Colorado’s most famous CBD oil purveyor, Charlotte’s Web Holdings, Inc. filed a final prospectus in anticipation of their IPO; the company announced last week. According to a statement, they obtained a receipt for the prospectus in every Canadian province except for Quebec. Interested investors can find a copy of the prospectus on the Alberta Securities Exchange Commission website SEDAR.
The company will set the offer price at CAD$7 per share, with aggregate gross proceeds of the offering totaling around CAD$100 million. Canaccord Genuity Corp. (TSX:CF) is the lead underwriter offering the shares, along with several other firms serving as underwriters, including GMP Securities, Cormark Securities, and PI Financial Corp. Several trust companies and individuals comprise the selling shareholders, who have entered into the underwriting agreement.
The offering expects to close by the end of August, after which the common shares will begin trading on the Canadian Securities Exchange under the symbol CWEB. The exchange agreed to conditional approval of the common share listing while customary requirements are being fulfilled.
Charlotte’s Web will also have a concurrent non-brokered private placement of around 875,000 shares also priced at the CAD$7 common share price. The issue of these private placement shares will be separate from the IPO with the stipulation of a four-month holding period in conjunction with Canadian securities law. However, the IPO is not contingent on any sale of the private placement shares.
The company offers a popular line of products under the CW Hemp brand including oils, topicals, capsules, and pet products. Their claim to fame is an extract from a plant originally named “Hippie’s Disappointment”—appropriately named for its inability to provide a THC high. Hemp has an almost undetectable amount of THC —0.3 percent or less.
CBD is known for its potential to control convulsions and its possible anti-anxiety properties. In fact, the FDA just approved GW Pharmaceuticals CBD-based drug Epidiolex for epilepsy.
Highlights of the prospectus show a 172 percent increase in revenue from 2016 to 2017 for the company, with a 212 percent increase in gross profits during the same period.
Last year, the firm estimated a 14 percent market share of the nearly $300 million hemp-based CBD market. Projections for the current fiscal year estimate sales to be around $65 million to $80 million.
Money from the IPO is intended to expand company operations. Their main hemp cultivation occurs in northeastern Colorado, but they’ve recently sourced contracts with both Kentucky and Oregon farms. The company will also expand R&D and look toward international opportunities.