Since 1971, the U.S. Drug Enforcement Agency (DEA) has been the tip of the spear in the fight against illegal drug use and trafficking in the U.S.

And while many states have passed legislation legalizing cannabis for medical and recreational use, the agency has stood firm…

And it’s rejected multiple petitions calling for federal reclassification of cannabis and psychedelics as highly addictive with no medical use, or what’s known as Schedule I classification… to the more lenient Schedule III classification – therapeutic drugs available via prescription.

But in a memo released this past Monday, the agency didn’t call for more prohibition or stricter enforcement… instead, it put out the call for more drugs.

Specifically, the memo calls for legal producers to ramp up the production of cannabis and psychedelics like psilocybin (found in so-called “magic mushrooms”), LSD, and MDMA (aka “ecstasy”) for medical use in 2022.

Here’s an excerpt from the memo:

There has been a significant increase in the use of schedule I hallucinogenic controlled substances for research and clinical trial purposes…

[The] DEA supports regulated research with schedule I controlled substances, as evidenced by increases proposed for 2022 as compared with aggregate production quotas for these substances in 2021. (Emphasis added.)

In short, the agency wants to increase production of certain drugs to meet growing research demands in 2022.

For instance, it proposes doubling the production of psilocybin… increasing LSD production by 12x… and MDMA production by 64x.

The DEA’s softening on psychedelic research is a critical milestone in what Daily editor Teeka Tiwari calls his “third trillion-dollar opportunity” – investing in the small companies at the forefront of these life-changing medical breakthroughs.

Based on my research, I fully expect the DEA to continue down this path and reclassify psychedelics to Schedule III status within the next 18 months… But if you wait until that happens to invest in the sector, you’ll miss out on the biggest gains.

In a moment, I’ll explain how you can position yourself to profit from the research and development of these therapeutic psychedelics… but first you need to understand how we got here.

From Drug Enforcement to Encouragement

As far back as the 1950s, researchers were starting to discover the healing properties of psychedelics like LSD, magic mushrooms, and mescaline – a psychedelic substance found in certain cacti.

Early studies at St. George’s Hospital in London showed that psychedelics cured alcoholism in about 50% of study subjects…

And by the mid-60s, hundreds of studies supported the use of psychedelics to treat conditions like depression, anxiety, and addiction.

But then things went awry…

In 1960, a Harvard psychologist named Timothy Leary began taking LSD and psilocybin with research subjects and his students… but then continued off the deep end, advocating for the mass use of LSD.

He became one of the most prominent faces for the counterculture movement of the ’60s, and his actions tainted the reputation of psychedelics-based research for much of mainstream America.

So, when President Richard Nixon declared the War on Drugs in 1971, nearly every psychedelic was labeled a Schedule I compound… making it illegal to use the drugs for medical research or recreation without an exemption from the federal government.

This strict lockdown and the bad reputation from the counterculture movement effectively killed research into psychedelics for a half-century… And the DEA made sure it stayed that way.

But the DEA’s recent about-face approval on research is a positive sign it’s softening its stance…

And the FDA’s recent approval of psychedelics for treating depression and PTSD is definitive proof that these drugs have medical uses.

So it’s only a matter of time before the DEA reclassifies psychedelics to Schedule III – grouping the drugs with common prescription medications like Tylenol with codeine, Vicodin, and anabolic steroids.

When that happens, we’ll likely see a flood of psychedelic therapeutic companies pour into the market… but the biggest gains will be found in a handful of companies actively working to make these drugs a reality today.

It’s Now or Never

According to the World Health Organization, more than 800 million people worldwide suffer from mental health disorders. Treatment costs, lost work, and social tolls amount to a $3 trillion drag on the global economy.

And modern medications aren’t doing nearly enough to address this mental health crisis…

According to the Institute for Quality and Efficiency in Health Care, 40–60% of people who took traditional antidepressants didn’t see improvement… and of those who did see results, one-third said the drugs stop working entirely over time.

This is where psychedelics can help.

Today, there’s a small group of companies leading the way in psychedelic research. They’re picking up where scientists in the 1950s left off… and working to develop better treatments for depression, anxiety, addiction, and more.

So, if you’re looking to take advantage of the opportunity in psychedelic therapeutics, my advice is to get positioned right now.

You can get broad exposure to this trend through the Defiance Next Gen Altered Experience ETF (PSY). It holds a basket of companies working on psychedelic and cannabis-based therapeutics.

These are early-stage companies on the very cutting-edge of the biotech space. That means there’s a significant risk that a company will fail to see its therapy reach the mass market.

The Altered Experience ETF spreads this risk out across many different companies in this space… but always remember to do your homework before investing… and never invest more than you’re willing to lose.

Invest with conviction,

Anthony Planas
Analyst, Palm Beach Daily