The day after the U.S. election, we don’t (yet) know who the next president will be. But we do know that psilocybin drug therapy is now legal in the state of Oregon.

Voters in Oregon passed the ballot measure granting physicians (and their patients) the legal right to use psilocybin as part of psychotherapy treatment.

Psychedelic Stock Watch is laying out what this does – and does not – mean for the emerging psychedelic drug industry.

Good for psychedelic drug research, good for drug reform

The legalization of psilocybin for medicinal use immediately advances the psychedelic drug industry as a whole, on two fronts.

Allowing the use of psilocybin to treat mental health disorders such as depression is good news for mental health patients. Psilocybin has already shown tremendous promise in clinical studies as a treatment for (in particular) depression.

This is also good news for psychedelic drug research.

A new legal jurisdiction for psychedelic treatment means more treatment data. This data can not only be used to advance psilocybin-based research, it will also (presumably) supply empirical ammunition to spread legalized therapy into other U.S. states.

Psilocybin use has grown dramatically in the U.S. in recent years – illicitly. We see that regularly in news headlines.

What are we not seeing in the headlines? People dying from psilocybin use.

Psilocybin is not a killer-drug, like opiates. As (medicinal) psilocybin use is rolled out in Oregon, the expectation is for positive empirical data.

• People receiving an effective therapy to treat depression (something that most Americans can’t get from existing legal therapies)
• Few serious adverse reactions

This is why the legalization of medicinal psilocybin use in Oregon can be expected to speed up the process of legalization in other, more progressive U.S. states.

Those other state governments will see the benefits of psilocybin-based psychotherapy. They will not (presumably) see negative repercussions that would make other states hesitant to approve legalization.

More importantly, the American people will get to watch the psilocybin experiment in Oregon. If they see positive results, legalization and decriminalization ballots will mushroom into existence (pun intended) across the United States.

No immediate commercial dividend

Legalizing the medicinal use of psilocybin in Oregon will have important dividends for the psychedelic drug industry as a whole. But what we won’t see is a large (psilocybin-based) “treatment industry” springing into existence in that state.

The logistical issues involved with gaining local licensing approval and finding (or training) qualified therapists inevitably means a very gradual evolution.

Perhaps more importantly, it’s unlikely that entrepreneurs are going to want to jump into this market – at least in its early stages.

The lesson learned by the cannabis industry will still be fresh in the minds of these people.

U.S. states (supposedly) opened up a legal cannabis industry through voter-driven legalization ballots. But the federal government went out of its way to undermine the legal cannabis industry, as did most local governments.

Entrepreneurs will be unlikely to stick their necks out like that again. (Psychedelics and Cannabis: Part 1, Regulatory Déjà Vu)

It will take both meaningful U.S. drug reform movement at the federal level and more supportive attitudes from local governments to draw in significant numbers of entrepreneurs – and venture capital – for this treatment market.

Legalizing medicinal psilocybin use in Oregon is an important step forward on the (mental) healthcare front as governments grapple with the Mental Health Crisis. It should help to significantly advance psilocybin-based drug research.

It’s not going to be a big revenue generator, for the foreseeable future.

Positive optics for psychedelic stocks

For psychedelic drug companies (and their investors), legalizing the medicinal use of psilocybin in Oregon is another significant milestone for the industry.

It further adds to the perceived legitimacy and commercial potential for psychedelic drugs.

Investors have already seen a growing list of high-profile investors throw their money behind this new industry: Tim Ferriss, Peter Thiel, Bruce Linton, Mike Novogratz, Kevin O’Leary, Bob Parsons and many others.

They have seen the nine-figure financings.

Mindstrong Announces $100M Funding Round

Compass Pathways Announces Closing of $146.6 Million Initial Public Offering

And they have seen the first unicorn among psychedelic drug stocks as Compass surpassed a $1 billion market cap with that IPO financing.

What was needed to compliment these very positive optics for the psychedelic drug industry is some signs of regulatory movement from governments.

We’ve already seen this federally in Canada, as special Health Canada “exemptions” have been granted to allow the legal medicinal use of psilocybin. Legalization momentum can be expected to grow in Canada – as it did with cannabis.

In the U.S., there have already been local measures to allow psilocybin use, in Colorado and California. Now a state government has legalized the medicinal use of psilocybin.

That’s a big jump.

Not surprisingly, many psychedelic stocks are surging on today’s election news.

Who will be the next U.S. president? Stay tuned.

How does the future look for psychedelic stocks? Increasingly bright.