Charlotte's Web Archives - Green Market Report

StaffNovember 2, 2022
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6min9670

The Daily Hit is a recap of cannabis business news for Nov. 2, 2022.

ON THE SITE

Green Thumb Beats on Record Revenue, Circle K Stores Remain in Question

Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) posted positive results that beat analysts’ expectations, with record revenue showing the demand for cannabis even as profits shrink industrywide. Green Thumb reported third-quarter revenue of $261.2 million, up 2.7% sequentially and up 11.8% from the prior-year period. This beat the Yahoo Finance average analyst estimate of $257.3 million. Read more here.

The Parent Company Sells Off Extraction Division

In yet another sign that the licensed California cannabis market is struggling, San Jose-based TPCO Holding Corp. (NEO: GRAM) (OTCQX: GRAMF) announced Wednesday that it had sold off its entire extraction division, a subsidiary called SISU Extraction LLC, for an undisclosed sum. Read more here.

Tilray Inks Distribution Deal with Charlotte’s Web Ahead of Health Canada Review

Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY) has inked a partnership with U.S.-based CBD giant Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) to sell hemp extract products in Canada. Under the agreement, Charlotte’s Web’s full-spectrum CBD products will be reach dispensary shelves through Tilray’s distribution network. Previously Charlotte’s Web products were only available in Canada to those that qualified for a special access medical exemption through Health Canada for specific need-states. Read more here.

Scotts Sales Drop 33% in Fourth Quarter, More Than Forecast

The Scotts Miracle-Gro Company (NYSE: SMG) announced in its financial results for the fourth quarter that ended Sept. 30, 2022, that sales fell by 33% to $493.6 million reflecting decreases in both major business segments. This missed the Yahoo Finance analyst estimates for sales of $519 million. Read more here.

Treez Acquires Payment Company Swifter

Cannabis cloud commerce platform company Treez is buying the payment solutions company Swifter. The value of the transaction was not disclosed. However, it does follow Treez Series C funding round of $51 million in April 2022. At the time the company said it would use the new funds to expand its footprint, pursue market expansion opportunities, and invest in partnerships that would connect each link in the supply chain. Read more here.

India Globalization Revenue Rises as it Shaves Losses

India Globalization Capital Inc. (NYSE American: IGC) posted rising revenues and cut losses as it reported its second fiscal quarter 2023 financial results. Revenue was roughly $202,000 for the second quarter, versus $56,000 during the same time last year. The company said that the rise in revenue is due mostly to growing sales of its CBD-based products and services, which increased 345% over last year. Read more here.

IN OTHER NEWS

Heritage Cannabis

Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) has entered into an equity line of credit agreement with Obsidian Global Partners LLC whereby Obsidian proposes to purchase common shares in the capital of Heritage for the aggregate gross proceeds of up to $20 million by private placement, at Heritage’s discretion. Read more here.

Cansortium Inc.

Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF), a vertically integrated cannabis company operating under the Fluent brand, has agreed with certain of its directors to issue an aggregate of 1,048,386 common shares to such directors in exchange for the cancelling $162,500 of owed director fees. Read more here.


Adam JacksonNovember 2, 2022
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4min7040

Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY) has inked a partnership with U.S.-based CBD giant Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) to sell hemp extract products in Canada.

Under the agreement, Charlotte’s Web’s full-spectrum CBD products will be reach dispensary shelves through Tilray’s distribution network. The company said that its products had previously only been available to those that qualified for a special access medical exemption through Health Canada for specific need-states.

“Partnering with Charlotte’s Web, the market leading CBD brand, opens new opportunities for Tilray Brands in Canada as we evolve our distribution channels from the dispensary model to natural wellness retail channels and eventually mass retail opportunities,” Tilray Canada president Blair MacNeil said.

Charlotte’s Web will sell the same core hemp extract products it has in the U.S., with Tilray handling licensing, manufacturing, quality, marketing, and distribution.

“This underscores our strategic expansion into international markets with leading domestic partners by leveraging well-established infrastructure, co-production, and route-to-market capabilities,” Charlotte’s Web CEO Jacques Tortoroli said in a news release.

