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

Safe Supply Streaming Co. is betting on a so-called third wave of policy changes that would decriminalize hard drugs, following similar measures making cannabis and psychedelics more mainstream. It plans to acquire companies that could benefit, such as fentanyl test-strip makers, addiction clinics and energy drinks containing coca leaf, according to chief executive Bill Panagiotakapoulos.

The company was valued at about $11.9 million as of Oct. 4’s close, based on its roughly 79 million shares, compared with a $20-million valuation in its most recent funding round. Safe Supply has pitched investors with estimates that legal cocaine in British Columbia, which recently decriminalized the drug, could be a US$3.2-billion market.

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

In a pitch deck 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 bring a responsible end to the drug war.”

“We’re going to start to build an ecosystem, go out as a beachhead, garner a market cap as a public company and start to acquire all these businesses that the general public hasn’t clued in yet are narcotics businesses,” said Michael Astone, who serves on Safe Supply’s advisory board and is chief executive of ArcStone Securities & Investments, one of the company’s financial backers.

Legalized hard drugs

A number of governments have embraced the vision of legalized hard drugs. Portugal decriminalized them in 2001, and the U.S. state of Oregon followed suit in 2020. At the start of this year, British Columbia’s decriminalization experiment, which covers everything from heroin to methamphetamine, went into effect. And a few months ago officials in Bern, Switzerland, announced a pilot program to legalize the sale of cocaine.

Canada has a “safe supply” program intended to prevent overdoses by supplying opioids, stimulants and other drugs. Canadian companies such as Lucy Scientific Discovery Inc. and Filament Health Corp. have touted agreements with Health Canada that let them research cocaine.

Yet there’s no data to support the idea that a legal, regulated supply of cocaine would stem the cost of overdose deaths. Even as Vancouver has introduced policies to make drug use safer, it remains mired in an addiction epidemic and drug-linked crime.

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

Hockenberry wasn’t familiar with Safe Supply Streaming. But he drew an analogy based on its investment model. “If Anheuser-Busch or Bacardi suddenly said it would take some of its revenue and invest in Betty Ford clinics, could you imagine the backlash?” he said. “It would never fly.”

Ronan Levy, the former chief executive officer of failed psychedelics company Field Trip Health & Wellness and a member of Safe Supply’s board of advisers, refuted that characterization. “We don’t see it as a conflict,” he said in an emailed response. “There is immediate and growing need for new investment in addiction and treatment facilities.”

Safe Supply’s investors include Jonathan Goldman, the scion of a Canadian real estate company, and Steve Arbib, who founded MedReleaf Corp., an early cannabis producer. Both invested in Safe Supply through a private placement, according to the company, and through stakes in Origin Therapeutics Holdings Inc. Safe Supply announced a reverse takeover of Origin, a psychedelics company, earlier this month in order to go public.

Goldman didn’t return a message seeking comment, and Arbib declined to comment.

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

Bloomberg.com