You get hip to this kind of tip, and go take that California trip…

Soon, you won’t need Route 66 to take a California trip. Lawmakers in the Golden State last week passed a bill that decriminalizes plant-based psychedelics, including “magic mushrooms.”

Dubbed SB-58, the bill was passed by the lower legislative house (the State Assembly) last Wednesday after being passed by the Senate earlier this year. Governor Gavin Newsom (D) has until October 14 to make a decision as to whether he will sign the bill into law. Political observers expect him to sign it.

The landmark legislative development already has unleashed a fresh influx of investment cash into the clinical stage biotechs in the state that are developing psychedelic-based drug treatments. Welcome to California’s new gold rush.

The bill seeks to make available psychedelic-based drug treatments for such mental ailments as anxiety, depression, alcoholism, and post-traumatic stress syndrome.

The bill passed on a 21-14 vote, with Democrats and Republicans divided on the issue. The state GOP, dominated by social conservatives, expressed concerns that passage of the bill would cause a surge in impaired driving, emergency room visits, and underage use. Supporters dismissed those concerns as overblown.

SB-58 legalizes the possession, preparation, obtainment, or transportation of specific quantities of psychedelics for individuals aged 21 and older. The substances affected are dimethyltryptamine (DMT), mescaline (except for peyote), and psilocybin, the primary psychoactive ingredient in magic mushrooms.

The bill also includes provisions for initiating a study on the effects of psychedelics that are plant-based (as opposed to those synthesized in a lab). If signed by Newsom, California will join Oregon and Colorado as the third state to decriminalize these substances.

The California cities of Oakland, Santa Cruz, and San Francisco already have decriminalized psychedelics.

Where psychedelics are legal, small businesses have been sprouting up to meet growing demand. It won’t be long before these cottage industries evolve into a multi-billion-dollar industry. We saw it happen with cannabis.

Activists in more than 100 cities across the U.S. are mobilizing this year to reform their own policies on psychedelics. Scores of initiatives are on state ballots for the November 2024 election.

The burgeoning psychedelics industry…

New data released in August 2023 by Market Research shows the vast sums that are at stake.

In 2022, the valuation of the psychedelics market in the U.S. had reached $2.5 billion (in terms of annual revenue). The market’s size is projected to climb to $5.1 billion by 2032, for a compound annual growth rate (CAGR) during this period of 7.6%. See the following chart, which breaks down the market by synthetic and natural psychedelics (an example of a synthetic psychedelic is lysergic acid diethylamide, or LSD).

Big Pharma is itching to get into the action and Washington is helping pave the way. On June 23, the U.S. Food and Drug Administration (FDA) unveiled comprehensive guidelines for conducting clinical trials on psychedelic substances.

Federal prohibition of psychedelic substances makes it difficult to study their benefits, requiring researchers to jump through bureaucratic hoops. Companies engaged in the development of psychedelic drugs cheered the regulatory clarity provided by the FDA’s new guidance.

Several studies support the notion that psychoactive substances such as psilocybin are effective as mental health treatments. For example, research shows that psilocybin-assisted psychotherapy offers relief from cancer-related mental distress.

Research into the therapeutic potential of psychedelic drugs was pioneered by psychiatrists way back in the 1950s.

Ironically, it was the CIA’s unsuccessful attempts to weaponize psychedelics during the Cold War that kickstarted the entry of psychedelics into society. The War on Drugs, launched in 1971, put an end to the psychedelics movement. In recent years, though, changing social mores and the emergence of advanced technologies in pharmacological research have given the field new impetus.

As interest in psychedelics gains traction, several drug companies are now deploying artificial intelligence (AI) methods in their search for new psychedelic compounds to treat a wide variety of mental and physical conditions.

WATCH THIS VIDEO: HHS Advises DEA to Reschedule Cannabis

The mainstreaming of psychedelics is reminiscent of the early days of marijuana legalization. The first half of 2023 has witnessed accelerating efforts in bold drug policy reform in the U.S., with the introduction of several new bills at the state and local levels that seek the legal normalization of psychedelics and marijuana.

Every time one of these laws gets enacted, psychedelics and cannabis get closer to mass consumer use, creating new investment opportunities. That’s why I’ve launched an investment service called Marijuana Profit Alert.

My publication Marijuana Profit Alert provides specific, actionable advice on the best investments in the psychotropic revolution. Visit this URL to learn more.

John Persinos is the editorial director of Investing Daily.

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