Major CBD brands report steep annual sales declines

Charlotte's Web and CV Sciences both lost millions in 2022, recent earnings reports have revealed.

Hank Schultz, Senior Editor

April 5, 2023

3 Min Read
Major CBD brands report steep annual sales declines

The marketers of CBD finished goods continue to operate under severe financial strain. Two major brands, CV Sciences and Charlotte’s Web, have recently reported depressed earnings and significant downsizing initiatives.

In a recent earnings call, CV Sciences reported that a drastic cost-cutting program, which saw the company reduce its headcount by almost 40% over the course of 2022, enabled it to eke out a positive cash flow of $200,000 from operations in the fourth quarter.

Eking out cash flow

This was “the first time that we generated operating cash since Q2 of 2019,” according to Joerg Grasser, the company’s CFO.

In addition to reducing its headcount to 44 employees, down from 71 at the end of 2021, CV Sciences also announced it has moved to a 6,000-square-foot facility from one that had a footprint of 30,000 square feet.

CEO Joseph Dowling said the move was possible thanks to the company’s shift toward a hybrid work-from-home model as well as unloading all of its manufacturing and distribution onto copackers and shipping partners.

“This move alone resulted in annual savings of approximately $1 million with zero decline in productivity,” Dowling said.

Those shreds of good news came as part of an annual report that saw the company’s overall revenue decline to $16.2 million from $20 million in 2021. The company lost $6.8 million in 2022 compared to a loss of $18.4 million in 2021.

Related:CBD market stagnates under regulatory limbo, but dedicated consumer core remains

Charlotte’s Web also under pressure

In a recent earnings release, competitor Charlotte’s Web led with the good news, too: In the past year, the company has concluded a deal with Major League Baseball to have its products listed as the “official” CBD of MLB.

The company also announced a $56.8 million investment from British American Tobacco.

That cash will help offset the steep decline in revenue.

Charlotte’s Web reported 2022 total revenue of $74.1 million, a decline of 22.8% from the $96.1 million recorded in 2021.

The “good” news was the company trimmed its operating loss to $52.5 million in 2022, compared to the $147.1 million it lost in 2021. Cutting SG&A (selling, general and administrative) expenses by $27.6 million, or 28.2%, helped the company cut its losses.

Charlotte’s Web stock price has declined more than 70% over the past year, hitting a recent low of about 34 cents a share compared to a 52-week high of $1.06. CV Sciences’ stock price has fallen off a similar cliff. It has declined about 57% to a low of less than 5 cents a share, from a 52-week high of 11 cents.

Emergent market volatility

Some of the tumult in the CBD markets may be attributable to the fluctuations common to any emergent system. The CBD market is still stuffed full of thousands of finished products brands, many of which almost certainly won’t survive. That makes it hard for established companies to make a profit.

The late Harvard evolutionary biologist Stephen Jay Gould famously made the argument that systems of any sort early in their histories are subject to this kind of volatility in his essay about why there are no more .400 hitters in baseball.

FDA inaction hamstrings companies

However, observers say FDA’s refusal to create a regulatory framework for CBD, following passage of the 2018 Farm Bill, has played a role as well. The uncertainty about the legality of cannabinoids sold in supplement-like products has squelched investment and severely restricted distribution opportunities.

Only one mass distribution outlet, Wegmans—a small- to medium-sized grocery store chain in the Northeast—has put CBD ingestible products on the shelf. Hometown Pharmacy, a smaller chain with more than 70 stores in Wisconsin and Michigan, also features an ingestible CBD oil product.

As far as ingestible products are concerned, virtually all other major players remain on the sidelines awaiting regulatory clarity. Amazon does sell a couple of ingestible “hemp oil” products, but none are labeled for CBD content.

CBD topical products, such as pain relief creams and balms, are widely available. Those markets, however, are only a fraction of the theoretical overall size of a fully open market for ingestible CBD products.

About the Author(s)

Hank Schultz

Senior Editor, Informa

Hank Schultz has been the senior editor of Natural Products Insider since early 2023. He can be reached at [email protected]

Prior to joining the Informa team, he was an editor at NutraIngredients-USA, a William Reed Business Media publication.

His approach to industry journalism was formed via a long career in the daily newspaper field. After graduating from the University of Wisconsin with degrees in journalism and German, Hank was an editor at the Tempe Daily News in Arizona. He followed that with a long stint working at the Rocky Mountain News, a now defunct daily newspaper in Denver, where he rose to be one of the city editors. The newspaper won two Pulitzer Prizes during his time there.

The changing landscape of the newspaper industry led him to explore other career paths. He began his career in the natural products industry more than a decade ago at New Hope Natural Media, which was then part of Penton and now is an Informa brand. Hank formed friendships and partnerships within the industry that still inform his work to this day, which helps him to bring an insider’s perspective, tempered with an objective journalist’s sensibility, to his in-depth reporting.

Harkening back to his newspaper days, Hank considers the readers to be the primary stakeholders whose needs must be met. Report the news quickly, comprehensively and above all, fairly, and readership and sponsorships will follow.

In 2015, Hank was recognized by the American Herbal Products Association with a Special Award for Journalistic Excellence.

When he’s not reporting on the supplement industry, Hank enjoys many outside pursuits. Those include long distance bicycle touring, mountain climbing, sailing, kayaking and fishing. Less strenuous pastimes include travel, reading (novels and nonfiction), studying German, noodling on a harmonica, sketching and a daily dose of word puzzles in The New York Times.

Last but far from least, Hank is a lifelong fan and part owner of the Green Bay Packers.

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