The coming cannabis & psychedelics convergence
Makes sense, sometimes
Early evidence and a solid strategic rationale suggest these nascent industries are cross pollinating.
Cookies, a leading cannabis brand and retail chain, is big into psychedelics. According to a spokesperson quoted in Forbes: “[Cookies has been] experimenting with plant medicine for years, and we see so much value in what mushrooms can do for consumer’s health and wellness, so it was only natural to go this route.” The Company is capitalizing on the burgeoning fungi market right now. Cookies is incorporating the beneficial elements of mushrooms like rishi, shiitake, and lion’s mane into a recently introduced line of CBD-based capsules. And once California gives the the regulatory go ahead for psilocybin, Cookies will likely incorporate hallucinogens into their products.
Others are following suit. Australia’s first medical cannabis grower, Little Green Pharma, has started developing psilocybin-based ingestibles. Finally, one of my Canadian clients is going the other way. They will leverage their mushroom cultivation & extraction capabilities to manufacture cannabis oil-based products.
It is inevitable that these two seemingly different sectors will converge in places. They have overlapping consumer needs states (recreational, wellness, medical); they share complementary cultivation and extraction technologies & expertise; they deal with similar regulatory issues and must cope with comparable stigmas.
More strategically, cannabis and psychedelics firms usually define themselves in like ways as CPG or pharmaceutical businesses and face the same capital markets challenges. Perhaps most significantly, many psychedelics leaders and investors cut their teeth in cannabis; they have transferable relationships and experiences (though many would consider this a negative).
There is also a market impetus for this convergence. Incorporating legal psychedelic substances can help cannabis companies overcome the challenges of differentiating their brands, maintaining margins and improving their return on assets. On the other hand, early-stage psychedelics companies facing years of zero revenue and long odds of success could use cannabis-based products to deliver a revenue stopgap and a means to drive early consumer awareness.
These horizontal strategic moves are not unheard of. There are many cases of beverage alcohol and tobacco moving into cannabis. And recently, Dr. Bonner's, the counter-culture soap company, has begun associating its brand with psychedelics benefits and advocacy plus donating funds to psychedelics research.
Of course, these pivots will not be for every company and much depends on positive regulatory change, having business smarts and being patient. These early steps will be interesting to watch.
#psychedelics #marketing #products #Cookies #LittleGreenPharma #mushrooms #psilocybin #CPG