The company expects Charlotte’s Web CBD products to be widely available in Canadian dispensaries by early next year.

Hemp-derived CBD falls under the same regulatory framework in Canada as cannabis, so Canadians for now can only purchase CBD products legally through a licensed cannabis retailer or through prescription by a doctor.

However, with Health Canada signaling a move toward simplifying CBD’s legal status, the company said that establishing Charlotte’s Web’s supply chain and distribution in the country also prepares for the possible introduction of natural health products regulations and potential ability to sell CBD products through traditional retailers.

Cory Pala, director of investment relations at Charlotte’s Web told Green Market Report in August that the company — which is based in the U.S. — is “particularly excited” about Health Canada’s inquiry to make CBD more accessible.

Charlotte’s Web cannot export its products to Canada under current law, “which is sort of ironic” considering it is federally legal in both countries, he said, so it has mapped out a plan to partner with cultivators in the country instead.

“In the U.S., we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

Charlotte’s Web has been focused on expanding its presence in the U.S. and abroad. Last month, the company also became the “official CBD of Major League Baseball” after the two organizations struck a lucrative sponsorship deal.


StaffAugust 9, 2022
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10min1280

The Daily Hit is a recap of cannabis business news for August 9, 2022.

ON THE SITE

Cronos Makes Gains in The Second Quarter

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) reported its 2022 second-quarter earnings with net revenue of $23.1 million which jumped from last year’s $7.4 million for the same time period. However, total revenue before taxes was $28 million which just beat the Yahoo Finance average analyst estimates for revenues of $27 million. It was also better than the first quarter‘s revenue of $25 million. The stock was dropping by roughly 8% in early trading to lately sell at $3.26. Read more here.

Acreage Holdings Sees Revenues Climb, Pushes Eastward

Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF) delivered positive results in the second quarter as the company moves away from established western markets in favor of emerging markets east of the Mississippi. The company reported its financial results for the first quarter ending June 30, 2022 after the market closed on Monday. Read more here.

Weedmaps Beats on Earnings, But Gives Cautious Outlook

WM Technology, Inc. (Nasdaq: MAPS) announced its financial results for the second quarter ending June 30, 2022. WeedMaps reported that its revenue increased 24% to $58.3 million over the second quarter of 2021. This slightly missed the Yahoo Finance average analyst estimate for revenues of $62 million. Net income was $19.8 million as compared to net income of $16.8 million from the prior year period. Read more here.

Hydrofarm Stock Craters as Sales Wither

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) slumped in trading on Tuesday as it posted second-quarter results that missed expectations — showing that consumer demand for hydroponics remained flat as a lack of regulatory guidance and recessionary pressures facing the sector persist. The company released its financial results for the second quarter ending June 30, 2022. Read more here.

MariMed Edges Up in Second Quarter Earnings

After the close on Monday, MariMed, Inc.  (CSE: MRMD) (OTCQX: MRMD) delivered its financial results for the second quarter ended June 30, 2022. MariMed’s revenue of $33 million just barely edged out the previous year’s revenue of $32 million and was higher than the first quarter’s revenue of $31 million. However, it missed the Yahoo Finance average analyst estimate for revenues of $36 million. The company reported a net income of $1.9 million versus last year’s net income of $7.6 million. Read more here.

Village Farms Beats on Revenue, as Produce Stays Strong

Village Farms International, Inc. (NASDAQ: VFF) (TSX: VFF)  announced its financial results for the second quarter ended June 30, 2022. Total consolidated sales increased 18% year-over-year to $82.9 million from $70.4 million. This beat the Yahoo Finance average analyst estimate for revenues of $70 million. Read more here.

Charlotte’s Web Misses on Revenue, Finds Hope Beyond The U.S.

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) missed expectations as the CBD company continues to struggle amid a patchwork regulatory landscape. The company reported its financial results for the second quarter ending June 30, 2022. Read more here.

Cannabis Operators Plan to Raise Prices, Blaming Inflation

The word “inflation” has dominated headlines and earnings calls this year, and a survey from a leading national cannabis accounting and advisory firm solicited feedback to gauge how such rising costs are affecting the sector. In a month-long survey this year asking operators a series of questions regarding the impacts of inflation on their cannabis operation, GreenGrowth CPAs found that one in four operators reported planning to raise prices in the near or immediate future to combat rising inflation costs. Read more here.

