uploads///Green Growth

Charlotte’s Web Reports Improved Yield and CBD Potency


Mar. 5 2020, Published 12:31 p.m. ET

On Wednesday, Charlotte’s Web Holdings (NYSEARCA:CWEB) announced that the audit of its 2019 hemp harvest is complete. According to the audit, the company’s total dried biomass grew by 245% to 2.34 million pounds, its CBD potency increased by 22%, and its yield per acre increased by 10%. The audit estimated that the company harvested 36 thousand kilograms of CBD with a 33% reduction cost per milligram.

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Charlotte’s Web produces all of its hemp in the US. The company cultivates the hemp across three states—Colorado, Oregon, and Kentucky—to mitigate crop risk. The company has adopted a vertically integrated model, which allows it to have greater control over its supply chain. In the press release, Charlotte’s Web CEO Deanie Elsner said, “We are very pleased with the results of the 2019 harvest, achieving yield and potency levels that surpassed our expectations. This reflects the tremendous expertise we have gained in hemp cultivation over the last six years.” She also said, “More than half of our harvest was certified organic in 2019 with the remaining acres in transition. We are well on our way to becoming one of the largest providers of certified organic hemp CBD extract in the country.”

Charlotte’s Web praises proprietary genetics for improvement

Charlotte’s Web credited its Horticulture division, which has developed new hemp genetics. The new hemp genetics contain superior cannabinoid expression and increase the effectiveness of its full-spectrum extract profiles. In last year’s growing season, the company introduced Lindorea and Kirsche varieties. Bear Reel, the Senior Director of CWEB’s Cultivation Research & Development, developed both of the varieties. The company reported that both of the types delivered high CBD potency, low THC, and superior yield, which exceeded the expectations. The company said added that it filed patents for both of the varieties.

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Analysts’ expectations

Analysts expect Charlotte’s Web to report revenues of $27.6 million in the fourth quarter. The amount would take the company’s total revenue to $99.2 million for 2019. The amount would be a rise of 42.7% from $69.5 million in 2018. For 2020, analysts expect the company’s revenue to rise by 49.2% to $148.0 million. Meanwhile, analysts expect the company to report an EBITDA of $9.9 million in 2019—a fall of 52.9% from $21.1 million in 2018. However, analysts expect the company’s EBITDA to rise by 95% to $19.4 million in 2020.

Stock performance

On Wednesday, Charlotte’s Web stock rose to a high of 7.28 Canadian dollars before closing the day at 6.87 Canadian dollars—a rise of 3.6% from the previous day’s closing price. The positive results from the audit and the strong broader equity market caused the company’s stock to rise. On the same day, the S&P 500 Index and the ETFMG Alternative Harvest ETF (NYSE:MJ) increased by 4.2%.

Meanwhile, Charlotte’s Web has lost 30.9% of its stock value this year. The stock has underperformed Curaleaf Holdings (OTCMKTS:CURLF), which has lost 15.5% of its stock value this year. However, Charlotte’s Web performed better than Cresco Labs (OTCMKTS:CRLBF) and MedMen Enterprises (OTCMKTS:MMNFF), which have fallen by 33.9% and 52.9%, respectively. Recently, MedMen reported its second-quarter earnings. To learn more, read MedMen’s Losses Widen in Q2, Shifts Its Strategy.


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