Why magic mushrooms companies are merging into the wellness industry

Psychedelics hits the mainstream

Many (rightly) see psychedelics as transformational treatments for mental health conditions.  The problem is that this vision is a long way away from fruition – if it is ever realized for some ailments.  

Developing and launching psychedelic therapies is fraught with financial risk, research setbacks and marketing disappointments.   

For some psilocybin-focused companies, the right strategic move would be to pivot their product development towards functional mushrooms-based (or nootropics) wellness products.  These supplements would not have the same psychedelic effects as prescription-based medicines but could (emphasis on could) provide many health benefits including heightened alertness, memory enhancement and immunity boosting.    

This pivot would make sense for many companies.

The medical market is very crowded; most biotech start-ups face long odds at being first or best to market.  On the other hand, the product development and regulatory pathway to the wellness market is quicker, easier and less capital intensive. This is appealing for start-ups that are in danger of running out of capital or are generating less than ideal research results.  

Shrewd companies could also use functional mushrooms as a practical first step before introducing presscription-based medicines or as a way of repurposing existing research.  Finally, the emerging wellness category, by itself, is a large, growing market. 

Some psychedelics companies such as Red Light Holland and Wake Networks are already early movers in this expanding space. Interestingly, cannabis firms like Avicanna and Cookies are combining weed with fungi to launch CBD-like wellness brands.  

Entering the functional mushrooms market is not for every psychedelics company.  Well-capitalized biotech firms that are generating compelling research outcomes should stay the course and not introduce strategic confusion and unwanted complexity.   

Those considering entering this growing category need to do their homework.  For example:

1. Understand the category & consumer  
> Functional mushrooms is a consumer packaged good, which is quite different from a biotech-driven medicine.  CPG products require different skill sets, structures & thinking frameworks than a pharma company. 

2. Know the risks & regulations   
> This burgeoning market has low barriers to entry not to mention challenges with brand differentiation.  As we saw in the CBD market, functional mushrooms will attract charlatans and spurious product claims, which can trigger regulatory oversight and clampdowns. Not surprisingly, regulatory restrictions and illegality presently stand in the way of seamless commerce. 

3. Assess you mission & purpose  
> Competing in two very different product markets with limited resources and capital is challenging for any firm let alone nascent psychedelics companies.  You may ultimately have to choose one strategic lane.

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