Charlotte's Web Archives - Green Market Report

Debra BorchardtMay 16, 2022
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7min4640

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) reported financial results for the first quarter ending March 31, 2022 as net revenue fell 17% to $19.4 million versus $23.4 million for the same time period in 2021. Sales also fell sequentially from the fourth quarter’s revenues of $24.8 million and greatly missed the estimates from Yahoo Finance for sales of $27 million. Charlotte’s Web said the decrease was partly due to a temporary closure of its production and shipping terminal in January after a local wildfire in Boulder County.

The net losses were trimmed to $8 million from last year’s net loss of $12 million. The company has also been trying to right-size itself as revenues continue to fall. Total selling, general and administrative of $20.4 million was reduced by 14.4% year-over-year. “The $3.4 reduction versus Q1-2021 was primarily the result of actions taken in late 2021 and early 2022 to bring expenses in line with current revenue levels to support a return to positive cash flow.”

“While our e-commerce traffic was lower compared to prior periods, subscriptions more than doubled since Q1-2021. With e-commerce revenue down $3.0 million year-over-year, rebuilding traffic and conversions remain key priorities for us in e-commerce, which is our largest revenue channel,” said Jacques Tortoroli, Chief Executive Officer. “In our retail business, shipping was disrupted in January due to a two-week closure after a local wildfire in Boulder County. Despite the slow start, the overall business improved through the quarter with March being the largest revenue month of the quarter. The quarter did not benefit from our new retail sales organization which was put in place in April.”

Revenue Breakdown

Charlotte’s Web said the direct-to-consumer (“DTC”) eCommerce revenue was $13.1 million, a decrease of $3.0 million or 18.5% year-over-year. The decrease was attributed to lower traffic to the online store, wildfire shipping delays, and an industry-wide consumer shift to lower-priced CBD products; primarily gummies and topical products, where Charlotte’s Web is the market share leader. New DTC subscriptions increased 107% year-over-year and eCommerce conversion rates were strong at 14.2%. Charlotte’s Web maintains the largest e-commerce business in the CBD industry. DTC sales contributed 67.9% of the Company’s total net revenue in Q1-2022.

Business-to-business (“B2B”) revenue was $6.2 million$1.1 million or 14.6% lower year-over-year with reduced shipments to some of the Company’s largest retail customers after the warehouse closure and some supply chain challenges on top-selling CBD Clinic SKUs. This was partially offset by new retail distribution in grocery, natural, and pet retail, following the passing of Assembly Bill 45 in California.

“Our December/January reorganization reduced complexity and reduced SG&A expenses by more than $20.0 million on an annualized basis,” said Lindsey Jensen, Chief Financial Offer. “This resulted in improved gross margin percentage, lower operating expenses, and improved EBITDA(1) for Q1-2022 compared to the same quarter of 2021. We used $4.7 million in operating cash in the quarter with the majority of this occurring in January. In the quarter we received $0.5 million against our $10.8 million IRS receivable that we started the year with, and an additional $2.7 million has been collected since March 31 through the date of this press release. We continue to steward the use of cash while furthering our product rationalization to lower complexity and costs across our operations.”

International Update

Progress continued in key international markets. In the U.K., the Company achieved a milestone becoming one of the first companies to receive validation of its Novel Food applications from the UK Food Standards Agency (“FSA”) for full-spectrum hemp extracts in the United Kingdom. The milestone adds Charlotte’s Web to the FSA’s list of products allowed to be sold in the UK. The Company’s Novel Foods applications for the European Union were also validated during the quarter and are now proceeding through the safety evaluation process. In Canada, the Company is in discussions for extraction and distribution to bring to market Charlotte’s Web’s first international hemp harvest, which is anticipated for later this year. In Israel, the Company believes the regulatory environment for CBD sales in retail outlets continues to move forward. Charlotte’s Web expects to begin filing product registrations in the coming months through its Israeli partner, Intercure, with the Company’s first bulk product shipment anticipated in the second half of the year.

Debra BorchardtMarch 24, 2022
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5min6410

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) reported that fourth-quarter revenue fell 7.8 % to $24.8 million from $26.9 million for the same time period in 2020. This missed the Yahoo Finance average analyst estimate for revenues of $27 million.

The company blamed the drop on sales and channel mixes and competitive DTC pricing. The net loss for the quarter was an eye-popping $118 million or ($0.86) per share. This missed the analyst estimates for a loss of ($0.05) per share. Charlotte’s Web said it recognized impairments of $76 million related to goodwill and $22 million related to customer relationships, trade names, and other long-lived assets. The impairments were primarily triggered as a result of the decrease in the company’s market capitalization in the fourth quarter of 2021. This resulted in impairment charges of $98 million which were factored into the net losses.

