Charlotte’s Web Holdings Inc. is highlighting what it views as progress on CBD regulation and the launch of a new brand as it deals with a difficult market in the absence of overarching federal rules for hemp products.

In its recent second-quarter earnings statement, the Louisville, Colo.-based firm reported significantly lower year-over-year top-line revenues.  However, the benefit it derived from a joint venture aimed at developing a botanical drug for neurological conditions enabled the company to post a razor-thin profit of 2 cents per share.

Hopeful signs on regulatory front

On the regulatory front, the company said recent statements by the U.S. Food and Drug Administration and a hearing of a House subcommittee on Capitol Hill signals progress toward an eventual regulatory solution for CBD and broad-spectrum hemp products.

In a press statement accompanying the earnings release late last week, the company said FDA has “committed to ‘work at speed’ with Congress to resolve a regulatory pathway for hemp-derived CBD. Recent progress has been encouraging surrounding The Hemp Derived Consumer Protection and Market Stabilization Act of 2023, (bill H.R. 1629) which aims to regulate hemp extract products under the dietary supplement regulatory framework. Charlotte's Web and industry peers have compiled and shared safety and toxicology data with Congress to address concerns raised by the FDA.”

Related:What Charlotte's Web’s hemp extract NDI filing means for CBD’s future

Witnesses called to testify in a hearing of the U.S. House of Representatives Committee on Oversight and Accountability, Subcommittee on Health Care and Financial Services in late July urged FDA to act on the CBD issue. In the wake of that hearing, a request for information (RFI) was issued by the Energy and Commerce Committee, something else that Charlotte’s Web views as progress on the issue. The deadline for that request is Friday, Aug. 18.

"Executing on one of our stated strategic pillars, 'Winning in Washington DC', Charlotte's Web is pleased to be a part of the influential collaboration among consumers and industry stakeholders under a united strategy that is proactively engaged with Congress to support the regulation of hemp CBD as a dietary supplement," Chief Operating Officer Jared Stanley said.

Earnings details

Charlotte’s Web recorded quarterly revenues of $16 million, compared to $18.9. million in the same period previously.

In the first six months of 2023, the company notched $33 million in revenues, down from $38.2 million in the same period a year previously.

New brand launches with sports tie-in

To combat the declining revenues, Charlotte’s Web launched a broad-spectrum hemp brand in the quarter called ReCreate that has a sports fitness positioning that the company believes will better connect with the millennial and GenZ market segments.

"These groups are anticipated to become the largest consumer group by 2026 and often view sports and fitness as a form of self-care,” Jacques Tortoroli, Chief Executive Officer of Charlotte's Web, said in the press statement.

Another part of that strategic pillar, Totoroli said, is the company’s ground-breaking partnerships with Major League Baseball and with the Angles FC club in Major League Soccer. In addition, the company has announced a partnership with the Premier Lacrosse League.

“This exposure is particularly important for our e-commerce channel," Tortoroli said.
The press statement noted that “Professional sports leagues raise brand awareness and relevance to their audiences, fans, players and teams, which are ReCreate's target consumers.”