Charlotte's
Web secures Option to purchase Stanley
Brothers' cannabis business
BOULDER, Colo., March 3, 2021 /CNW/ - Charlotte's Web Holdings, Inc.
("Charlotte's
Web", "CW" or the "Company") (TSX: CWEB) (OTCQX:
CWBHF), the market leader in full-spectrum hemp CBD extract
products, announces that it has entered into an Option Purchase
Agreement (the "Option") with Stanley Brothers
USA Holdings, Inc. ("Stanley
Brothers USA"), a
privately-held Delaware company,
and the shareholders of Stanley Brothers USA. Stanley Brothers USA is a cannabis wellness incubator currently
operating in three states (Colorado, California, Florida) with expansion plans underway in
eight additional states. The Option has a five-year term
(extendable for an additional two years) and provides Charlotte's Web the optionality to acquire
Stanley Brothers USA on the
earlier of three years from the effective date of the Option
and federal legalization of cannabis in the United States, or such earlier time as
Stanley Brothers USA and
Charlotte's Web may agree (the
"Triggering Event") potentially including when otherwise
permitted by the policies of the stock exchange on which the
Company's securities are listed for trading. The common shares
of Charlotte's Web continue to trade on the TSX in Canada and OTCQX in the US.
"Consumer attitudes, market trends, and laws surrounding
cannabis and its role within the wellness category continue to
trend positively. This strategic Option provides Charlotte's Web optionality to enter the U.S.
cannabis wellness market in partnership with an experienced and
trusted team and brand, positioning our business for potential new
growth opportunities and shareholder value creation," explained
Deanie Elsner, CEO of Charlotte's Web. "The Stanley Brothers are
innovating cannabis wellness with the same philosophy and vision
that drove their success as founders of the Charlotte's Web brand. With this shared
heritage, we could not be more aligned."
Stanley Brothers USA is
evolving botanical formulations for the Cannabis 2.0
wellness-focused consumer, combining full-spectrum cannabis
extracts with functional botanical ingredients. Marketed under the
"ReCreate" brand, the wellness formulations are lower in
tetrahydrocannabinol ("THC") for more precisely controllable
benefits. Products include functional chocolates, gummies and oil
tinctures, formulated with the wellness benefits of the entire
cannabis plant including CBD and THC to help achieve a desired
state of wellbeing.
Charlotte's Web is the global
leader in the cultivation, production and distribution of
hemp-derived CBD wellness products. Until the Option is exercised,
both Charlotte's Web and Stanley
Brothers USA will continue to
operate as standalone entities in the US. Internationally the
companies are able to explore opportunities where cannabis is
federally permissible.
Related-Party Transaction and Board
Changes
Two founders of Stanley Brothers USA are members of the Charlotte's Web board of directors. To further
support the strategic Option, Charlotte's Web co-founders Joel Stanley and Jared
Stanley resigned as members of the Charlotte's Web board of directors in order to
transition to board positions with Stanley Brothers USA and oversee execution of that business
with aligned values, business practices, and vision.
- Joel Stanley, a Charlotte's Web co-founder and Board Member,
is a Stanley Brothers USA
co-founder and will assume a seat on the Board of Directors at
Stanley Brothers USA.
- Jared Stanley, a Charlotte's Web co-founder, Board Member, and
its Chief Cultivation Officer, is a Stanley Brothers USA co-founder and will assume a seat on the
Board of Directors at Stanley Brothers USA.
A special committee (the "Special Committee") of the
board of directors of CW (the "Board"), comprised solely of
independent and disinterested directors, and advised by its own
independent legal advisors, unanimously recommended that the Board
approve the Option. Acting upon the recommendation of the Special
Committee, the members of the Board unanimously approved the
Option.
Additional Terms of the Option
The five-year Option (extendable to seven years upon payment of
additional consideration) with Stanley Brothers USA shareholders was purchased for total
consideration of US$8 million cash.
Upon the occurrence of the Triggering Event, the Company may
exercise the Option to acquire Stanley Brothers USA for a purchase price to be determined at
the time of exercise of the Option. The purchase price
determination will involve weighted application of 3.5 times
revenue and 13.5 times EBITDA multiples to Stanley Brothers
USA's financial statements at the
relevant time, or a base amount and earn-out, in certain
circumstances. The purchase price will be subject to
customary adjustments for working capital, debt and cash at
closing, and certain portions of the purchase price may be held
back to cover post-closing adjustments and indemnification matters.