Fourth-quarter DTC net revenue was 12.1% lower year-over-year due to product mix and lower-than-expected online sales during the December holiday season. New DTC subscriptions increased 116% year-over-year and e-commerce conversion rates were strong at 11.8%. DTC accounted for 62% of total revenue in the fourth quarter of 2021 versus 65% for the same period in 2020.

“At the beginning of 2022, we took organizational actions, better-aligned leadership, and employees with shareholder interests, and simplified our business for focus, speed, and executional excellence. Our organization is fully engaged and we intend to grow our business,” said Jacques Tortoroli, Chief Executive Officer of Charlotte’s Web. “We have substantially completed our multi-year investment in our production capacity to effectively service a sophisticated mass retail channel when federal regulations are set for the CBD wellness category in the U.S. In the interim, regardless of regulatory actions, we are focused on developing sustainable revenue growth with our current customers and through new customer acquisitions, and new channels, as well as selective innovation in new products, and international market expansion.”

Full Year Results

For the full year of 2021, net revenue grew 1.0%, to $96.1 million. The net loss for the year was $137 million versus 2020’s net loss of $30 million. The company said that growth for 2021 from increased unit sales volumes was largely offset by an industry-wide consumer shift to lower-priced CBD products; primarily gummies and topical products, where Charlotte’s Web is the market share leader.

Direct-to-consumer (“DTC”) e-commerce revenue decreased 2.3% year-over-year to $62.3 million while business-to-business (“B2B”) revenue grew 7.5%, to $33.8 million, increasing the company’s leading market share position in total food/drug/mass retail (“F/D/M”), and U.S. natural specialty retail. Charlotte’s Web said it maintains the largest e-commerce business in the CBD industry and outperformed the overall DTC category. Gummies and topical products represented 31% and 19% of gross sales for the company in 2021 respectively, versus 22% and 14% in 2020. DTC sales contributed 65% of the Company’s total net revenue in 2021 and B2B retail contributed 35%, versus 67% and 33% in 2020.

The adjusted EBITDA loss for the fourth quarter was $4.5 million, or 18.1% of net revenue, as compared to Adjusted EBITDA loss of $3.1 million, or 11.5% of consolidated revenue, for the fourth quarter of 2020. The higher loss is primarily due to lower gross profit as well as lower net revenue.

 


Debra BorchardtJanuary 18, 2022
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4min11490

National supplements retailer GNC is going to start selling Charlotte’s Web Holdings (OTC: CWBHF), Inc. full spectrum hemp extract products. Initial shipments of six varieties of Charlotte’s Web Gummies will be available for purchase at GNC retail locations across 24 states, with the intent to expand into additional states.

“To best reach and serve consumers we rely, in part, on strong partnerships with proven mass retail partners,” said Jacques Tortoroli, Chief Executive Officer of Charlotte’s Web. “GNC’s established retail footprint adds depth to our reach domestically and broadens consumer access to our high-quality hemp CBD products. We expect GNC will become one of our largest retail customers this year, and we are excited about the growth provided by bringing our two leading brands together.”

This is welcome news for the CBD company that has seen its fortunes come and go. As one of the original leaders in the medical marijuana space, Charlotte’s Web had the largest market share of any CBD company. However, extreme competition cut into its lead along with a lack of direction from the FDA on how to label and market CBD products. The company announced a corporate reorganization last week and has struggled to maintain its market share and reduce costs.

GNC is also no stranger to challenges. The company faced bankruptcy and was acquired by Harman Pharmaceutical group. It closed about 40% of its stores and sales fell by almost 60%. It named a new CEO and CFO as the company emerges from Chapter 11.

Charlotte’s Web Gummies are made with full-spectrum hemp extract from its patented hemp cultivars. Vegan and non-GMO, Charlotte’s Web extracts contain the naturally occurring phytocannabinoid cannabidiol (“CBD”), plus terpenes, flavonoids, and other beneficial hemp compounds. Charlotte’s Web Gummies are developed with superior formulations using high-quality hemp extract enhanced with functional herbs and botanical supplements that work in synergy to further support targeted wellness needs.

