Ann: Quarterly Report and Appendix 4C, page-19

EXL is making more revenue than any other ASX listed medical cannabis stock at the moment, but then again, they are not a medical cannabis stock.

Their partners in the USA (for EXL's purpose) produce industrial hemp.

And that Hemp, and Hemp Oil is not permitted to be sold in Australia, unless prescribed by a physician who is licensed by the Australian government to prescribe medical cannabis, and there are currently almost no (brave enough) physician's doing so.

Recently, a Canadian company with a view to establish medical clinics in Australia similar to Canada, was here investigating the possibilities, and signed an MOU with an Australian company, but after extensive research, everything was cancelled, because of current Australian government legislation.

The Australian government's anti-medical cannabis laws are so tight that it was impossible for them to see even a medium term future for a medical cannabis clinic in Australia that even remotely resembled the Canadian model.

So what does this tell you about the profitability of (potential) Australian medical cannabis companies in the medium term future. Don't kid yourself - there literally is no profitability here in Australia, and won't be for a long, long time.

Elixinol are lucky, they are selling 95% of their product from the USA.

However, all those profits are being wiped out by the losses in Australia, and by their (supposedly) poor business decision to attempt to become a medical cannabis company in Australia.

How many patients do you think Australia is going to have in the next decade, given the current government legislation, and how many companies do you think can make money out of that, when 2 of them in Australia have already partnered with the 2 biggest North American medical cannabis companies in the world.

Elixinol, in terms of medical cannabis, is dead in the water here, and will be flawed internationally if they go ahead and spend $30 million plus on a solo venture to develop growing facilities, laboratory facilities, medical facilities, and all the ancillary stuff and costs that come with it in such a conservative country like Australia. Pure business folly.

So what should they be doing?
They should be promoting and growing the North American business, and then moving into Germany and Europe.
The should continue to develop their CBD products for those countries, because they can't sell them in Australia (without a cannabis clinician), even though these products contain almost no THC (at only 0.2% approximately).
So paranoid is the Australian government, and so fearful of losing votes at the next election, that in 2017 it actually tightened the legislation to prohibit the import of Elixinol products, and other CBD products.

If EXL want to pursue such an expensive and non-productive exercise in Australia, then sure ... go ahead and get a medical cannabis license, but do it within a JV, with a large international company who has all the finance and facilities already in place, because EXL will not be able to compete against them down here in such a small Australian market, a market that will bring almost no profits compared to North America, South America, and Europe.

In the end, it will come down to how EXL waste (or save) their North American profits, and if they have the nouse to remove the (potential) blinkers, and make good sound business decisions based on quality research and the facts, and not on what we would all like to believe.

As for medical cannabis legislation, Australia is fearful, regressive and antiquated.

Gw