“Cannabis is dead; long live cannabis.” Mushrooms, mark my words..
–Ancient potstocks proverb
Seriously though, folks, the cannabis sector is in trouble. Take a look at the Horizons Marijuana Life Sciences ETF, a basket of some of the largest cannabis stocks on the market.
Here is equity.guru founder, Chris Parry’s take on how the growing pains of Canadian cannabis all lead back to the sector’s beginnings:
Back in 2013/2014, when cannabis deals were running rampant on public exchanges, most without any real business plan, management-level knowledge of the cannabis business, or confirmable evidence that they had a chance of one day being licensed, Canopy Growth Corp, or Tweed as it was then, dominated the public markets by understanding a simple premise; the cannabis sector was, at that time, less about making money than it was about raising money.
Well, here’s the logical culmination of a market largely built on speculation and promotion. The weed is bad, the companies have (largely) disappointed and even B.C. isn’t buying.
We’re all looking for the next thing, the next ground floor to get into before the next meteoric elevator rise. The only question is, what building is it going to be?
It’s pronounced fun-gee
It’s mushrooms, and not the kind you want to serve your relatives (unless you’re that family).
Ok hear me out: TV has made us crazy. We now have minute-to-minute updates as the Brazillian rainforests continue to burn and this planet becomes more and more inhospitable in a way our parents could only have nightmares about.
“If it bleeds, it leads” has been the modus operandi for newspaper editors and TV producers for decades, and look where we are.
Despite the comforting onslaught of consolations by our so-called intelligentsia (Steven Pinker, I’m looking at you) nearly 14% of Canadian women aged 25 to 79 and 4.2% of men age 25 to 44 take anti-depressants, according to Health Canada.
Part of that is genetic, but there are environmental factors to consider as well. Wage growth is stagnant, even reversing if one considers purchasing power parity, and soon we’ll be fresh out of polar bears outside of Coca Cola commercials. Nice.
So what’s a girl to do? Pop some xans, right? Wrong.
Last year, I was spoke to Shekhar Parmar, CEO of Harvest Medicine, who told me the efficacy of SSRIs is roughly 20%. I have personally taken five separate kinds to no avail, and if I wasn’t unemployed and living with my parents at the time, I would most likely have lost my job and ended up on the streets. Not ideal.
But the Overton Window for what constitutes acceptable medical treatment is shifting. Ayahuasca and ketamine are being used in clinical trials to establish their efficacy in treating mental illness, as is MDMA, the once maligned ‘rave-drug.’
Psilocybin, the active ingredient in magic mushrooms, is another compound working its way back into the mainstream after years on the fringe, and the markets are paying attention.
The number of publicly-listed purveyors of psilocybin is…well it’s a short list.
Wuhan General Group (WUHN.Q) may be the preeminent pubco within the #shroomboom at the moment, though that isn’t saying much as the sector is in its infancy.
WUHN, which makes pains to declare itself as having ” no dealings with any Chinese parties,” has a $5.9M market cap, 34 million shares outstanding and is trading at $0.17.
There’s essentially no liquidity and stockwatch.com lists its sector of business as “Industrial and Commercial Fans and Blowers and Air Purification Equipment.” Very nice.
That’s to be expected as a recent press release states the company is undergoing “a strategic reorganization that will better position the company to capitalize on the rapidly changing Medical Marijuana and Psilocybin Mushroom industries.”
But the company’s website makes no mention of either cannabis or psilocybin, and clicking on the site’s “Blog” tab produces a 404 message page. There does not seem to be any investor deck to speak of either.
All that exists is a brief mention of a JV called M2BIO which “was specifically set up to be a leader in the field of research and commercialization of medicines derived from mushrooms containing psilocybin.”
Next, Broadway Gold Mining (BRD.V) has recently signed a binding LOI with Mind Medicine, a private company based in Delaware which is to complete in a reverse take-over of Broadway by Mind Medicine.
MMED is assembling a compelling drug development pipeline of psychedelic inspired medicines planning or undertaking FDA trials. The company plans to grow its pipeline of psychedelic inspired medicines through acquisitions, joint ventures and collaborative development agreements.
There’s no mention of psilocybin on the press release in question, but the Twitter account @shroomstreet retweeted it, implying the company may be associated with psilocybin-related treatments in the future.
A media contact for Broadway said he was unable to speak on internet speculation.
The company’s stock is currently halted and last traded on June 5 at $0.07.
Then there’s Roadman Investments (LITT.V), a company which may have claim to being the first boomers in the shroom space.
— Shroom Street (@ShroomStreet) August 28, 2019
Well, a shroom space. Earlier this month, the company invested $150K into a BC-based ” craft mushroom distributor and product formulator” called Champignon Brands.
The company makes garden variety mushrooms, but the release includes the following quote by Roadman’s CEO:
“On May 8th, 2019, Denver voters approved Initiative 301, a measure that prohibits the city’s government from deploying resources to impose criminal penalties relating to the consumption and possession of psilocybin by adults over 21 years of age.”
It’s clear the company is going to leverage Champignon’s mushroom cultivation expertise to enter the psilocybin market.
The company has a valuation of $7M, 100 million shares outstanding and closed at $0.07 as well.
To close, I’d like to quote my boss once more, this time on the future of magic mushrooms: “I think somebody’s going to do it right, but until then, I think a lot of people are going to f*ck it up.”
Yup, that’s the ground floor alright.