Charlotte’s Web Holdings, Inc. announced its financial results for the three and nine months ended September 30, 2026. The company reported that its operating loss narrowed to its lowest level since 2019, despite a decrease in revenue. The filing details the impact of California hemp restrictions and a strategic reduction in discounting on the company's performance.
For the third quarter of 2026, revenue was $9.4 million, a decrease of 18.3% compared to $11.5 million in the prior year period and 13.5% compared to the second quarter of 2026. The company attributes the revenue decline to the restrictions on the sale of full-spectrum hemp products in California that took effect in July and a reduction in online promotional discounting. However, revenue in California has begun to recover following the reintroduction of broad-spectrum products in the state, which has regained approximately 40% of the sales lost due to the restrictions.
Despite the lower revenue, gross margin improved to 46.9% of revenue, or $4.4 million, compared to 38.9% in the third quarter of 2025. The company attributes this improvement to revised promotional strategies, improved pricing, and lower standard costs from insourcing. The company also noted a $1.4 million addition to the inventory reserve related to simplifying its product line.
Selling, general, and administrative (SG&A) expenses were $8.1 million in the third quarter of 2026, a 16.8% decrease from the prior year. This reduction is attributed to lower targeted paid media spending and reduced debt amortization costs following the conversion of a convertible debenture in May. As a result, the operating loss for the quarter was $3.7 million, compared to $5.3 million in the prior year. The net loss was $3.5 million, or $(0.01) per share.
For the nine months ended September 30, 2026, revenue was $31.4 million, down 14.1% from $36.6 million in the prior year. Gross margin improved to 47.0%, and SG&A decreased 13.5% to $27.1 million. The company’s balance sheet has improved significantly, with total liabilities at $19.4 million, down from $77.3 million at December 31, 2025, and shareholders’ equity at $53.1 million, compared to a deficit of $2.0 million at year-end.
The company also provided an update on its federal policy advocacy. On September 2, 2026, the Continuing Appropriations and Extensions Act, 2027 was signed into law, delaying the enactment of federal hemp restrictions contained in Section 781 of Public Law 119-37 to December 11, 2026. Under current law, hemp products containing more than 0.4 milligrams of total THC per container would be restricted. The company’s full-spectrum products would fall within these restrictions, while its broad-spectrum and isolate products are expected to remain available. The company continues to advocate for legislation that distinguishes non-intoxicating full-spectrum products from synthetic and intoxicating products.
Charlotte’s Web is also developing its healthcare channel strategy. The company is in negotiations with Accountable Care Organizations (ACOs) regarding a potential pilot under the Substance Access Beneficiary Engagement Incentive (BEI) program, expected to begin in 2027. Additionally, the company has launched a dedicated ordering portal for healthcare practitioners and a new affiliate program to facilitate the supply of its products to patients.
The company expects to host a corporate update call and webcast in December 2026, after the revised federal definition of hemp is scheduled to take effect, to review policy developments and provide an outlook based on actual plans.
