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Why this top ASX cannabis share price has rocketed 90% higher in 2019

The Elixinol Ltd (ASX: EXL) share price has rocketed 90% higher so far this year and is a red hot option within the industrial hemp and medicinal cannabis industries.

What is fuelling the Elixinol share price this year?

The Elixinol share price has rocketed 90.4% so far this year to currently trade at $4.76 per share amid solid earnings and strong growth prospects for the company and sector as a whole.

Investors in the Elixinol IPO would have seen their investment increase by 156% in less than 18 months which tells me there’s something special about this Aussie cannabis stock.

The company’s largest division in the United States manufactures and sells hemp-based products to wholesale and retail customers and has been a key factor behind the $584 million market cap company.

Elixinol continues to focus on its three core business segments across both pharmaceuticals and household products, with product lines spanning dietary supplements, hemp foods and medicinal cannabis.

The Aussie hemp company is benefitting from heightened interest in the sector within Australia with further developments led by various governments and the potential for a Labor government to encourage more access across the country.

What has Elixinol recently announced?

Making the Elixinol share price surge even more amazing is the company’s recent dip following a mixed reaction to its Q1 2019 quarterly update.

Elixinol reported Q1 2019 group revenue of $8.2 million, representing a 21% increase on prior corresponding period (pcp) and a 31% quarter-on-quarter (QoQ) decline.

Management attributed the QoQ decline to the company’s decision to reduce the focus on low margin private label business in the US to enable increased capacity for the expected future growth of higher margin branded products and provide the ability to capture further market share.

The company’s regional highlights included the commencement of US national distribution sales beginning Q2 2019 following an initial order for 13 Elixinol branded CBD topical and dietary supplement products from a large ‘bricks and mortar’ national retailer initially across 330 stores with expectations of a rollout to more than 1,000 stores.

The industrial hemp and emerging medicinal cannabis company also reached a European promotional partnership agreement with Cambrian Alliance Group (UK) and received a purchase order for distribution in a popular UK high-end retail amongst other ongoing conversations.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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