Renowned political consultant Steve Schmidt succinctly described the profound cultural influence of the Golden State: “Whether they’re for good or bad, all trends in the United States start in California.”

That was the case with marijuana legalization in the U.S., which started in California in 1996. And now, we’re seeing this dynamic unfold in the state with psychedelics.

California officials on July 14 gave the green light to a grassroots campaign to initiate signature gathering for a 2024 ballot initiative to legalize the possession, sale and regulated therapeutic use of psilocybin, the psychoactive ingredient in “magic mushrooms.”

Not only is California a cultural trend-setter for the rest of the country, but if it were a sovereign nation, it would be the world’s fifth largest economy. Psychedelics legalization in the state would unleash a torrent of investor cash into developing these substances for medicine and recreation.

The California cities of Oakland and Santa Cruz have already decriminalized psilocybin and other psychedelics. San Francisco (as you might expect) is moving in that direction as well.

The state-wide effort that was cleared last Friday is one of at least two campaigns in the state that strive to enact psychedelics reform through the ballot process next year. Several polls show that psychedelics legalization is popular among California voters.

Decriminalize California announced last weekend that the state attorney general’s office approved the title and summary for the current initiative (see tweet).

In addition to legalizing the possession, cultivation and sale of psilocybin for adults 21 and older, the proposal would mandate that the state set up a regulatory infrastructure for medical professionals to administer the psychedelic for physical and psychological therapies.

“Now that the plague is over we can take advantage of all the summer festivals and fully activate our college teams for tabling days when they are back in session in late August and September,” Ryan Munevar, campaign director of Decriminalize California, said in an email to group members and the press.

“However, the political climate is going to be even more insane this time around as we are facing an utterly surreal rematch of Biden vs Trump and the white noise from that is going to be epic as both parties continue to polarize the country,” he said. “All we have to do is stay focused, collect the signatures, and get it on the ballot.”

California would need to “implement qualification requirements and protocols for psilocybin-assisted therapy created by an unspecified ‘independent professional certifying body,’” the summary prepared by the attorney general’s office says.

The measure would allow psilocybin for the “social consumption, on-site consumption, sales at public events, sales at farmers’ markets, and retail sales, whether or not for profit”

There would be no possession limit. Psilocybin mushrooms sold for recreational use could only be taxed at the local level; therapeutic purposes could not be taxed.

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A separate organization, called Californians for Treatments, Research, Education, Access, and Therapies for Psychedelic Assisted Therapy and Cures, recently announced its intention to put a psychedelics-assisted therapy initiative on next year’s ballot as well, but as of this writing the effort is in the nascent stage and lacking in details.

Meanwhile, a California Senate-passed bill to legalize the possession and facilitation of certain psychedelics is advancing through the Assembly and on track to reach a floor vote.

On the federal level, the U.S. Food and Drug Administration (FDA) on June 23 unveiled comprehensive guidelines for conducting clinical trials on psychedelic substances.

This FDA development paves the way for the integration of substances such as psilocybin and lysergic acid diethylamide (LSD) into mainstream behavioral health treatments. Where conventional drug treatments have failed, psychedelics are proving effective in treating a range of ailments, including depression, anxiety, chronic pain, and post-traumatic stress disorder.

Federal prohibition of psychedelic substances makes it difficult to study their benefits, requiring researchers to grapple with red tape and delays. The FDA’s new guidance provides regulatory clarity. Big Pharma, as well as smaller biotechs, are poised to ramp up their psychedelics research. Investors and venture capitalists are opening their wallets.

As cannabis and psychedelics enter the mainstream, some related equity investments are superb. But many others are not. You need to conduct due diligence.

That’s where my publication, Marijuana Profit Alert, comes in. By applying my proprietary screening methodologies, I pinpoint for subscribers the most attractive plays on the psychotropic revolution. To learn more, click here.

John Persinos is the chief investment strategist of Marijuana Profit Alert.

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