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Charlotte’s Web: An Overview of a Cannabis Giant

Charlotte’s Web Holdings, Inc. (CWEB) is a US-based vertically integrated CBD producer. The company focuses on making and distributing hemp-derived CBD products. Charlotte’s Web’s mission is to help people find peace in mind, body, and soul. Further, the company aims to meet the consumer’s demands for quality products, efficiency, and consistency.

Initial development

Charlotte’s Web was founded in 2018 by Stanley brothers Joel, Jesse, Jared, Josh, Jordan, Jon, and Austin. The company has its base in Colorado. The company was named after Charlotte Figi, the girl who made hemp and the Stanley brothers famous in America. Charlotte’s Web Holdings went public through the Canadian Stock Exchange in 2018 under the ticker CWEB.

Currently, the company’s management consists of CEO Deanie Elsner, executive vice president and CFO Russell Hammer, and COO Stephen Lermer. Out of the founders, Joel Stanley is chairman of the board of directors and Jared Stanley is a director. Currently, the Stanley brothers work with research institutes and government agencies to improve cannabis products, policies, and education.

Charlotte’s Web products

Charlotte’s Web makes products from hemp genetics. The company’s product categories are CBD Topicals, capsules, oils and extracts, and pet products. These products are non-intoxicating.
  • Flavored CBD oils include different concentrations of CDB in Olive Oil, Mint Chocolate, Orange Blossom and Lemon Twist.
  • Liquid capsules with different concentrations of CBD.
  • CBD Gummies in Sleep Gummies, Recovery Gummies, and Calm Gummies.
  • Topicals are hemp-infused balms and hemp-infused creams.
  • CBD Isolates.
  • Pet products include Hemp Extract drops, Canine Hemp infused balms, Cognitive Pet Chews, Calming Pet Chews, Hip & Joint Pet chews.

Geography and expansion

Charlotte’s Web currently has 862 acres of hemp plantation. This grew by 187% from last year. The company has outdoor cultivations across the US. Also, the company has 166 acres is in Colorado. The company’s own cultivation team tends to these farms. However, 371 acres in Oregan and the remaining 325 in Kentucky are cultivated by contract farmers. The company made 675,000lbs of dried hemp from 300 acres in 2018. The company is planning additional expansions in the following years.

Charlotte’s Web announced a partnership with Kroger Co. (KR) in July. Kroger started selling Charlotte’s Web products in its retail stores. Kroger currently has 1,350 stores across 22 states. In addition to this, CWEB has its products in more than 9,000 retail stores across the US. Further, the company expects more growth with its expanding product line in the FDM (food, drug, and mass) channel.

Currently, CWEB has a fully operational 40,000-square-foot production facility. In addition, the company recently signed a lease agreement for a new building. The 136,610-square-foot building is located in Louisville, Colorado. The new building will help CWEB prepare for making and distributing the hemp products to meet the demands. Also, the company has expansion plans for research and development to support the company’s projected sales.

Revenue and profitability

Recently, Charlotte’s Web announced its third-quarter earnings. CWEB’s revenue for the quarter stood at $25.1 million. This implies a 41.5% rise from last year’s third quarter. Out of this, B2C (business-to-consumer) sales made up 51.2%. Whereas, B2B (business-to-business) sales made up 48.8%. This implies a 38.7% rise in B2C sales. Also, B2B sales rose by 66.4% from last year’s third quarter. The year-to-date revenue till September end stands at $71.8 million. This implies an almost 50% increase from 2018 revenue of $48 million.

For the third quarter, the company reported $0.7 million in adjusted EBITDA. This implies an adjusted EBITDA margin of 2.8%. Whereas, the company reported an adjusted EBITDA margin of 29.9% for last year’s third quarter. This fall in EBITDA margin is mainly due to an increase in operating expenses and growth initiative investments. Also, CWEB reported $1.3 million in net loss for the third quarter. This implies a significant fall from $1.8 million net profit in the third quarter of 2018.

Future plans of Charlotte’s Web

Management plans to improve and innovate new products. The company expanded its product line by adding hemp extract-infused CBD gummies and pet products this year. The company also plans to make new products that interest consumers to sustain and develop brand loyalty and recognition. Also, management continuously analyzes acquisition opportunities to expand the company’s operations.

Charlotte’s Web has plans to grow its partnerships to improve wholesale and retail presence. The company currently sells through its e-commerce website and other third-party websites added during the year. The company reported a 68% year-on-year rise in customer usage. Further, the company expects to register 10,000 new customers on a monthly basis.

CWEB raised its plantation area by 187% from last year. Further, the company plans to keep expanding it in the following years to meet the growing consumer demands. In addition, the company is building a 137,000-square-foot production facility. It will be fully functional in 2021. This facility is expected to increase the company’s production multifold.

Also, Charlotte’s Web Holdings developed its distribution channels significantly. The company is selling its products in almost 9,000 retail outlets. And CWEB expects to grow its presence by adding 1,000 more retail outlets.

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