Psilocybin: The Next Magical Industry

Rines Angel Fund
4 min readNov 18, 2022

By Jeff Marquis ’23 Associate

While federally illegal, cannabis has become one of the fastest growing industries in the US economy, seeing $25 billion in domestic sales last year. This is a result of 37 states straying from national legislation and legalizing the substance for medicinal purposes. Additionally, 19 have gone further and permitted recreational use. This unique movement has created a booming business for those who managed to capitalize on the crop’s changing restrictions, and many wonder if it ends with marijuana. Psilocybin mushrooms, commonly called “magic mushrooms” or simply “shrooms,” have also seen a dramatic increase in public and governmental acceptance in recent years. Should North American angels be considering investments in this emerging yet currently illegal vertical?

According to a poll by USA Rx, today, 39% of Americans support psilocybin legalization for any use. This perception change is being reflected by states and cities once again contradicting federal legislation and legalizing/decriminalizing the substance. Denver, Colorado was the first to decriminalize psilocybin mushrooms in May of 2019 and since, dozens of major cities, Washington DC, and the state of Oregon have followed suit. Though many enjoy psychedelics for their consciousness-altering effects, promising medical research is the driving factor of persuasion for lawmakers. In November of 2020, Oregon became the first state to permit the substance for medical usage, and legalization conversions are becoming discussion points in elections across the country. The psilocybin vertical’s growth potential has also piqued the interest of numerous biotech startups who see mushrooms in the future of psychological medicine.

Cannabis vs Psilocybin Legality in the US (Nov ’22) 2,4

Regardless of a company’s intended use for the drugs, legal restrictions for share-trading remain in place for any company producing, processing, or selling Schedule I substances (cannabis, psilocybin, LSD, heroin, etc.) This means that until schedule reclassification occurs, US-based “plant-touching” cannabis or psilocybin mushroom companies are unable to publicly trade on US stock exchanges like NYSE or Nasdaq. American cannabis giants Curaleaf Holdings and Green Thumb Industries, both IPO’d in the latter half of 2018, trading on the Canadian Securities Exchange (CSE) and the Over-the-Counter Stock Market (OTCQX). Unlike their US competitors, Canadian growers like Cronos Group are eligible to trade on the Nasdaq, where they have done so since February of 2018. All this is to say that workarounds exist regarding national laws and the business of restricted plants. The key difference is that over four years after federal legalization of cannabis in Canada, our neighbors remain aligned with the US government’s position on magic mushrooms. With possession and sale remaining illegal in both countries, IPOs within the psilocybin vertical are currently unlikely.

The good news for psychedelic-loving angel investors is that over 83% of US-based cannabis exits have been mergers and acquisitions. Assuming a level of similarity between the cannabis and psilocybin verticals, IPOs are an uncommon exit strategy for most seed-stage biotech/drug discovery firms in the magic-mushroom space anyways. In May of this year, Mycotopia Therapies, a tech-focused psilocybin research firm creating treatments for mental illnesses like anxiety, depression, and PTSD, signed a merger agreement with Emotional Intelligence Ventures, valuing their new parent company,, at $383 million. Shareholders in this Florida-based startup will enjoy an exit valued at $23 million.

As the Latin proverb suggests, fortune favors the bold. In angel investing, fortune favors the educated. Much is uncertain about the future of psychedelics in the US and nearby economies, but legal and social trends are certainly moving in a direction that investors should be watching closely. For entrepreneur and angel investor, Tim Ferriss, the data is clear… “​​There just aren’t that many opportunities that are so dramatically obvious,” he told Fortune in an interview about psychedelic investing.13 Certainly, legislation will be the biggest factor in the success of the industry, and these new laws would create massive wealth for companies and individuals, early-movers in particular. For those embarking on the journey of psychedelic investments — have a good trip!

Jeff is a senior from Derry, NH pursuing a dual option in Management and Entrepreneurial Studies with a minor in Hospitality Management. His passion for entrepreneurship and startups began when he was young. While at UNH, Jeff has investigated this interest further by participating in the E-Center’s paid internships at start-ups program and the Holloway Competition. Outside of the fund, Jeff works as a Community Assistant at the Gables apartments and serves as a captain on the Club Tennis team.



Rines Angel Fund

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