What happened

Charlotte's Web Holdings (CWBHF -0.14%) has rarely been a stock to bounce wildly in price during a trading day. Tuesday was an exception, though, as some positive news from the laboratory reported by the company pushed its stock as much as 12% higher. The excitement didn't last, however, and by market close the rally fizzled and the shares landed 0.5% below their Monday closing price.

So what

Charlotte's Web makes cannabidiol (CBD) products, so of course its clinical news concerned such goods. It revealed in a press release that the latest round of a study it conducted on the safety of CBD had positive results.

A dropper filled with CBD oil, with a marijuana plant in the background.

Image source: Getty Images.

Specifically, the data from a second cohort of the study show that the substance causes, in the company's words, "no association of increased prevalence of increased liver function test, no clinical liver disease, zero product related adverse events and new data concluding no daytime drowsiness and no testosterone deficiency."

This cohort added 222 adult users, all of whom were orally administered CBD tinctures on a daily basis for 60 days. Combined with the first cohort, all told 1,061 people participated in the study, which derives from a request for scientific data on CBD and liver safety by the Food and Drug Administration (FDA).

Now what

"The execution of these two cohorts provides proof of the hemp CBD industry working cooperatively to support rigorous scientific research to inform regulators, the FDA, and the U.S. Congress," Charlotte's Web quoted the president of its CW Labs division, Tim Orr, as saying.

And that in itself should boost the prospects for the company, as well as other CBD makers. But these days, investors aren't very enthusiastic about the marijuana industry CBD specialists are often lumped in with. Compounding that, Charlotte's Web has struggled with bottom-line losses, eroding sales, and negative cash flow. Investors likely began to remember this after the initial euphoria about the clinical testing subsided.