The shifting fortunes of corporate psychedelia
Finance and Society September 8, 2025 Peer reviewed DOI: 10.1017/fas.2025.10014 via OpenAlex
Summary
The for-profit psychedelic medicine sector experienced a boom from 2016 to late 2021, followed by a bust through late 2024. This cycle is best understood through capitalization, linking present valuations to investor expectations about future earnings. Psychedelic companies face intensified volatility due to murky intellectual property claims, unpredictable subjective experiences, and lingering cultural stigma. During the boom, venture capital and other investors were attracted by promises of revolutionary mental health treatments, but disappointing clinical trial results, regulatory setbacks, and doubts about standardizing therapies led to sharp declines in confidence.
Study at a glance
| Design | theoretical or philosophical paper |
|---|---|
| Key finding | The boom-bust cycle in for-profit psychedelic medicine is driven by capitalization dynamics and intensified by the unruliness of these substances as capitalized assets. |
Abstract
Abstract This article traces the shifting fortunes of for-profit psychedelic medicine through two phases: a boom from 2016 to late 2021, followed by a bust that continued through late 2024. It argues that the forces driving this cycle are best understood through the concept of capitalization, which links present valuations to investor expectations about future earnings. Engaging the capital-as-power framework, the article situates psychedelic companies within the broader biopharmaceutical sector, showing how the volatility of drug development is intensified by the unruliness of these substances as capitalized assets. This unruliness stems from a range of factors, including murky intellectual property claims, unpredictable and intense subjective experiences, and lingering cultural stigma. During the boom, firms attracted significant interest from venture capital and other investors by promising revolutionary breakthroughs in mental health treatment. As expectations rose, so did valuations. But disappointing results from clinical trials, regulatory setbacks, and deepening doubts about the ability to control and standardize psychedelic therapies led to sharp declines in investor confidence. Analyzing financial performance alongside investor narratives, the article underscores the tensions involved in subjecting these unruly substances to the logic of capitalist power.