Somewhere up there (or down there, depending on your perspective), the late psychedelics guru Timothy Leary is smiling regarding the recent launch of the Defiance Next Gen Altered Experience ETF (PSY), the first U.S.-listed fund that taps into the nascent medicinal psychedelics market.

A growing body of scientific research points to the potential benefits of using psychedelics such as LSD, psilocybin (the element that powers “magic mushrooms”) and MDMA (the short-hand name for the chemical also known as ecstasy) to treat depression and post-traumatic stress disorder. The new PSY fund from Defiance ETFs tracks the BITA Medical Psychedelics, Cannabis, and Ketamine Index comprised of about 20 companies that get at least half of their revenue from activities related to psychedelics, cannabis and ketamine for medical purposes.

Ketamine is used in anesthesia, is an effective pain reliever when dispensed in low doses, and is now available in a U.S. Food and Drug Administration-approved product to help fight depression. But its hallucinogenic properties make it a recreational drug, and it can relax the body to such an extent that its misuse has been associated with date rape. As quoted in a published article a few years ago, John Abenstein, a Mayo Clinic anesthesiologist and former president of the American Society of Anesthesiologists, described ketamine this way: “Outside of the clinic, ketamine can cause tragedies, but in the right hands, it is a miracle.”

That summarizes the delicate balance involving substances that can both aid human health and titillate recreational drug users—or abusers. And that’s reflected in how the federal government regulates them.

Under the Controlled Substances Act, ketamine is a Schedule III drug that’s approved for medical purposes and is deemed to have moderate to low potential for physical and psychological dependence. LSD (lysergic acid diethylamide), psilocybin, MDMA and cannabis, on the other hand, are classified as Schedule I drugs with no currently accepted medical use and a high potential for abuse. It’s illegal to possess or distribute Schedule I drugs.

Of course, cannabis has been undergoing a regulatory sea change at the state level thanks to the growing acceptance of its palliative benefits for physical ailments. And it’s also gaining favor with state governments that see recreational marijuana as a potential financial jackpot. All of this is germane to the PSY fund, which despite its headline-grabbing psychedelics focus still has a heavy cannabis tilt. As such, its performance will likely depend in part on the vagaries of the marijuana trade until psychedelics become a bigger part of the portfolio.

As of mid-May, 36 states and four territories had approved medicinal marijuana use, according to the National Conference of State Legislatures. And 17 states, two territories and the District of Columbia had approved its recreational use. (These numbers are pending various court cases.)

To account for the fact that federal law still blacklists marijuana, the handful of U.S.-listed cannabis ETFs get around that largely by investing in Canadian-listed cannabis companies and/or in multistate operators, or MSOs, which are U.S.-based companies directly involved in the legal production and distribution of cannabis in states where it's approved. The major U.S. securities exchanges don’t list MSOs because they don’t want to run afoul of U.S. law, so MSOs are relegated to trading on the OTC market in the U.S. and/or on the Canadian Securities Exchange, an electronic stock exchange for micro-cap and emerging companies.

Nearly two-thirds of the PSY fund’s overall portfolio weighting by subsector is linked to the cannabis industry, and Canada is the portfolio’s largest country weight at almost 75%. But it’s the fund’s 35% psychedelic portion that sets it apart from the other U.S.-listed cannabis ETFs.

That portion includes a position in Compass Pathways, a British mental healthcare company with a patented synthetic form of psilocybin for use as an antidepressant. The company began trading on the Nasdaq market last October.

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