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Charlotte's Web Sponsoring New CBD Study

By Eric Volkman - Jun 9, 2020 at 9:22PM

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The research is aimed at providing the Food and Drug Administration with scientific data on the substance.

Charlotte's Web (CWBHF 6.64%) is putting its money where its mouth is with cannabidiol (CBD). The company, which specializes in "wellness" products made from the substance, announced Tuesday it is sponsoring a research study on the effects of CBD. It did not specify how much it is contributing with this sponsorship.

The study, being conducted by privately held clinical research company ValidCare, is aimed at determining whether and how daily CBD use affects the human body. Further details of the planned study, including its timing, were not provided.

A field of hemp plants.

Image source: Getty Images.

Seven marijuana companies active in the CBD segment, including Charlotte's Web, are involved in the study. Of the seven, Charlotte's Web is the only one that is publicly traded.

The research push comes from a request from the Food and Drug Administration seeking science-based data on CBD to help guide its regulatory approach to the substance. Last November, the FDA published a consumer update on CBD products, warning that their use could result in health problems such as liver injury, among other difficulties.

"As the market share leader, anchored in science, sponsoring ValidCare's study made strategic sense for us," Charlotte's Web wrote in its press release heralding its involvement. "This research will provide important clinical data to guide our entire industry while also showing the FDA we've heard their requests and are answering their questions with precise data."

CBD derived from hemp is fully legal in the U.S., having been sanctioned by the wide-ranging Farm Bill passed into law in late 2018.

Investors might not be happy about Charlotte's Web spending its time and capital on sponsoring the study. On Tuesday, the company's shares slumped by almost 6%, exceeding the decline of the broader stock market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.

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