Charlotte’s Web gummy options available at GNC include:

  • Charlotte’s Web DAILY WELLNESS: Full-spectrum hemp extract with 15mg of CBD per serving to support everyday use. (Raspberry Lime flavor)
  • Charlotte’s Web SLEEP: Full-spectrum hemp extract with 10 mg of CBD and 3mg of melatonin to support restful sleep*. (Raspberry flavor)
  • Charlotte’s Web CALM: Full-spectrum hemp extract with 10 mg of CBD, and 75mg of lemon balm to support everyday stresses and feel relaxed, but not sleepy*. (Lemon Lime flavor)
  • Charlotte’s Web RECOVERY: Full-spectrum hemp extract with 10 mg of CBD, 25mg of ginger, and 50mg curcuminoids for exercise and active lifestyles to support your body’s healthy inflammatory response and target joint health*. (Ginger flavor)
  • Charlotte’s Web IMMUNITY: Full-spectrum hemp extract with 10mg CBD, 90mg Vitamin C from organic acerola extract and ascorbic acid, 20 mcg vegan Vitamin D3, and 70mg organic Astragalus root to support immune function*. (Lemon Berry flavor)
  • Charlotte’s Web THC-FREE: Broad-spectrum extract with beneficial hemp phytocompounds including 15mg CBD per serving to support everyday wellness, whether on the job or at home. (Mango Peach flavor)

Debra BorchardtDecember 2, 2021
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9min15570

Despite the controversy over Delta-8, sales are beating some popular CBD companies. Hemp Benchmarks has been following the price of Delta-8 within the hemp industry and recently highlighted the company LFTD Partners (OTC: LSFP), whose sales rival many established CBD companies. 

CBD Fever Dreams

When the Farm Bill was passed in 2018, there were high hopes for the CBD industry and in particular for the hemp farmers. Hundreds of acres were grown, but the huge demand for CBD never materialized. There was demand, to be sure, but not at the levels the market had anticipated. This resulted in a glut of CBD biomass in the market and prices plunged. Farmers plowed over crops instead of harvesting due to the cost and many dramatically reduced the acres of hemp they were growing. 

Delta-8 Growth

Then Delta-8 came along and the farmers began to find a new market for their crops. It was discovered that within the language of the Farm Bill, only Delta-9 cannabis was carved out as an adult-use THC product, leaving Delta-8 in a grey area. Delta-8 is often referred to as cannabis light in that the psychoactive response is milder than Delta 9 cannabis. It is also extracted from hemp as opposed to the regular cannabis that produces the typical THC product. This loophole caught many off guard and with little regulation or oversight, the product began to take off. 

Several states have banned the product from being sold due to the lack of oversight. The cannabis industry seems mixed on whether it supports the product or not. Some are happy that it has helped out hemp farmers, while others see it as competition that isn’t subject to the same onerous regulations. In addition to that, the FDA noted that it has received several troubling reports on Delta-8. Seeing a Delta-8 company beat a highly regulated CBD company in revenue has got to hurt.

Lifted Made

LFTD Partners also known as Lifted Made, manufactures and sells branded products containing hemp-derived cannabinoids (e.g. delta-8-THC, delta-9-THC, delta-10-THC, THCV, THCO, CBDA, CBC, CBG, CBN, CBD), e-liquid, disposable nicotine vapes, kratom and kava products. In February 2020, LSFP acquired 100% of Warrender Enterprise Inc. d/b/a Lifted Made (formerly d/b/a Lifted Liquids). It recently announced that it was expanding its operations for the fourth time during the last 18 months, leasing an additional 8,000 square feet in a third building in Kenosha, WI. LSFP has also signed a letter of intent to acquire Savage Enterprises, owner of award-winning hemp-derived products brand Delta Extrax, sub-brand Chronix, Savage CBD, male enhancement products brand Vix, kratom and kava-based products brand Kanna, and plans to enter the California marijuana industry by purchasing Premier Greens LLC and MKRC Holdings, LLC. 

Two weeks ago, the company reported its third-quarter revenue had risen 32% to $8.8 million and net income grew by 40% to $2.2 million. Savage reported that it had revenues of $20 million in the third quarter, but doesn’t look to have Delta-8 products in its portfolio. Still, the pro-forma of the combined companies puts it near a $30 million quarter. 

CBD Companies Struggle

CBD brands have struggled under the massive amount of money it took to get established only to see competition muddy the landscape. CBD was being sold at grocery stores and gas stations. Consumers had no idea whether the cheap CBD at the gas station was the same, better, or worse than more reputable brands. With major restrictions on what CBD companies could say about themselves, consumers couldn’t even do their own research. Websites remain vague and companies that attempt to give consumers as much information as possible often get slapped by the FDA for making claims they can’t support with medical research. 

This year, a well-respected brand Plus Products essentially went bankrupt. Aligning itself with a major celebrity like John Legend didn’t help as the company became overwhelmed with debt. The stock has quit trading as the company restructures. In its last earnings report, Plus only delivered revenues of $4 million for the second quarter. 

