Ecofibre (EOF) $3; Elixinol Global (EXL) $3.04; ECS Botanics (ECS) 6.7 cents

The fastest route to the pot sector is not the medicinal or recreational sectors; rather, it’s the burgeoning market for hemp-based nutraceuticals since the US Hemp Farming Act Bill fully legalised hemp last year.

Ecofibre shares have tripled since listing at $1 apiece earlier this year, with a market cap approaching $1 billion. Ecofibre is also profitable, which affords it unicorn status in the ASX cannabis corner.

In the US, Ecofibre supplies hemp products under the Ananda Health banner to 3,200 pharmacies, while locally it produces grown and processed protein powders, de-hulled hemp seeds and hemp oil.

In 2016, the company abandoned its original remit of developing medical marijuana - a strategy shift that has paid off in spades.

Ecofibre posted $12.3 million of revenue in the June (fourth) quarter and generated cash of $3.2 million, taking the 2018-19 tally to $35.6 million of revenue (up 519%) and a $6 million profit (compared with a previous $8.6 million loss).

Elixinol sells hemp skincare and food products in 40 countries. Its Colorado-based business in the US is the country’s third biggest seller of hemp dietary products.

Here, Elixinol operates the Hemp Foods Australia brand. Through its subsidiary Nunyara, the company is also seeking an Australian medical cannabis cultivation and manufacturing licence.

In June, Elixinol raised $50 million in an institutional placement at $3.90 apiece. The funds will support the company’s plans to double the size of its Colorado facility.

The company reported June quarter revenue of $9.9 million, up 19% and a $19.3 million loss, reflecting an $11.5 million splurge on raw hemp inventories ahead of its US expansion.

The US Farm Act Bill is monumental not just for the legalisation aspect, but because hemp growers now should be able to access finance and insurance on the same basis as other agricultural producers.

Finally, industrial hemp play ECS Botanics quietly debuted last month in a $6.5 million compliance listing and despite this week’s market rout, investors have almost doubled their dough.

Hemp by the way is recognised as a rich source of proteins (amino acids), unsaturated fats, fibre and vitamins and minerals.

ECS chief Alex Keach says: “Everybody has been talking medical marijuana, but in our view the future is hemp and being ‘healthy but not high’”. 

tim@independentresearch.com.au

Disclaimer: Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.