Psychedelics Plays a Role In Metamodernism

There are stories about how psychedelics changed the minds of entrepreneurs not only seeking enlightenment in the San Francisco Bay Area beginning in the late 60s and early 70s but incorporating their psychedelic visions into business models. Read more here.

IN OTHER NEWS

Curaleaf Holdings, Inc., Pharma GmbH

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF), a U.S. provider of consumer products in cannabis, today announced that Curaleaf International Holdings Limited, the company’s European holding company, has signed a definitive agreement to acquire a 55% stake in Four 20 Pharma GmbH, a fully EU-GMP & GDP licensed German producer and distributor of medical cannabis with its own product line. Read more here.

Lowell Farms Inc.

Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF), a California-born cannabis cultivation and maker of brand Lowell Smokes, announces unaudited revenue and operating results for the second quarter (ended June 30, 2022). All figures stated are in US Dollars. Read more here.

AFC Gamma, Inc.

AFC Gamma, Inc. (NASDAQ:AFCG) today announced its results for the second quarter of 2022. AFCG issued a presentation of its second quarter 2022 results, titled “Second Quarter 2022 Earnings Presentation,” which can be viewed at www.afcgamma.com under the Investor Resources section. AFCG also filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, with the Securities and Exchange Commission on August 9, 2022. Read more here.

Akanda Corp., Cansativa GmbH

International medical cannabis platform company Akanda Corp. (NASDAQ: AKAN) today announced it has signed a multi-year supply agreement with European medical cannabis leader Cansativa GmbH to supply EU-GMP quality THC dried flower strains cultivated from its Portuguese operations at Holigen. This new supply agreement marks one of the largest for medical cannabis to be exported from Portugal to serve the emerging European medical cannabis market. Read more here.

TRP, Cookies Florida, Inc.

TRP is bringing recognized cannabis brand Cookies to the Florida market through an exclusive partnership. The first Cookies dispensary in the state is opening at 8303 Bird Road in Miami, Florida on August 13, 2022. TRP looks forward to serving South Florida’s patients via its subsidiary and MMTC license holder Cookies Florida, Inc. Read more here.

22nd Century Group, Inc.

22nd Century Group, Inc. (Nasdaq: XXII), a leading agricultural biotechnology company dedicated to improving human health with reduced nicotine tobacco, hemp/cannabis, and hops advanced plant technologies, today reported results for the second quarter ended June 30, 2022, and provided an update on recent business highlights. Read more here.

MediPharm Labs Corp.

MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ), a pharmaceutical company specialized in precision-based cannabinoids, announced it has entered into a research support agreement with the Keck School of Medicine of University of Southern California (USC) to conduct a randomized double-blind placebo-controlled Phase 2 trial on the efficacy of THC and CBD to treat hospice-eligible patients diagnosed with dementia and experiencing agitation. Read more here.

Mindset Pharma Inc.

Mindset Pharma Inc. (CSE: MSET) (FSE: 9DF) (OTCQB: MSSTF), a drug discovery and development company focused on creating novel, optimized, next-generation psychedelic and non-psychedelic medications to treat neuropsychiatric and neurological disorders with unmet medical needs, today issued a letter to shareholders from James Lanthier, Chief Executive Officer of Mindset. Read more here.

Cybin Inc.

Cybin Inc. (NEO: CYBN) (NYSE American: CYBN), a biopharmaceutical company focused on progressing “Psychedelics to TherapeuticsTM”, announced that it has established an at-the-market equity program that allows Cybin to issue and sell up to USD $35,000,000 of common shares. Read more here.


Adam JacksonAugust 9, 2022
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8min3860

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) missed expectations as the CBD company continues to struggle amid a patchwork regulatory landscape. The company reported its financial results for the second quarter ending June 30, 2022.