While Charlotte’s Web (OTC: CWBHF) reported revenues of $23 million in the most recent third-quarter earnings report, this was down from 2020’s third-quarter revenue of $25 million. Another CBD with a large market share, CV Sciences (OTC: CVSI) reported that sales for the third quarter of 2021 were $5.1 million, which dropped 8% from $5.6 million in the third quarter of 2020. 

FDA Warns About Delta-8

In September, the Food & Drug Administration (FDA) issued a warning about Delta-8 THC noting that the product hasn’t been evaluated or approved by the agency. Granted the FDA’s opinion on anything cannabis-related is received with a healthy dose of skepticism. The FDA still hasn’t made any determination on CBD after years of discussion and research. In the warning notice, the FDA said that from December 2020 through July 2021, it had received adverse event reports from both consumers and law enforcement describing 22 patients who consumed delta-8 THC products and 14 went to a hospital or emergency room for treatment. 19 of these patients said they had eaten delta-8 THC food products. The adverse events included vomiting, hallucinations, trouble standing, and loss of consciousness. In addition to that, the FDA said that the national poison control centers received 661 exposure cases of delta-8 THC products between January 2018 and July 31, 2021, 660 of which occurred between January 1, 2021, and July 31, 2021. Of the 661 exposure cases:

  • 41% involved unintentional exposure to delta-8 THC and 77% of these unintentional exposures affected pediatric patients less than 18 years of age.
  • 39% involved pediatric patients less than 18 years of age
  • 18% required hospitalizations, including children who required intensive care unit (ICU) admission following exposure to these products.

In Closing

CBD companies were already facing a tsunami of challenges and the onslaught of the Delta-8 products has only added to those troubles. Until the cannabis industry decides to take a position on Delta-8, one way or the other, it is likely the CBD-only companies will have to find new ways to succeed. The patchwork approach by some states banning the product, while others allow it only creates more chaos for consumers. In the meantime, it looks as if the lack of regulations and customer demand will keep Delta-8 companies in business and possibly more successful than the CBD companies who are trying to play by the rules.


StaffAugust 13, 2021
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8min16221

Charlotte’s Web (OTC: CWBHF) CEO Deanie Elsner addressed the company’s recent rejection letter by the FDA in the company’s earnings call on Thursday. Since the passage of the 2018 Farm Bill that legalized hemp, the issue of CBD products has remained in a grey area. The FDA has had several public meetings and accepted public comments on the subject, but it still hasn’t made any specific decisions.

Charlotte’s Web was specifically focused on a regulatory pathway for full spectrum hemp extract with naturally occurring CBD. CBD products remain unregulated as the industry has grown to become a $3 billion to $4 billion industry.

FDA Punts To Congress

“After 2.5 years, it has become increasingly more apparent that in the FDA’s own words, potential legislation might be appropriate to enable a framework for under which the FDA can regulate full spectrum hemp extracts as dietary supplements,” said Elsner. “During the second quarter of 2021, we put this thesis to test by formally submitting a new dietary ingredient notification to the FDA for our full spectrum hemp extract as they have been recommending. The FDA responded with an objection letter to our NDI notification. Their response substantially based on their drug preclusion provision reveals that legislation is required to enable the FDA to establish a regulatory oversight for full spectrum hemp extracts as dietary supplements. Both the House and the Senate have introduced bills that would recognize hemp CBD as a dietary supplement and we are encouraged by this progress.”

When asked about the specifics of the letter, Elsner went on to say, “I will start with we were disappointed and strongly disagreed with not just the conclusion that they advanced, but the reasoning for their conclusions, because their letter back to us contained a significant amount of factual inaccuracies. And so the first thing I would tell you to do is on our website in the IR section, we have posted our response to the FDA. And we laid out an excruciating detail why we think they need to create the record in terms of what we submitted and what they concluded.

Now, that said, they drew a conclusion based on two examples. One was, they can’t move forward with an NDI as a dietary supplement because CBD is precluded, because it’s already a drug. And as you know, six months prior to the hemp bill being signed into law in December 2018, a drug was approved that’s CBD isolate. The second reason why they objected to our NDI was that they expressed safety concerns. And I think that’s the part that we are looking for a correction on, because regarding safety, the conclusions drawn just don’t appear to be based on the data we provided in our NDI. So, that’s we are trying to get focused on. In terms of what does it mean, I think what you are getting to is, it is the industry has been caught in a little bit of a catch-22, because the FDA has not been clear about the process by which they want companies to go through to gain regulatory clarity. And Congress has been pointing to the FDA to take responsibility for this.

