Charlotte’s Web Holdings, Inc. (TSX:CWEB)(OTCQX:CWBHF) reported its final hemp planting for its 2019 growing season. The company said that in order to meet growing demand the total acres planted for 2019 has been increased to 862, an 187% increase from 300 acres planted in 2018.
“Interest and demand for our products has been exceptional and growing rapidly. Our 2019 planting strategy ensures we will have the required raw materials to deliver on production targets for Charlotte’s Web products through 2020 and into 2021,” stated Deanie Elsner, CEO of Charlotte’s Web. “Our leading CBD hemp varieties under cultivation today are the foundation of our 2020 production plan.”
Charlotte’s Web said it uses an inventory model where it grows more hemp than it needs for the subsequent year to minimize the impact of farming risks and product shortfalls against forecasted rapid market growth. Dried hemp can be stored for years, with even more longevity in its extracted form. In 2016, 2017 and 2018, the company produced 41,000 lbs., 63,000 lbs. and 675,000 lbs., respectively, of dried hemp biomass.
A few weeks ago the company reported its earnings for the first quarter with revenue growing 66% to $21.7 million. The net income though dropped to $2.3 million from last year’s $3.1 million. The company delivered earnings per share that fell to $0.03 and diluted EPS of $0.02 versus last year’s $0.04. Operating expenses doubled from last year’s $6.4 million to this year’s $13.2 million.
Charlotte’s Web cultivates hemp outdoors in various regions across the United States to hedge against potential weather risks and other crop-related impacts. Of the 862 acres planted, 166 (19%) are in Colorado, 325 (38%) are in Kentucky, and 371 (43%) are in Oregon. The Colorado farms are operated by the company’s cultivation team while farms in Kentucky and Oregon employ family-owned contract farmers, supporting the important American agricultural economy through hemp farming.
All acres are cultivated using natural farming methods. An active supporter of organic farming, up to 457 acres, or 53% of the total acres planted for 2019 are designated for USDA organic certification, with additional organic expansion planned in subsequent years.
The company said it grows several hemp varieties, all of which contain high levels of CBD content but only trace THC amounts of less than 0.3%. Hemp varieties with high CBD potency reduce the amount of biomass required for CBD extracts, allowing for responsible farming practices by maximizing the production of cannabinoids, terpenes, and other beneficial botanical compounds.