Subject to compliance with applicable law and stock exchange
approval, if required, Charlotte's
Web intends to satisfy the purchase price through the issuance of
common shares of CW ("CW Shares"), to be issued at a price
based on the 20-day volume weighted average trading price of the CW
Shares on the Toronto Stock Exchange at the relevant time of
issuance.
CW is not obligated to exercise the Option.
In addition to the Option, Stanley Brothers USA has issued CW a warrant (the
"Warrant") exercisable to purchase 10% of the outstanding
Stanley Brothers USA shares and
convertible securities that are considered in-the-money subject to
certain conditions and exclusions. The Warrant is exercisable for a
nominal exercise price in the event the Company elects not to
exercise the Option.
A copy of the Option and the Warrant will be made available on
CW's SEDAR profile at www.sedar.com.
Advisors
The Special Committee was advised by independent legal advisors
and an independent national valuation firm.
DLA Piper (Canada) LLP and DLA
Piper (US) LLP acted as legal counsel to Charlotte's Web. Akabas & Sproule acted as
legal counsel to Stanley Brothers USA.
About Charlotte's Web
Holdings, Inc.
Charlotte's
Web Holdings, Inc., a Certified B Corporation headquartered in
Boulder, Colorado, is the market
leader in the production and distribution of innovative
hemp-derived cannabidiol ("CBD") wellness products under a family
of brands which includes Charlotte's Web™, CBD Medic™, CBD Clinic™, and
Harmony Hemp. The Company's premium
quality products start with proprietary hemp genetics that are
100-percent American farm grown and manufactured into whole-plant
hemp extracts containing a full spectrum of naturally occurring
phytocannabinoids including CBD, CBC, CBG, terpenes, flavonoids and
other beneficial hemp compounds. Charlotte's Web product categories include
CBD oil tinctures (liquid products), CBD
gummies (sleep, stress, inflammation recovery), CBD
capsules, CBD topical creams and lotions, as well as CBD
pet products for dogs. Charlotte's
Web is the number one CBD brand in the USA and distributed through more than 22,000
retail locations, select distributors and online through the
Company's website at www.CharlottesWeb.com.
Charlotte's Web was founded by
the Stanley Brothers with a mission to unleash the healing powers
of botanicals through compassion and science, benefiting the planet
and all who live upon it. Charlotte's Web is a socially and
environmentally conscious company and is committed to using
business as a force for good and a catalyst for innovation. The
Company weighs sound business decisions with consideration for how
its efforts affect employees, customers, the environment, and
diverse communities. The rate the Company pays for agricultural
products reflects a fair and sustainable rate driving higher
quality yield, encouraging regenerative farming practices, and
supporting U.S. farming communities. Management believes that its
socially oriented and environmentally responsible actions have a
positive impact on its customers, suppliers, employees and
stakeholders. Charlotte's Web
donates a portion of its pre-tax earnings to charitable
organizations.
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Web investor news.
Forward-Looking Information
This news release
contains forward-looking statements and information within the
meaning of applicable securities legislation. Often, but not
always, forward-looking statements and information can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "estimates", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements or information involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Charlotte's Web to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements or information contained
in this news release.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
including assumptions as to CW's business; Stanley Brothers
USA's business; the efficacy and
results of research; the adverse impact of the COVID-19 pandemic to
the Company's operations; and such risks contained in Charlotte's Web's annual information form
dated March 27, 2020 and filed with
Canadian securities regulators available on Charlotte's Web's issuer profiles on SEDAR at
www.sedar.com. Readers are cautioned that the foregoing list of
factors is not exhaustive.
There can be no assurance that the Triggering Event or the
exercise of the Option or Warrant will occur, or that such events
will occur on the terms and conditions contemplated in this news
release.
Charlotte's Web Holdings,
Inc.
THE WORLD'S MOST TRUSTED HEMP EXTRACT™
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SOURCE Charlotte's Web
Holdings, Inc.