has started conducting research in turning psychedelics such as LSD, MDMA, DMT, Mescaline, 5-meo-dmt, and psilocybin (Magic Mushroom) into medicine.

During MindMed's earnings presentation in May 2021, The company revealed that it expects phase 2 of some clinical trials to commence within the CY21/22.

MindMed successfully raised USD 204 million from its initial listing; highlights for the calendar year CY21 included the successful acquisition of HealtMode, with a financial upsize of CAD 92 million (USD73 million) followed by a successful private placement of CAD 19.5 million (USD 15.4 million)

The company also highlighted a total cash burn of USD 10 Million with assets valued at USD 201 million, announcing its inclusion into the FTSE Russell indexes.

“The Company’s prospects depend on the success of its product candidates which are at early stages of development, and it may not generate revenue for several years.” the company commented.

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EasyAUD
Creso Pharma Ltd (CPH)

Creso recorded a 451% growth in revenue to AUD 1,715,933 by the second quarter of 2021 compared to its previous corresponding period (pcp) revenue of AUD 312,353. Its Swiss operations (AUD 675.479) together with its Canadian subsidiary Mernova Medical inc (AUD 1,040,454) saw strong demand which increased sales.

With cannabis demand growing, this has given the company a great outline while revenue is in with the company’s strategy to increase sales, furthermore, expanding into international markets through new products.

Revenues for the Canadian cannabis market are expected to double this year, reaching up to 500% growth by 2025.

Aside from only focusing on cannabis to capitalize on the growing psychedelic market, Creso recently completed its Halucenex acquisition, a psychedelic company established in Canada
Estimated at a value of USD 100 Billion, the acquisition of Halucenex provided Creso access to a growing market that’s expected to reach up to USD 10 Billion by 2025.

“Completing the acquisition of Halucenex is a major milestone for Creso Pharma, and we will now pursue a number of near-term value creation strategies… This acquisition has allowed Creso Pharma to emerge as a best-in-class provider of cannabis, cannabinoids, and alternative psychedelics solutions to meet a large and unmet demand to improve mental health and wellbeing”. Non-executive Chairman Adam Blumenthal said.

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Informed decision

The cannabis & magic mushroom industry may be considered profitable in short to long-term investors adding that risks are involved while investing in companies that deal with such. Some countries are still have struck harsh regulations around psychedelic medicine.

As the market grows, we may likely see a rise in competition as more countries open up the industry for recreational and medical purposes.

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Sources – EasyResearch, JSE Sens, Labat Africa Limited, Mail & Guardian, IoL, Mind Medicine (MindMed) Inc, ASX Announcements.

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