And so our decision was full transparency, to force the issue to see who has the next decision. And with the FDA objecting to our NDI, it becomes very clear that the regulatory process to get established has to start with Congress, legislative and the FDA to regulate the dietary supplement for CBD, and then FDA can regulate within. And so I am confident there is a way to do this. Over the last 18 months, we have met with the FDA, about eight to ten different times and our meetings were very constructive. I have got a great deal of respect for the FDA. But I think they are in a bit of a catch-22, because they have approved the drug. And they can’t seem to move away from that precedent. And so Congress has to act. And I think once Congress acts, the FDA can be very clear about the process. The process is scientific. It’s intense. There is a ton of data that we have got to do to submit for it. And I feel really good having gone through this knowing what they are looking for. But now we need Congress to act. And when that happens, I think the category will be able to submit NDIs and the whole thing will begin to open up.”

THC Challenge

Elsner was asked whether relying on Congress would be any better and she answered, “This is not just a CBD hemp industry challenge. This is a THC sector challenge, because we are going through with hemp extracts with naturally occurring CBD is exactly what the cannabis industry is going to have to do following us. And so this is not Congress, maybe or maybe not engaging on the hemp CBD industry. This is Congress looking at a category today, that is roughly $17 billion to $20 billion in total in the US across 11 states where cannabis is legal and CBD participates. And so some kind of resolution has to be landed for how both of these categories are regulated. And the FDA has to have clarity and perspective about how they want companies to produce safe products for consumers in a way that is holding manufacturers to a very high level of standard. And so we are doing this for ourselves, but doing this for our category. We are doing this in support of our consumers. But it’s the whole sector that is going to put the pressure for Congress to act and push the FDA to move forward. And we will continue to push both fronts.”


Debra BorchardtAugust 12, 2021
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7min9310

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) reported financial results for the second quarter ending June 30, 2021 with consolidated revenue increasing 11.4% year-over-year to $24.2 million. This missed the Yahoo Finance average analyst estimate for revenues of $28 million. Charlotte’s Web said that increased retail volumes have resulted in ongoing incremental quarterly gains in retail market share. Charlotte’s Web grew its number one market share across its core retail channels, including total US Food/Drug/Mass retail, total US natural specialty retail.

Net losses were trimmed to $5.3 million from last year’s $14.4 million. The earnings per share were ($0.04) which fell from last year’s ($0.13). It also beat the estimates for ($0.05).

“The ongoing economic recovery from the pandemic that began in Q1 strengthened through the second quarter, driving a 38% increase in our retail revenue as many consumers transitioned from online shopping back to brick and mortar retail. This was especially evident within our largest and most established medical and healthcare practitioner channels,” said Deanie Elsner, CEO of Charlotte’s Web. “We believe we are best positioned to take advantage of the return to brick and mortar retail as we hold the number one share position in the food/drug/mass and natural specialty retail channels in the US.  Internationally, we recently planted our first hemp crop in Canada and anticipate initial product sales by early 2022.”

In disappointing news, Law360 reported that the U.S. Food and Drug Administration released a letter on Wednesday telling Charlotte’s Web that it can’t put a cannabidiol product on the market as a dietary supplement, suggesting that CBD reform may have to wait for congressional action. The site said, “The agency told Charlotte’s Web that it won’t sign off on its application to market its “Full Spectrum Hemp Extract” because CBD is already the active ingredient in the company’s epilepsy treatment Epidiolex, the first and so far only FDA-approved cannabis-derived drug, according to the letter dated July 21. It has been the FDA’s stance since the 2018 farm bill removed hemp from the Controlled Substances Act that CBD can’t be used in foods since it’s a drug product.”

Law360 said the letter stated that while Charlotte’s Web submitted a study showing that there were no observable adverse effects from the CBD product, it did not supply the underlying data that the FDA requested, according to the letter. “In addition, none of the provided studies addressed the issue of whether CBD affects the liver or the reproductive system, according to the letter.”

Revenue Growth

The company noted that the consolidated business-to-business (“B2B”) revenue increased 37.7% year-over-year reflecting consumers returning to brick & mortar retail shopping following the economic reopening from pandemic lockdowns. Similarly, B2B healthcare practitioner (“HCP”) and medical channels experienced increased activity and revenue, additionally supported by the company’s acquisition of Abacus Health in June 2020. The direct-to-consumer (“DTC”)  eCommerce net sales grew by 1.0% year-over-year, reflecting some consumer transition back to retail shopping. Year-over-year new subscriptions increased 43% and conversion rates increased 27%. DTC accounted for  64.9% of total revenue in the second quarter of 2021 versus 71.6% for the same period in 2020.