For the key metric of total revenue, Charlotte’s Web missed expectations as it delivered approximately $18.9 million during the period — missing the Yahoo Finance Average analyst estimate for revenues of $27.13 million. The revenue decreased 21.8% versus $24.2 million in the same period last year. The company said that the decrease was primarily due to lower comparable customer shipments, consumer shift to lower priced formats, a return reserve as well as lower comparable online traffic.

Charlotte’s Web also reported a second-quarter net loss of $7.9 million compared to a net loss of $5.9 million in the same period last year. The company said that the net result was primarily impacted by “lower net revenues, higher return reserves and increased inventory provisions, which were offset by significantly reduced operating expenses.” The earnings were for a loss of five cents per share, a cent below analysts’ loss estimates of four cents a share.

“While we are disappointed with the second quarter revenue, we achieved significant distribution and customer wins consistent with our growth priorities to expand our coverage in existing channels and enter new vertical,” CEO Jacques Tortoroli said. “We’re also focused on improving operating cash flow as we progress through the second half of the year. Operating expenses were down over 31.5% year-over-year in the second quarter. In July, we further lowered our staffing levels and administration expenses. In aggregate, our focus on right-sizing our business is bringing operating expenses below $70M on an annualized run rate.”

The company also saw a $2.4 million decline in the e-commerce platform versus $15.7 million at the same time last year. Charlotte’s Web maintains the largest e-commerce business in the CBD industry; and e-commerce represents the largest channel in the industry with an approximate 40% market share, according to the Brightfield Group.

Business-to-business net revenue was $5.6 million after a $0.9 million returns reserves — representing $2.9 million, or 33.9%, lower year-over-year “primarily due to lower comparable shipments to some of the company’s largest retail customers.”

“Charlotte’s Web holds the number one share position across major retail channels including food/drug/mass retail, natural grocery & vitamin retailers, and e-commerce, based on market share data from leading third-party analysts such as The Nielsen Company and Brightfield Group,” the release said.

Gross profit was $9.3M, or 49.4% of revenue versus $15.8 million and 65.5% of revenue respectively in same period last year. The company said the decrease was primarily related to lower net revenue “including a $0.9 million customer return reserve, and $1.9 million of inventory provisions.” Excluding the return reserve and inventory provisions, gross profit was 61.0% of revenue, it said.

Adjusted EBITDA fell to $5.4 million in the second quarter, versus a loss of $5.1 million in the same period last year.

Net cash used from operations during the first half of the current fiscal year was $4.3 million versus $16.2 million for the same period last year.  The company’s cash and working capital as of the second quarter were $14.8 million and $64.6 million, respectively, versus $19.5 million and $75.6 million in the latter half of the previous fiscal year.

Total selling, general and administrative expenses of $17.3 million improved 31.5% year-over-year due to a $7.9 million reduction versus the second quarter last year. The company said the improvement reflects lower staff levels and compensation as well as increased operating efficiencies “resulting from actions implemented year-to-date.”

New Pathways For CBD

As companies in the cannabis sector suffer from a lack of regulatory guidance from the federal government, new opportunities are opening up for CBD companies.

Overseas, the company’s original CBD oil formula has been placed on the Foods Standards Agency list of products allowed to be sold in the U.K — making Charlotte’s Web the only substantially vertically-integrated U.S. company with a full-spectrum hemp extract to have passed the validation phase and advance to the safety assessment phase in the United Kingdom, it said.

Also, the Scientific Advisory Committee for Health Canada unanimously agreed CBD is “safe and tolerable for short-term use” — recommended hemp CBD products should be considered for mainstream retail availability.

Cory Pala, Director of Investment Relations, told The Green Market Report at the time that the company is “particularly excited” about the recommendation.

The company cannot legally export its products to Canada under current law “which is sort of ironic” considering it is federally legal in both countries, he said, so it has partnered with cultivators in the country instead. The new recommendation presents a juncture for the company.

“In the US, we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

The health board will take consultation with stakeholders and advocates to hash out regulation guidelines and figure out whether it actually wants to move in that direction before seeking approval from the Canadian government.


