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Why Charlotte’s Web Had a Seesaw Tuesday | The Motley Fool

What happened

Charlotte’s Web (OTC:CWBHF) is going organic, and investors were on the fence about it. After the cannabidiol (CBD) products specialist announced that it had achieved organic certification for one of its facilities, its shares went on a bit of a roller-coaster ride across the day, finally closing 1% lower in price.

So what

The U.S. Department of Agriculture issues the certification; Charlotte’s Web earned this for its corporate farm and a research, development, and manufacturing facility it operates in Colorado. With the certification, the company will be able to place the USDA Organic seal on several of its product lines.

Image source: Getty Images.

The certification means that Charlotte’s Web has satisfied a set of USDA standards for the production of its goods. Basically, in the Department’s words, this means they “must be produced using agricultural production practices that foster resource cycling, promote ecological balance, maintain and improve soil and water quality, minimize the use of synthetic materials, and conserve biodiversity.”

Charlotte’s Web said that the products that will carry the USDA Organic label conform to both the government agency’s standards and its own. It added that these goods are made without utilizing genetically modified organisms, synthetic pesticides, and herbicides. 

Now what

Most companies in the cannabis (or cannabis-adjacent) industry struggle with growth and profitability, so even the lightest touch of good news can send one of their stocks northward. That seems to be the dynamic behind the brief bull rush into Charlotte’s Web shares on Tuesday.

But perhaps at the end of the day, investors realized that this doesn’t change the company’s world too much. CBD adherents are going to gravitate toward their favorite products whether they’re organic or not, and those goods aren’t going to suddenly find a new audience simply because of that USDA sticker. 

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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