Real Estate for Psychedelics

Psychedelic business is a term that was only whispered on the fringes of society not too long ago. But, today they are popping up all over the place and the founders of these companies are singing their messages from the rooftops. 

As the landscape shifts (literally and metaphorically), the needs of the psychedelic industry are growing, and people are scrambling to find solutions. The newest solution to one of the industry’s major problems is being addressed by Healing REIT– a Real Estate Investment Trust started by Cody Shandraw (President), Daniel Carcillo (COO), and Ty Zakovich (CEO).

The founders of Healing REIT were inspired by one question– where? Legal MDMA and psilocybin therapy are getting closer to becoming a reality. Oregon’s psilocybin program is already underway, and MDMA will likely gain FDA approval next year. But, where will these treatments take place?

A standard therapist’s office will not suffice for psychedelics. Those spaces are designed for an hour of talk therapy, not six hours of an intense mystical experience. Set and setting play a crucial role in the outcome of psychedelic therapy, and the spaces where these treatments take place must be designed with this in mind. A new type of therapeutic space is needed for this new type of treatment, and it’s needed fast. 

The legalization of psychedelics will not automatically give patients access. Therapists will first have to find suitable spaces for them to treat patients, and that poses a big challenge. It is difficult for psychedelic therapists to get access to the capital they need to build out these new spaces for several reasons.

People working within Oregon or Colorado’s legal frameworks, will not be able to get loans from a bank. Though psilocybin treatment will be legal in these states, it is still federally illegal. 

Banks will not be willing to do business with those working in the psychedelic industry because it could cause problems for them. This is exactly what has been happening with the recreational cannabis market. Cannabis companies have struggled to get loans and find places to put their money because few banks will work with them. The psychedelic industry is faced with the same issue. However, not all new clinics will be operating in this grey area.

Experts estimate that MAPS will gain FDA approval for the treatment of PTSD with MDMA in the next year. Once it is approved, people will be able to open up clinics that operate within a federally legal framework. However, it is unlikely that banks will start bankrolling these clinics before the FDA stamp of approval comes through. If therapists want to start treating patients as soon as it becomes legal, they will need outside investors to help them start building now– that is where Healing REIT comes in. 

A Real Estate Investment Trust (REIT) is a type of fund that invests in real estate for commercial use. It is popular with investors because they have historically outperformed the S&P 500 over the long term.

Healing REIT will be acquiring properties specifically for psychedelic clinics, as well as distribution, testing, and other needs in the industry. They will then rent them out through NNN leases. This will allow people who want to open clinics, and other psychedelic businesses, to focus their funds on building out the space and getting operations up and running.

Healing REIT officially launched a few weeks ago. The timing of this launch begs to answer another key question– when? There is a very small window of time between too early and too late. Start too early, and clinics aren’t able to bring in the revenue that they need to keep up with their lease. Start too late, and therapists are missing an opportunity to bring life-changing treatment to new patients. The founders of Healing REIT have been contemplating this problem for a while and decided that now is the time.

With MDMA therapy around the corner and Oregon’s legal psilocybin program going into effect last month, the fund is hitting the ground running. They are already looking at a twenty thousand-square-foot facility in Oregon for the fund’s first investment. 

Healing REIT’s founders, as well as Iter Investment’s Dustin Robinson, have put money into the fund. They are looking to raise between three and four million dollars in the first round. The goal is to have $87 million under management in a year and $500 million in three years. This is a steep goal, but given the exponentially increasing demand and lack of competition in this space, it may be possible. 

There are estimated to be 16 thousand new clinics for MDMA by 2031, and that number doesn’t account for additional ketamine and psilocybin clinics. There will be clinics that offer multiple psychedelic compounds as they become legal while some focus on just one type of treatment. The fund is offering a much-needed resource to meet the growing demand for psychedelic treatment while offering investors promising returns.

Healing REIT is focused on bringing psychedelic clinics to areas where interest in psychedelic treatment is high, but patients are unable to gain access. Their partnership with HealingMaps gives them a unique advantage in identifying geographical areas where demand is the highest. 

HealingMaps is a website that helps connect people to psychedelic therapy around the world. While helping people find treatment, it also collects valuable data on market demand. 

The data collected from HealingMaps shows that areas around VA hospitals have some of the highest search volumes in the US. Consequently, these are also the areas with the least access to psychedelic therapy. Healing REIT is using geographical search data to identify the best places to purchase real estate for clinics. 

This strategy will ensure that areas will the highest need for clinics are being targeted. It also ensures that clinics will have enough business to thrive, and as a result, the fund will have a reliable source of income from its properties. 

If successful, the work that Healing REIT is doing will be a win for everyone involved. If that isn’t a psychedelic business model, I don’t know what is.