Joanne CachaperoJuly 19, 2022
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7min2620

Cannabis research firm Brightfield Group released its CBD: FDA Impact and the Path Forward/ 2022 Mid-Year US CBD Report, which found that growth in the CBD industry is “heavily dependent” on Food and Drug Administration (FDA) regulation, though there has been little progress on federal regulation for cannabidiol (CBD) since provisions removing hemp and hemp derivatives from prohibition were passed in the Farm Act of 2018. 

“If federal regulation were to be implemented by 2024, sales are expected to reach $11.0 billion by 2027, driven by accelerated growth of ingestible products like capsules and gummies as well as increased acceptance by mainstream retailers,” the Brightside report said. “Without such guidance, the CBD market is expected to remain decidedly lower.”

CBD Needs FDA

Currently, the U.S. CBD market is expected to reach $5 billion by 2022, according to Brightside. The report then offered two scenarios – projections with FDA guidance in place by 2024, or without. Their analysis predicted more than $4 billion in growth for the CBD industry by 2027, to $11 billion with the implementation of a regulatory scheme. However, without regulation, the report predicted relatively stagnant growth over the same time period to just over $6 billion. 

Lack of FDA guidance, Brightside pointed out, presented challenges for CBD industry businesses by allowing a market environment with “a shifting product mix and competition from other hemp-derived cannabinoids, though price compression has begun to subside, and the industry is increasingly attracting attention from large firms.”

“While waiting for increased oversight, companies have been seeking to define CBD’s place in the wider wellness landscape and using tactics like creating non-CBD products that can be sold through mainstream outlets and partnering with retailers who do not sell CBD to increase distribution and reach a novel base of consumers,” the report surmised.

Charlotte’s Web CBD Gummies

Brightside said CBD product companies Charlotte’s Web (OTC: CWBHF) and Your CBD Store (SunMed) were the two top leaders in company shares for the second year in a row. Charlotte’s Web saw the largest portion of industry online sales and was third in brick-and-mortar sales behind Your CBD Store (SunMed) and American Shaman. Companies that saw significant gains in Q1 2022 included High Tide and Heavenly Rx/Simply Better Brands. 

Grocery store sales of CBD products grew 18 percent since 2021, with $131 million in sales predicted for 2022. Brightside called grocery companies “risk averse” in regards to CBD products, resulting in marketing challenges for ingestible CBD products. Topicals will account for more than 41 percent of grocery store CBD product sales in 2022, with tinctures a distant second place at just over 19 percent. With FDA guidance, the report said, the ingestible CBD product market was set to boom.

Hope Fades

Pundits and industry experts are not hopeful for any federal regulations to come from the agency any time soon. Though four years have passed since the hemp provisions were approved in the Farm Bill, only one CBD-based pharmaceutical application has been approved by the FDA; Epidiolex, which was developed to treat seizures associated with a severe form of pediatric epilepsy. 

The FDA has said there is not enough data or research on CBD (or other cannabinoids) to allow comprehensive guidance for the industry. The COVID-19 pandemic also apparently slowed progress for the agency, as it prioritized vaccine approval over the last two years. 

An open day-long meeting in mid-June was held by the Science Board to the FDA to discuss the challenges to evaluating cannabinoids as dietary supplements or food ingredients, as well as safety reviews and concerns regarding toxicity possibly associated with consistent consumption of large amounts of CBD. The agency claims concerns are based on data gathered during the approval of Epidiolex. CBD industry leaders said the meeting provided only more delaying tactics from the FDA. 

In February, the appointment of new FDA Commissioner Robert M. Califf, M.D., gave attorney Blair Gue of Rogoway Law, a glimmer of hope for progress. Comments from Califf, though, were nonspecific regarding when FDA guidance on CBD may be forthcoming. Gue pointed out that continued pressure on the agency was needed from CBD industry companies. 

“Though Commissioner Califf could not provide a plan or timeline for the adoption of hemp or CBD regulations, he did express a strong desire to work with Congress on the subject moving forward.  Given Commissioner Califf’s comments about his willingness and desire to make real progress on the FDA’s industrial hemp product and derivative regulations, now is the time for the industrial hemp community to apply pressure to ensure that he actually does so,” she said. 


Debra BorchardtMay 16, 2022
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7min880

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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5min830

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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4min1440

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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9min2150

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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8min1331

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.”


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