Please ensure Javascript is enabled for purposes of website accessibility

Why Charlotte's Web Had a Seesaw Tuesday

By Eric Volkman – Oct 12, 2021 at 4:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were mulling the effect of a new sticker that will appear on the company's products.

What happened

Charlotte's Web (CWBHF -6.54%) 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.

A field of hemp.

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. 

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

Stocks Mentioned

Charlotte's Web Stock Quote
Charlotte's Web
CWBHF
$0.63 (-6.54%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.