Although it has given back its gains now, the Elixinol Global Ltd (ASX: EXL) share price was a strong performer this afternoon.
At one stage the shares of the manufacturer and global distributor of industrial hemp based dietary supplement and skincare products were up as much as 4.5% to $4.18.
Why did the Elixinol Global share price charge higher?
Investors were buying the company’s shares this afternoon after it released a positive announcement relating to its wholly owned subsidiary, Nunyara Pharma.
According to the release, the Australian Office of Drug Control (ODC) has granted Nunyara Pharma a licence to manufacture medicinal cannabis for extracts and tinctures of cannabis and cannabis resin.
This is a step in the right direction for the company, but not the last licence that it will require.
Elixinol Global is still awaiting approval to receive its medicinal cannabis licence which will allow it to cultivate and produce cannabis for medicinal purposes.
The company’s new chief executive officer, Stratos Karousos, was very pleased with the news.
He said: “The granting of the Manufacture Licence is extremely exciting and we look forward to also being granted our Medicinal Cannabis Licence shortly which will complete our licence application process for Nunyara. The Board will continue with its review of capital allocation across all Elixinol Global businesses to deliver optimal value to our shareholders.”
In addition to this, the company also revealed that it is reviewing its capital requirements.
The release explains that: “The Board intends to review the capital required to support Nunyara’s ongoing growth in the Australian medicinal cannabis industry. Elixinol Global’s US CBD business continues to grow rapidly and provide extensive capital opportunities for the group to invest in. Further, the broader expansion of Elixinol Global’s CBD business in Europe remains a focus as the industry continues to evolve.”
Elsewhere in the industry, the high-flying Althea Group Holdings Ltd (ASX: AGH) has had its wings clipped today and is down 2% in late trade. Fellow cannabis company Cann Group Ltd (ASX: CAN) is trading 0.5% lower this afternoon.
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Motley Fool contributor James Mickleboro 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.