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By Emily Jarvie
Psychedelics stocks were buoyed on Thursday morning by the news that Colorado voters had approved a midterm election ballot measure that would legalize the possession and use of certain psychedelic plants and fungi.
The possession, use, cultivation and sharing of psilocybin, ibogaine, mescaline (not derived from peyote), DMT and psilocin will be legalized for adults 21 and older, without an explicit possession limit. Under the measure, the state will also create new regulations for the distribution and administration of these substances.
With 88% of the vote counted at mid-morning on Thursday, 51.4% were in support of the measure while 48.6% were against it.
US-based psychedelics exchange-traded funds (ETFs) rose during Thursday morning's trading session on the news, with the AdvisorShares Psychedelics ETF up 3.1% and the PSYK ETF up 4%.
Psychedelic industry 'an ideal opportunity' says Stifel GMP analysts
Earlier this week following the conclusion of the psychedelics networking conference Wonderland in Miami, analysts at Stifel GMP wrote in a note to clients that they had come away from the conference with a renewed conviction in the psychedelic industry.
Key themes they noted were the large unmet need for psychedelic-assisted psychotherapy clinics both now and in the future and that the realm of addiction seems to be an attractive field for psychedelic therapies, offering multiple distinct opportunities outside of popular depression and anxiety indications.
Further, the analysts wrote that early-stage companies have a material second mover advantage given multiple unknowns in trial design given psychedelics are a greenfield opportunity.
“Overall, it seems progress continues despite depressed valuations, resulting in an ideal opportunity for investors that can navigate through the cycle,” they wrote.
Source: Proactive Investors
Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by visiting https://psyk-etf.com/investor-materials. Read the prospectus carefully before investing.
The PSYK ETF is distributed by Quasar Distributors, LLC. The investment advisor is Exchange Traded Concepts, LLC. Quasar is not affiliated with Elemental Advisors Inc. or Exchange Traded Concepts.
PSYK ETF
There is no assurance that the Fund will achieve its investment objectives.
Associated Risks of Psychedelic Treatment Companies. In Canada, certain psychedelic drugs, including psilocybin, are classified as Schedule III drugs under the Controlled Drugs and Substances Act (“CDSA”) and as such, medical and recreational use is illegal under Canadian federal law. In the United States, most psychedelic drugs, including psilocybin, are classified as Schedule I drugs under the Controlled Substances Act (“CSA”) (21 U.S.C. § 811) and as such, medical and recreational use is illegal. There is no guarantee that psychedelic drugs or psychedelic inspired drugs will ever be approved for a therapeutic or medicinal use in either jurisdiction. Unless and until psilocybin, psilocin, or other psychedelics-based products receive FDA approval, such products are prohibited from sale, which limits the growth opportunities for certain companies held by the Fund. Even if approved by the FDA, the manufacture, importation, exportation, domestic distribution, storage, sale, and legitimate use of such products will continue to be subject to a significant degree of regulation by the DEA. There can be no guarantees that such approvals or administrative actions will happen or be favorable for psychedelics companies. Additionally, therapies containing controlled substances may generate public controversy and carry reputational risk. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, psychedelics companies and many future therapeutic candidates they may develop. All of these factors and others may prevent psychedelics companies from becoming profitable, which may materially affect the value of certain Fund investments.
The Fund is considered to be non-diversified, which means that it may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund. As a result, the Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers than a fund that invests more widely. This may increase the Fund’s volatility and cause the performance of a relatively smaller number of issuers to have a greater impact on the Fund’s performance.
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