Psychedelics and Functional Mushrooms

The Psychedelic and Functional Mushroom Industries

Health, Growth, and Overlap in Markets

In 2020, mushrooms are having a moment. They are gaining popularity as supplements, food additives, mental health treatments, and even textiles. Recent research shows that psilocybin-assisted psychotherapy may be effective in treating a variety of mental disorders, including OCD, anxiety, and depression. There is also a growing interest in functional mushrooms as consumers crave healthy, natural, and beneficial products in their day-to-day lives. Some companies appear to be looking toward functional mushrooms as an entree to the psychedelic space, in anticipation of market overlap and changes in the legal landscape.

What are Functional Mushrooms?

Functional mushrooms, or medicinal mushrooms, have been used for years in traditional East Asian medicine for their reputed health-boosting properties. These mushrooms are marketed as supporting overall health and well-being by lowering stress levels, providing more energy, and strengthening the immune system. Every functional mushroom claims a unique benefit, however, the most popular are Reishi (helps with managing stress), Lion’s Mane (stimulates focus and creativity), Chaga (supports immune system), Cordyceps (boosts energy levels) and Turkey Tail (improves gut health). These mushrooms will not produce a state of altered consciousness, as they don’t contain psilocybin or psilocin. They are increasingly popular among wellness influencers as ingredients, or a supplement in morning shakes, coffees, or teas.

What are Psychedelic Mushrooms?

Psychedelic mushrooms, or “magic mushrooms” are  mushrooms that contain natural, active hallucinogens, such as psilocybin and psilocin, produced by certain species of fungi. Since these mushrooms are psychotropic, psilocybin and psilocin are classified as a Schedule I controlled substances, meaning their possession and consumption is a criminal offence. They can induce changes in thoughts, ideas, and perception. However recent clinical trials show that psychedelic mushrooms can be a promising therapy for treatment-resistant depression, anxiety and suicidal moods. 

Psychedelic and Functional Mushroom Industries


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According to the Food and Drug Administration of the USA (FDA), functional mushrooms are classified as dietary supplements under the Dietary Supplement Health and Education Act of 1994, which regulates vitamins, minerals, herbs and other botanicals. These supplements can be sold without FDA approval as they are labelled as a dietary supplement and “do not claim to treat, diagnose, cure or prevent diseases.” 

According to the Dietary Supplement Research study, Americans spend more than 30 billion dollars annually on supplements, which makes it a great market for functional mushroom companies. According to data from market research firm Mordor Intelligence, the global functional mushroom market is set to reach $34.4 billion by 2024, with a compound annual growth rate (CAGR) of 8.04 percent. 

On the other hand, psychedelic mushrooms have to demonstrate results at least in a few clinical trials to receive FDA approval for entry into the pharmaceutical market. According to a study from researchers in the United Kingdom and Belgium, the average price to bring a new drug to the pharmaceutical market in the United States between 2009 and 2018 was $985.3 million. That means that the price for the development and testing of  psychedelic products, never mind getting them to consumers, is substantially higher than for the functional mushroom industry. According to Data Bridge Market research, the psychedelics market is expected to reach $6.85 billion by 2027 with a CAGR of 16.3 percent. The overall market valuation for psychedelics has increased since 2019 due their showing increased potential in treating mental disorders and depressions. 

Since functional mushrooms don’t have psychological or psychedelic effects on the mind, it’s easier for them to go on the market without any clinical trials, as long as manufacturers don’t claim that the product can treat, cure or prevent physical or mental diseases. For psychedelics companies that are looking for immediate legal revenue, the functional mushroom may be a better and faster way to achieve profits, while they wait for the clinical trials’ results.

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