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Elixinol: Will this Hemp Stock Benefit from Bold Expansion?

Elixinol On Thursday, Elixinol Global (OTC: ELLXF), a worldwide leader in hemp production and sales, released its second-quarter business update. The update came as a pleasant surprise to investors but will this hemp stock benefit from its bold expansion?

Focus on high-margin products, cash position improving

Elixinol: Will this Hemp Stock Benefit from Bold Expansion?

Through its new range of products blended with herbs and added health benefits, the company intends to reposition itself. It now wants to be perceived as a high margin branded CBD seller. Notably, the cannabis company has been consciously exiting the lower margin businesses.

In Q2, the company’s normalized unaudited revenue dropped 24% QoQ (quarter-on-quarter) to A$3.4 million. However, it is interesting that the revenue mix of the company tilted towards higher-margin Elixinol branded CBD consumer nutraceuticals.

The cash position of Elixinol is also improving. Elixinol reported an A$8.3 million reduction in quarterly operating cash outflow between Q4 of fiscal 2019 to Q2 of fiscal 2020. The company also sold its Nunyara land assets which resulted in an additional $2.6 million in liquidity.

Alliance with PharmaCann to sell CBD products in Australia

Elixinol: Will this Hemp Stock Benefit from Bold Expansion?

In one of the crucial developments post Q2, Elixinol Global entered into a new distribution agreement with cannabis wholesaler PharmaCann to sell its branded CBD products in Australia. PharmaCann has taken approval to import and sell Elixinol products in Australia under the Therapeutic Goods Administration’s (TGA) Special Access Scheme.

If TGA’s proposed de-scheduling of CBD comes through, i.e CBD is changed to schedule three, then users can purchase the drug over-the-counter at pharmacies. Currently, PharmaCann has a robust supply network across Australia and New Zealand, and Elixinol’s alliance with it will likely boost the pot company’s sales manifold.

Decision to retain HFA on the back of strong performance

Elixinol: Will this Hemp Stock Benefit from Bold Expansion?

In another development, after assessing a strong momentum in the operating performance of Hemp Food Australia, Elixinol has decided to retain it.

In February 2020, the pot producer has decided to offload its Hemp Food Arm in Australia to a subsidiary of Shanghai Shunho New Materials Technology. Elixinol only wanted to concentrate on its hemp-derived CBD market.

However, on evaluation, the division’s performance was found to be encouraging and hence the cannabis company doesn’t want to let go HFA. Elixinol now wants to fine-tune and optimize its operations for even better results.

New Group CEO to lead Elixinol

Besides focusing on expanding operations, Elixinol also has a fresh face at the helm. In April 2020, the management appointed Oliver Horn as the Group CEO. Horn previously led Swisse Wellness ANZ & North America. It now remains to be seen if the new CEO steers the pot company in the direction of further growth and development.

Elixinol’s growth trajectory

Elixinol seems to be on the right path to growth. Despite continued weakness in the cannabis segment, the hemp stock has the conviction to keep expanding its market. The company’s focus on high-margin goods is also likely to boost its bottom line. It has made some major decisions during the quarter. We are keen to watch the implications of these choices in the coming months.

Elixinol: Will this Hemp Stock Benefit from Bold Expansion?


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