Expenses Improve

Operating expenses were $25.0 million, a 15.2% year-over-year improvement from $29.5 million. In response to lower B2B retail sales during the pandemic,  management took actions in the fourth quarter to better align operating expenses through an expense optimization program targeting reductions of more than 10% of the third-quarter consolidated expense run rate. Operating expenses reductions for the first half of 2021 were ahead of plan and were achieved despite incurring the additional operating expenses from the CW Labs R&D division as well as the acquisition of Abacus Health, which were not present for the full first six months of 2020.

Adjusted EBITDA for the quarter was negative $3.9 million, or (16.3)% of consolidated revenue, a 31.1% improvement from negative Adjusted EBITDA of $5.7 million, or (26.6)% of consolidated revenue, for the second quarter of 2020.

Balance Sheet and Cash Flow

The company used $6.5 million of cash in operations during the second quarter of 2021 compared to $7.1 million of cash used in operations during the second quarter of 2020. The company’s cash and working capital on June 30, 2021, were $27.1 million and $90.1 million, respectively, compared to $52.8 million and $113.6 million on December 31, 2020Charlotte’s Web has a near-term IRS tax receivable of $10.9 million and maintains an unused $10 million line of credit with JPMorgan, with an opportunity to extend to $20 million.


Kaitlin DomangueMay 18, 2021
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6min69282

Brightfield Releases New CBD Report

Cannabis and CBD consumer data analytics company, The Brightfield Group, is announcing the release of their newest report analyzing the CBD market in 2020 and laying out their predictions for 2021. Some key information from the report includes: 

  • U.S. hemp-derived CBD sales are expected to reach $5.3 in 2021, up 15% from 2020’s $4.6 billion
  • By 2026, American CBD sales will reach $16 billion, driven by accelerated growth of ingestible products
  • Drinks and gummies are expected to be the fastest growing product types in 2021, with 71% and 44% value growth, respectively
  • Tinctures will retain the highest share of the market in 2021, holding 18% of retail sales
  • Online sales will surpass $2 billion in 2021, accounting for 38% of the total American CBD market

The report also highlights the coronavirus pandemic’s impact on the American CBD market, the FDA’s stance on regulating CBD in 2021, and various other pieces of information about the rapidly expanding market. The Brightfield Group predicts the hemp-derived CBD market will grow at a compound annual growth rate (CAGR) of 25% from 2021 to 2026, with growth driven by: 

  • New consumers 
  • Expanding retail into new channels
  • A regulatory framework from the FDA, accelerating the growth rate of ingestibles
  • New players to bring innovation to the market

Price and Potency Changes

According to aggregate data from Hemp Benchmarks, the Brightfield Group’s report says the aggregate assessed price for hemp CBD biomass declined by a whopping 82% from April 2019 to May 2020, taking the price from $38 a pound to just $7 per pound. 

While the coronavirus pandemic surely played a part in this, you have to wonder if the newly-established American CBD industry in 2019 played a role in the price per pound during that time. It was a hot market, performing beautifully and faster than anticipated, thanks to the federal government removing hemp from the Schedule I Substances list in 2018. The hemp space in 2019 is a tough year to compete with, and throw a global pandemic on top just one year later: you might see some lower hemp prices than average. 

  • 30 ML tinctures saw, on average, a 33% potency increase, going from 450 to 600 milligrams of CBD. The price dropped from $25 to $20. 
  • 120 ML tinctures saw, on average, a 33% potency increase, going from 1800 to 2400 milligrams of CBD. The price dropped from $70 to $60. 

Innovation 

In typical cannabis industry fashion, the CBD market is ahead of innovation and constantly thinking of new ways to keep customers satisfied. However, CBD brands are going beyond wacky flavors and new designs: the companies are focusing on functional ingredients that will make a difference for the consumer. 

Immunity is a huge focus for the CBD space in 2021, and 2020 saw the same thing. Ingredients like elderberry, echinacea, Vitamin C, and zinc are popular choices for consumers. Minor cannabinoids like CBG and CBN are still hot for 2021, tapping into the entourage effect full-spectrum cannabis products provide us. 

Top CBD Companies in Q4 

In terms of market share, here were the leading CBD companies during the last quarter of 2020: 

  1. Charlotte’s Web (3.6%)
  2. Medterra (1.7%)
  3. cbdMD (1.6%)
  4. CBDfx (1.5%)
  5. CBDistillery (1.2%)

The report listed 20 CBD companies, others include: CBD American Shaman, Bluebird Botanicals, Garden of Life, Ananda Hemp, and Martha Stewart CBD. 

Distribution Channels

Online CBD sales are expected to reach $2.02 billion in 2021, accounting for 38% of the total market. This is down slightly from 42% in 2020, but it’s a good sign that things might be returning to the beginning of normalcy as people return to in-person retail shopping. Curbside and contactless options are still available in many places, which might contribute to this number. E-commerce will dominate the distribution market in 2021, with pharmacy following behind it, then CBD speciality retailers, natural food stores, pet stores, and more.


