Hemp stock Elixinol debuts on ASX, shares surge more than 65%

Elixinol ASX EXL IPO debut hemp foods australia
Hemp seed product from Hemp Foods Australia.

Elixinol Global (ASX: EXL) has joined the ranks of other thriving “pot stocks” after it debuted on the ASX at A$1.00 per share and its stock price surged 75% to peak at A$1.75 in its first day of trade.

Under its initial public offering (IPO), the company issued 20 million shares at A$1.00 each to raise about A$20 million, which will fund the company’s planned growth and development of Australian-based facilities for cannabis cultivation, extraction and manufacturing.

As part of the offer, Elixinol Global will acquire Elixinol US, Elixinol Australia and Hemp Foods Australia which, combined, cultivate, manufacture and distribute hemp and medicinal cannabis-based products through the US, Australian and a multitude of other countries.

Elixinol US has been generating revenue for a few years through selling CBD-based nutraceutical products online, wholesale, retail, bulk and exports. IPO funds will assist the company with expanding its product line and entering vertical markets.

Meanwhile Hemp Foods Australia sells hemp-based products such as seeds, oil and protein powder via, online, wholesale and retail distribution platforms. Similar to Elixinol, IPO revenue will be used towards expanding product lines and market expansion.

Elixinol Australia is a start-up, which, once it is fully permitted and operational, will sell medicinal cannabis-based products to the Australian market.

During the 2017 financial year, Hemp Foods Australia achieved its first profit of A$2.9 million in revenue, while Elixinol US generated A$5.8 million in the January to June 2017 period.

Elixinol Group aims to become a vertically integrated business by working across the value chain to develop, grow, manufacture and distribute hemp-based nutraceuticals and food.

To remain in line with ever-changing market needs, the company will also conduct ongoing research and development, including clinical trials, to create new products and delivery systems.

Heading up the group will be former Primary Health Care chief financial officer Andrew Duff as non-executive chairman, Paul Benhaim as chief executive officer and Linda McLeod as managing director. Other directors include Stratos Karousos, Ron Dufficy and Gabriel Ettenson.

Global medicinal cannabis market

Elixinol Group joins a rapidly growing cannabis sector which is forecast to be valued at A$500 billion by 2029.

Driving the massive growth is the easing in medicinal cannabis restrictions across the world and increasing legalisation of recreational marijuana use in the US and Canada.

Elixinol Group is one of the latest small cap cannabis stocks to list on the ASX – with its debut well-timed to fit in with the Australian Federal Government’s announcement last week to permit exports of Australian manufactured medicinal cannabis products.

Detailed information on the global cannabis market and the ASX-listed cannabis stocks can be found in our guide.

By early afternoon trade, Elixinol Group’s share price had settled back to A$1.55 – up 55% on its IPO figure.

To find out which companies are planning to list on the ASX, visit our upcoming IPOs page.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.