The hold music for Hemp Foods Australia is the Banana Boat Song, set to the lyrics “me say hemp seed, tasty hemp seed is what we all need”.

It’s a bit of fun for a company about to join Australia’s ASX-listed cannabis companies.

Elixinol Global (ASX:EXL) hit the market at $1.75, up 75 per cent from its $1 issue price.

The company raised $20 million, giving it a pre-open market cap of $102.8 million.

The business will roll together Hemp Foods, US nutraceuticals company Elixinol, and a new medicinal cannabis venture which was the spur for a long-planned IPO.

The founder and CEO Paul Benhaim will retain control of 53.1 per cent of Elixinol Global, and 80.6 per cent of the register will remain in the hands of existing shareholders.

Bringing hemp to Australia
Mr Benhaim is a hemp veteran.

The Brit was deep in the UK hemp sector in the mid 1990s when he decided the time was right to set up in Australia in 1999.

“The company started in 1999 with the intention of producing hemp foods in Australia, but the legislation was not changed as soon as I thought it would,” he told Stockhead.

He was 19 years too early: the law changed to allow hemp food products here in November.

Paul Benhaim. Pic: Elixinol
Paul Benhaim. Pic: Elixinol


Hemp, unlike marijuana, only has small amounts of tetrahydrocannabinol (THC). The other listed hemp company in Australia is Queensland Bauxite (ASX:QBL) which has an investment in Medical Cannabis.

Mr Benhaim says Hemp Foods has the largest hemp production facility in the southern hemisphere, in NSW.

This will be the basis for ramping up food production as well as a foray into medical cannabis, plans for which he is still keeping under wraps.

Making money
Elixinol lists as a money-making venture, even though it still anticipates to make a $1.3 million loss in calendar 2017.

CFO Ron Dufficy says that without the corporate costs associated with listing, “the sum of the parts is in a profit making situation”.

The US business is based in Colorado, where marijuana is legal for recreational use, and sells hemp-derived cannabidiol-based products.

Cannabidiol (CBD) is one of at least 113 active cannabinoids identified in cannabis, but doesn’t have the intoxicating effects caused by THC.

The Australia-based hemp business was selling raw hemp materials, but now will be scaling a food production business.

In fiscal 2016, the US and Australian businesses threw off $9.6 million in revenue.

The IPO prospectus forecasts this to rise to $15.5 million in calendar 2017.

The US business is the largest money maker and while Australia is coming around to the idea of hemp foods and medical cannabis, the US is going in reverse, potentially threatening that revenue stream.

US Attorney General Jeff Sessions, a vocal opponent of legalised cannabis use, has rescinded memos from the Obama administration that allowed a federal hands-off approach to marijuana-friendly State laws.

Federal prosecutors will now be able to decide the degree to which they enforce federal marijuana law.

Mr Dufficy says they’ve been expecting this move for a while though, and doesn’t expect it to impact on the company.

On Thursday last week, Health Minister Greg Hunt said legislation to permit exports of Australian-made cannabis products would be introduced to Parliament in February.