Debra BorchardtMay 11, 2021
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4min12281

Charlotte’s Web Holdings, Inc. (OTCQX: CWBHF) reported financial results for the first quarter ended March 31, 2021, as revenue increased 9.1% to $23.4 million. This missed the average analyst estimate for $27 million from Yahoo Finance. Charlotte’s Web said DTC eCommerce net sales increased 14.5% reflecting increased marketing, targeted promotions as well as incremental demand for the company’s new topical and THC-free ingestible products.

The net losses increased to $13.9 million over last year’s $11.5 million for the same time period. The net loss per share was $0.10, which was also higher than the average analyst estimate for an net loss per share of ($0.05).

“Despite reduced retail activity due to the pandemic, our directly comparable B2B retail sales showed year-over-year growth. Our B2B retail sales and velocities further strengthened in March and April as US vaccination programs support reopening of the economy, and our DTC sales continued to grow demonstrating long-term secular strength for our products in the e-commerce channel,” said Deanie Elsner, CEO of Charlotte’s Web. “We continued to expand our leading market position with quarterly market share gains across all of our channels. Internationally we have made our first moves into Israel and Canada with initial product sales planned for early 2022. We are pleased with our progress and believe that Charlotte’s Web is well-positioned to drive continued growth in the US and new growth in key international markets as we expand outside of the US.”

Expenses Rise

The company also reported its operating expenses rose 2.9% to $24.0 million over last year’s $23.3 million. the company said that in response to lower B2B retail sales during the pandemic, management took actions in the fourth quarter to better align operating expenses through an expense optimization program targeting reductions of more than 10% of the Q3-2020 consolidated expense run rate. First-quarter operating expenses were 15.2% lower compared to the third quarter of 2020, ahead of plan, and were achieved despite the additional expenses in the quarter from the CW Labs R&D division and the acquisition of Abacus Health, which were not present for the full quarter in Q1-2020.

Adjusted EBITDA for the quarter was negative $4.7 million, or (19.9)% of consolidated revenue, compared to negative EBITDA of $5.7 million, or (26.5)% of revenue, for the first quarter of 2020.

Cash Burn

Charlotte’s Web cash and working capital at the end of the quarter was $35.0 million down from last year’s $52.8 million for the same time period. The company said it used $7.7 million of cash in operations during the first quarter of 2021 compared to $14.9 million of cash used in operations during the first quarter of 2020. So it spent less and still has a cushion of cash.  During the quarter the company paid total consideration of $8.0 million cash for an Option Purchase Agreement with Stanley Brothers USA Holdings, Inc. providing the optionality to acquire or own warrants Stanley Brothers USA upon federal legalization of cannabis in the United States.


Debra BorchardtMarch 25, 2021
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Charlotte’s Web Holdings, Inc.  (OTCQX: CWBHF) looks like it has been able to regain some ground after the pandemic caused the company a lot of disruption as retailers were closed for some time. Charlotte’s Web reported revenue increased 17.9% to $26.9 million in the fourth quarter of 2020 versus $22.8 million for the same time period in 2019. The company said DTC (direct-to-consumer) sales increased 21.2% year-over-year, contributing $17.4 million or 64.8% of the fourth-quarter revenue. While it was a positive turn of events, the company missed revenue estimates of $27.5 million according to Yahoo Finance.

For the full year, total net revenue increased to $95.2 million vs. $94.6 million in 2019. The company said DTC eCommerce sales grew 27.6% in 2020 contributing 67.0% of total revenue, substantially offsetting a decline of 29.5% in B2B sales impacted by the COVID-19 pandemic.

“We turned a challenging start to 2020 into a strong finish, taking multiple actions and outperforming much of the competitive set to extend our brand and market share leadership,” said Deanie Elsner, CEO of Charlotte’s Web. “We filled product and channel gaps with competitive offerings and advanced the science of hemp CBD through CW Labs and collaborative studies with top-tier institutions. We have now protected our intellectual property with 5 patents awarded for our proprietary cultivars and have defended our trademarked Charlotte’s Web brand through a recent judgment.”

E-Commerce Business Builds

During 2020 Charlotte’s web said it implemented a competitive pricing realignment strategy across its product portfolio resulting in increased unit sales and expanded market share in the second half offsetting some of the headwinds created by COVID-19.  B2B net sales increased 12.4% year-over-year supported by expanded topical product offerings. DTC net sales grew by 21.2% year-over-year supported by the pricing realignment and higher conversion rates through ongoing marketing and social media programs. Year-over-year new consumer acquisitions increased 52% and conversion rates increased 98%.

