Does Your Portfolio Have Mushrooms In It?

If you haven’t noticed, the so-called “magic mushroom” movement continues to gather tailwinds. Denver and Oakland have already decriminalized the psychedelic fungi, with Chicago and Santa Cruz aligning to likely follow suit. Advocates argue that decriminalization is appropriate to allow individuals to seek therapeutic benefits and free up time for law enforcement to pursue higher priority crimes.

Upstart Yield Growth Corp. (CSE: BOSS)(OTCQB: BOSQF), which is already addressing the $4.2 billion global wellness market through legal hemp and cannabis products, has started leaning into the opportunity with mushrooms – both hallucinogenic and those that are free of psychedelic effect.

The company is quietly and swiftly building a formidable team and mushroom asset base that should have investors taking notice of the savvy diversified approach by a team comprised of execs with a long history of brand development.

The Opportunity: Investing in Magic ‘Shrooms

Centuries of anecdotal evidence point to medicinal uses of psilocybin, the psychotropic component of magic mushrooms, for hard-to-treat diseases. The library is starting to build with science-backed evidence too, which has city councils taking a closer look at health benefits, even though, much like marijuana, psilocybin remains a Schedule I drug at the federal level.

Speaking to the Santa Cruz city council on the therapeutic effect of psilocybin, Dr. Alli Feduccia of the Multidisciplinary Association for Psychedelic Studies said, “There’s some fascinating research coming out about how [psilocybin] could increase neuro-plasticity and neurogenesis in the brain.”

This is particularly interesting considering neuro-plasticity and neurogenesis are implicated in an array of difficult disease that have been mostly failed by conventional therapies, such as PTSD, depression, Alzheimer’s Disease and even autism. For decades, studies have pointed to psilocybin being beneficial in reducing depression in people with serious medical conditions, but federal prohibition has kept on thumb on research.

Follow the Money

It is with good reason that Bruce Linton, the ex-CEO who built marijuana juggernaut Canopy Growth Corp. (NYSE: CGC)(TSX: WEED), has invested in and joined the board at Mind Medicine, a neuro-pharmaceutical company focused on psychedelic-inspired medicines. Lending credence to the upside potential of the industry, Linton was joined in a strategic investment round that raised $6.2 million for MindMed by original Shark and billionaire Kevin O’Leary and Bain Capital partner James Bailey.

Linton and Bailey were both visionary with early investments in the cannabis space, now switching gears to take pioneering positions in supporting psychedelics for patients in dire need for new classes of medicine.

The “hard to argue with” evidence is lending to increased investment and interest in general. Two months ago, Johns Hopkins Medicine announced the launch of the Center for Psychedelic and Consciousness Research for the purpose of studying compounds like psilocybin and LSD for a full spectrum of mental health conditions. A group of private donors have contributed $17 million to move the research forward.

In April, Imperial College London launched a similar center backed by $3.5 million in private donations.

Yield Growth: The Leader Amongst PubCo’s

Yield Growth stock has languished along with every other company that dabbles in legal marijuana. Since about March, the entire industry has been downtrodden by Wall and Bay Streets, slashing valuations by at least half for most. This is not uncommon in an emerging industry as narrow-focused investors that have profited massively by the early upward cycle move on to the next shiny object.

Regardless of analyst sentiment at this moment, the legal cannabis industry is an unstoppable force sweeping the globe, with spending rising from $9.5 billion in 2017 to $12.2 billion in 2018 and expected to reach $31.3 billion by 2022, according to Arcview Market Research and BDS Analytics.

So don’t sweat pullbacks or cyclical swings.

As for mushrooms, since Yield Growth announced in September that it established a new subsidiary, Flourish Mushroom Labs, to pursue the opportunity in edible and psychedelic mushrooms, management hasn’t wasted any time with developments. The company acquired 30% of Absolem Health Corp., owner of One Up Pure Energy, which has edible mushroom snacks registered with Health Canada and acquired more than 100 mushroom recipes for products like teas, soups, elixirs and other foods and drinks. In many instances, psychedelic mushrooms can be substituted for non-psychedelic ones in jurisdictions that allow magic shrooms.

Yield Growth is by no means pigeon-holing itself into just magic mushrooms by any stretch of the imagination. Mushrooms in general are a growing part of a global functional food market expected to reach $34.3 billion by 2024, according to Markets and Research. Consumer uptake is supported by a trend shift towards functional foods like mushrooms that are high in antioxidants, balance energy levels, have skin-enhancing benefits and improve immune and digestive functions.

Tuesday morning, the company said it appointed chemical engineer, Vivek Taneja, as Vice President, Operations of Flourish Mushroom Labs. Taneja was serving as a consultant to Flourish Labs, but was obviously compelled to take a more substantial role. With his new position, he will be tasked with overseeing the commercialization of the company’s functional mushroom products, beginning with organic mushroom coffees slated to hit the market in Q2 2020.

Taneja, an accomplished engineer and seasoned vet in the food and beverage industry working on projects with global giants like Coca-Cola, Nestle Water and Minute Maid, will also be part of the team developing clinical trials to research innovative therapeutic uses of certain compounds in magic mushrooms.

Taneja says he sees “huge potential” for the organic mushrooms Flourish is developing.

Judging by Linton, O’Leary, Bailey and many other investors taking entry positions in the psychedelic mushroom space, Taneja is in good company and likely spot on with his outlook.

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