Legalized cocaine is coming, says Canadian startup – 10/06/2023 – Market

A startup has just listed on the Canadian Stock Exchange with a business model based on a provocative prediction — legal cocaine is coming.

Safe Supply Streaming is betting on a so-called third wave of policy changes that would decriminalize hard drugs, following similar measures that have made marijuana and psychedelics more popular.

The startup plans to acquire companies that could benefit from this, such as makers of fentanyl test strips, addiction treatment clinics and energy drinks containing coca leaf, according to CEO Bill Panagiotakopoulos.

The company was valued at around US$8.6 million (R$44.4 million) at Wednesday’s close (4), based on its approximately 79 million shares, compared to a valuation of US$14 .6 million (R$75.4 million) in its most recent financing round.

Safe Supply has been presenting investors with estimates that legal cocaine in the Canadian province of British Columbia, which recently decriminalized the drug, could be a US$2.3 billion (R$11.8 billion) market.

Safe Supply’s founders are promoting a comprehensive vision of global decriminalization, supporting laws that would treat the sale of drugs like any normal product, making them regulated, sold and taxed — based on the belief that legalization would ease a drug crisis and would reduce overdose deaths.

In a presentation document whose cover features a young man balancing on a tree branch above a nighttime urban skyline, Safe Supply portrays its business plan as a way to “build a better world and help responsibly end the war on drugs”.

“We’re going to start building an ecosystem, get a market cap as a publicly traded company and start acquiring all these businesses that the general public hasn’t yet realized are narcotics businesses,” said Michael Astone, who sits on the board advisor to Safe Supply and is CEO of ArcStone Securities & Investments, one of the company’s backers.

Several governments have adopted the vision of legalizing hard drugs. Portugal decriminalized them in 2001, and the US state of Oregon followed suit in 2020. Earlier this year, British Columbia’s decriminalization experiment, which covers everything from heroin to methamphetamine, came into effect. And a few months ago, authorities in Bern, Switzerland, announced a pilot program to legalize the sale of cocaine.

Canada has a “safe supply” program aimed at preventing overdoses by supplying opioids, stimulants and other drugs. Canadian companies such as Lucy Scientific Discovery and Filament Health have disclosed agreements with Health Canada that allow for cocaine research.

However, there is no data to support the idea that a legal, regulated supply of cocaine would reduce the cost of overdose deaths. Even as Vancouver has introduced policies to make drug use safer, the city remains mired in an epidemic of drug addiction and crime.

Jason Hockenberry, department head at the Yale School of Public Health, said legalization would likely remove the stigma of drugs, encouraging experimentation, more widespread use and, eventually, addiction. “If you ask a person if they would try it, they might say no. But then they meet someone who says, ‘I do cocaine every Friday night,’ and that changes their mind,” he said.

Hockenberry was not familiar with Safe Supply Streaming. But he made an analogy based on the startup’s investment model. “If Anheuser-Busch or Bacardi suddenly said they would use some of their revenue to invest in Betty Ford clinics [de reabilitação]can you imagine the negative reaction?” he said. “That would never be accepted.”

Ronan Levy, former CEO of psychedelic company Field Trip Health & Wellness and member of Safe Supply’s advisory board, refuted this characterization. “We don’t see this as a conflict,” he said in an email response. “There is an immediate and growing need for new investment in treatment and recovery facilities.”

Safe Supply’s investors include Jonathan Goldman, heir to a Canadian real estate company, and Steve Arbib, founder of MedReleaf, a pioneering cannabis producer. Both invested in Safe Supply through a private offering, according to the company, and through stakes in Origin Therapeutics. Safe Supply announced a reverse takeover of Origin, a psychedelics company, earlier this month to go public.

Goldman did not return a message seeking comment, and Arbib declined to comment.

“We are talking to investors and family offices who have made money in cannabis and understand the narcotics trade,” Astone said. “Not everyone will believe a wave is coming.”