The Elixinol Global Ltd (ASX: EXL) share price is on fire today, up more than 55% at the time of writing to 22 cents a share. The Elixinol share price closed at 14 cents a share last week, but opened this morning at 16 cents a share and has appreciated even more as the trading day continues. So who is Elixinol? And why are these shares blazing to new highs today?
Who is Elixinol Global?
Elixinol Global is an ASX cannabis company with a portfolio of worldwide operations. Its Australian offerings are limited to its subsidiary, Hemp Foods Australia Pty Ltd. Hemp Foods Australia focuses on manufacturing and wholesaling hemp-based foods, materials and products. However, its global offerings are more extensive.
Elixinol makes and sells both hemp and cannabidiol (CBD) products across the United States, Latin America, Europe and the United Kingdom, as well as in Japan and South Africa. The legal status of CBD (a component of psychoactive cannabis, but not industrial hemp in meaningful amounts) varies around the world, which means that Elixinol can only sell these products in certain markets (which doesn't include Australia at this time).
Elixinol is a dual-listed company, appearing on the ASX, as well as on the Over-the-Counter (OTC) markets in the US. It only IPOed on the ASX back in January 2018, where it hit the boards at $1.57 a share. Looking at that price, it's not hard to conclude Elixinol has had a rough trot since then. The company did have a boom of sorts, rising from the IPO price to a high of $4.58 in May 2019. However, even after today's rise, Elixinol shares are down roughly 95.5% from those highs.
Why is the Elixinol share price surging today?
Elixinol shares are not the only ASX cannabis shares on the rise today. It looks as though we are seeing a sector-wide move, which indicates some macro or external factors at play. To illustrate, Elixinol's fellow ASX cannabis company Cann Group Ltd (ASX: CAN)'s shares are up 6.25% to 34 cents a share, whilst THC Global Group Ltd (ASX: THC) shares are up 7.14% to 22 cents and Althea Group Holdings Ltd (ASX: AGH) shares are up 14.81% to 46 cents.
The external factor could be that several US states legalised either recreational or medical cannabis use in last week's elections. According to our Fool colleagues across the Pacific, the states of New Jersey, Arizona, Montana and South Dakota look to have successfully voted to legalise recreational use, while the conservative state of Mississippi has legalised cannabis for medical use only.
Following these results, it means that 15 out of the 50 states in the USA have now legalised recreational use, with 35 permitting medical use as well. Being the world's largest economy, it's not hard to view these developments as good news for ASX cannabis companies, and by extension, any cannabis company around the world.
An impressive quarterly update
However, the Elixinol share price is still vastly outperforming its peers in the cannabis space today. So what might explain this? Well, last week, the company posted a quarterly update to the markets, which might have gone unnoticed until today amidst the election drama.
In this update (covering the quarter ending 30 September), Elixinol told the markets that its quarterly revenue had grown by a hefty 18% compared with the previous quarter to $4 million. It also succeeded in slashing costs and cash outflow, which was at $3.5 million for the quarter, down from $6.2 million in the previous quarter, and down from $9 million in the quarter before that.