Cutting Expenses

Charlotte’s Web also made headway as it cut Operating expenses by 10.4% to $23.6 million from $26.4 million. The company noted that the high operating expenses were due to its investments in capacity expansion and transition to a consumer-packaged-goods (“CPG”) operating company capable of supporting mass retail channel growth. In response to lower B2B retail sales growth during the pandemic, management said it took actions to better align operating expenses through an expense optimization program successfully achieving reductions of more than 10% of the consolidated expense run rate by the end of 2020. “This was achieved despite the addition of the CW Labs R&D division and the Abacus acquisition during the year. As a percent of revenue operating expenses improved from 136%, to 113% and 88% for Q2, Q3 and Q4, respectively in 2020.”

The company said it used $5.1 million of cash in operations during the fourth quarter of 2020 compared to $8.6 million of cash used in operations during the fourth quarter of 2019. Charlotte’s Web cash and working capital at December 31, 2020, were $52.8 million and $113.6 million, respectively, compared to $68.6 million and $116.9 million on December 31, 2019.

Elsner added, “In 2021 we are positioning for long-term growth and shareholder value creation as we evolve towards establishing Charlotte’s Web as a leading global botanicals wellness company by expanding into cannabis wellness where federally permissible. To support our international growth we have an exclusive agreement with one of Israel’s largest medical cannabis producers, and in the U.S. we secured future optionality through a strategic option to acquire Stanley Brothers cannabis business pending US federal legalization of cannabis.”


Kaitlin DomangueMarch 4, 2021
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It’s time for your Daily Hit of cannabis financial news for March 4th, 2021. 

On the Site

Columbia Care Guides Higher for 2021

Columbia Care Inc.  (OTCQX: CCHWF)  released preliminary results for the fourth quarter and full year ended December 31, 2020 and issued 2021 guidance. Actual revenue rose 228% in the fourth quarter to $76 million versus $23 million for the same time period in 2019. 

While this is a solid performance, it does miss the analyst estimates for revenue of $79 million in the fourth quarter according to Yahoo Finance. The combined results for the fourth quarter are listed as $81 million. 

 

Cannabis Companies Go On Buying Spree

This week has been unusually active as cannabis companies have been on a major buying spree.

  • Schwazze acquires Star Buds for roughly $72.3 million
  • Greenlane acquires Eyce for an undisclosed amount
  • Terra Tech buys UMBRLA, Inc., recently rebranded as Unrivaled for an undisclosed amount

 

PACT Act to Apply to All Vaping Products

Amendments to the Prevent All Cigarette Trafficking (PACT) Act may have caused cannabis to hit yet another setback. The PACT Actt has been amended to include “electronic nicotine delivery systems”, which looks inclusive to cannabis at first glance. However, it’s described as followed:

“any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device including an e-cigarette; an e-hookah; an e-cigar; a vape pen; an advanced refillable personal vaporizer; an electronic pipe; and any component, liquid, part, or accessory of a device described without regard to whether the component, liquid, part, or accessory is sold separately from the device.”

This means that USPS can no longer deliver cannabis vape products to consumers. 

 

Delic Moves To Focus On At-Home Mushroom With Homestead Acquisition

Psychedelic media company Delic Holdings Inc. (OTCQB: DELCF) has acquired mushroom kit maker and media company Homestead brands in an all-stock deal. DELIC issued subordinate voting shares worth $50,000 and 50,000 incentive stock options were also granted to Homestead founder David Tatelman, with an exercise price of $0.58. David Tatelman will act as a consultant to the company.

 

Charlotte’s Web Moving Beyond Hemp

Well-known hemp CBD company Charlotte’s Web Holdings, Inc.  (OTCQX: CWBHF) is expanding beyond its current model with a planned acquisition of privately-held Stanley Brothers USA Holdings. Stanley Brothers is a cannabis wellness incubator currently operating in three states (Colorado, California, Florida) with expansion plans underway in eight additional states.

The acquisition though isn’t immediate. Instead, Charlotte’s Web is pursuing a five-year option plan valued at $8 million, which could be extended to seven years.

In Other News

Tryp Therapeutics Announces Application to List on OTCQB

Pharmaceutical company focused on identifying and developing clinical-stage compounds for diseases with complex and unmet medical care, announced today their application to list on the OTCQB® Venture Market OTCQB. 

 

Illinois Dispensaries See $2.88 Million in Daily Sales in February 

Illinois dispensaries sold almost $2.9 million dollars worth of cannabis last month, outpacing the record set just one month earlier. The state’s retail shops sold more than $80 dollars in adult-use cannabis last month, a slight drop from $88 million in February. 


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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