CBD sales deteriorated further in Q2, pouring cold water on optimistic statements made by several publicly traded companies in the opening quarter of this year. Additionally, the second quarter also saw the first sign of softening hemp-derived THC product sales. Given our limited view into the sector, however, the downturn could be due to increased competition and price pressure, rather than decreasing overall growth. As Hemp Benchmarks has reported, wholesale prices for delta-8 and delta-10 THC distillate have declined significantly over the past year.
In analyzing CBD firms’ financial results for the opening quarter of this year, which can be found in our Hemp Benchmarks July 2022 Spot Price Index report, we noted that sales were down year-on-year. Despite revenue downturns, the companies under discussion noted positive market signals that they portrayed as reason for optimism. In one case – speaking of Charlotte’s Web – the company noted that a major wildfire that burned in Boulder County, Colorado just before the start of this year disrupted operations and contributed to the decrease in sales. However, Q2 results show CBD sales continued to deteriorate as 2022 progressed, with year-on-year revenue drops of at least 20% for all companies considered.
Charlotte’s Web (CW) reported $18.9 million in revenue for Q2 2022, down 22% year-on-year and down 3% from the previous quarter. While the company remains profitable, the recent financial filing shows that both direct-to-consumer and business-to-business sales have slowed substantially compared to 2021.
cbdMD similarly reported slowdowns in both retail and wholesale sales of its products in Q2, when it achieved $8.87 million in gross sales, down 22% year-on-year and down 11% from Q1 2022. Q2 sales declined despite cbdMD’s introduction of hemp-THC products at some point in or around Q1, although the company apparently remains positive about the prospects of its foray into that space, as we expand upon below.
CV Sciences saw a 20% year-on-year decrease in sales in Q2, when revenue of $4.1 million was also down 8% from the prior period. The company reported, “The decline is primarily due to lower sales in the retail channel.” Additionally, unit sales were down 5% from the prior quarter, when an uptick in sales volume was taken as a positive market signal.
Hemp Benchmarks’ previous coverage of LFTD Partners Inc. – a publicly-traded company that manufactures and sells hemp-derived THC and other products – has revealed rapidly-growing sales in a sector marked by questionable legality. We noted in recent months that the legality of hemp-THC products appears increasingly secure due to recent developments at both the federal and state levels.
Ironically, Q2 2022 saw LFTD report its first revenue downturn in spite of the increasingly favorable legal and regulatory landscape for its products. LFTD reported sales of almost $16.8 million in Q2 2022, down by 7% from revenue of over $18 million in Q1. With vape shops and other similar specialty retailers stocking innumerable brands of hemp-THC products, it is likely that the quarter-on-quarter downturn in sales is due to increased competition in the space. Still, the company’s sales are up by 151% year-on-year.
We noted in our previous CBD and hemp-THC sales update that cbdMD had introduced its own line of hemp-derived delta-9 THC products, probably sometime in Q1 2022. While the new product line did not boost the company’s Q2 sales, cbdMD’s press release detailing Q2 results, linked above, states that the company “successfully launched a marketing campaign on its 2018 Farm Act compliant hemp extracted Delta 9 product assortment … in July and [is] seeing strong sequential monthly category growth.”