Why Charlotte’s Web Partnered With Major League Baseball To Educate The World About CBD

Over a decade ago, Charlotte’s Web created the CBD category and despite a roller coaster in the market, they remain the category leader today. As the category leader, they view it as their job to educate the industry and the general public on the benefits of CBD. In pursuit of this mission, at the end of 2022, Charlotte's Web became the first “Official CBD of Major League Baseball.” I sat down with co-founder and COO Jared Stanley, to discuss this partnership, the market as a whole.

Since our interview, the FDA has concluded that a new regulatory pathway for CBD is needed and said they are prepared to work with Congress on this matter. Charlotte’s Web has been pushing for regulation for years and believes regulation from the FDA is vital to the continued growth and acceptance of CBD. We deep dive on all this and more.

Dave Knox: Charlotte’s Web pioneered the CBD industry. How did you get started and what led you into the space?

Jared Stanley: In 2009, my brothers and I started our business under the medical cannabis program in Colorado. Back then, we had what were called “patients of the state.” Shortly thereafter, our cousin was diagnosed with Cancer, and we had more than 100 Cancer clients who really appreciated the products for helping them get through chemotherapy with things like appetite stimulus and sleep, but they didn't like the intoxicating effects of THC. At that time, there was research that was coming out of Israel that led my brother Joel to investigate breeding cannabis for CBD, which was little known at the time. We ended up growing what is now considered non-psychoactive hemp with less than 0.3% THC under the 2018 Farm Bill. When we had about 8 plants of this CBD forward, low THC variety of hemp, Joel met Paige Figi, mom of Charlotte (our company is named after her). Paige was desperately looking for CBD as a last-ditch option for Charlotte, who had Dravet syndrome, and was suffering from about 300 seizures a week. She was on a do-not-resuscitate order. Joel came to me and my brothers and said, "Guys, you’ve got to hear what I'm thinking about doing. There's a girl that I've met. She's failed 17 pharmaceuticals, and her mother has asked us to formulate a CBD extract." We all agreed, we formulated the first tincture, and the rest is history. Immediately, Charlotte went 99% seizure-free. She went from 300 seizures a week to less than one. I wouldn't say Charlotte's Web created the category, I would say Charlotte Figi did. She was the disruptor, and we are part of her story. If it wasn't for her, we would never have launched the company we know today as Charlotte's Web.

Knox: Fast forward, how has the CBD industry evolved?

Stanley: The CBD market today is a $5 billion market. It's a huge opportunity for us to come in and take market share. But what we've seen is we know how miraculous this plant can be to wellness seekers. But what's happened in the last 10 years is you've seen the product get really marginalized into lollipops and gas stations. I see it in mattresses and pillows and, it's really just a shame because we know how impactful this product can be. Additionally, the estimated $5b market today we believe is closer to $3b considering $1b of the market is made up of one FDA approved drug, Epidiolex and an additional $1b is in markets Charlotte’s Web will never play in such a as vaporizers, CBD flower, delta-8 THC and synthetic cannabinoids. Charlotte's Web is still the market leader. Our 2021 sales were $96 million. It's the number one market share across all consumer metrics. We also just did a deal announcing that we're the official CBD of Major League Baseball, which continues to be a major validation exposure and allows us the ability to educate and widen the consumer base so that we can start to separate ourselves from the pack. With this deal, we can use the megaphone of Major League Baseball to continue to educate consumers on how amazing this product and compound can be. We have also added a third pillar of our company strategy, in partnership with a biotech company, we are seeking an IND (Investigational New Drug) through the FDA. Being in the industry for nearly 10 years and having a vertically integrated breeding program with now seven patents in hemp, we are positioned with IP and a knowledge of the greatest impact we can make with our products. When you look at the $1b market made up of one drug, Epidiolex, that drug was approved for Dravet Syndrome and Lennox Gastaux, two rare forms of epilepsy. Charlotte, our true founder, suffered from Dravet syndrome. This strategy would garner physician advocacy and reclaim the birthright of our company. Our mission has not changed, we believe in all forms of access. When you peel back the layers of the onion in our industry, we are confident our strategy is the right one because it diversifies the company and seeks to help the most people through access to CBD. It’s simple really, if you want to create the greatest wellness company you have to cast the widest net for wellness seekers.

Knox: How did the deal with MLB come about? Was that an intentional strategy that you went to them or did they approach you?

Stanley: It's a little bit of both. Major League Baseball was the first league to stop testing for THC, and then they were the first league to endorse the CBD category. This was really a pioneering movement from them. And when they announced that they were endorsing the category, there was really one company that checked all the boxes for quality, safety, and consistency to achieve NSF certification. This certification is what MLB chose as the gold standard. The CBD industry sits in this area where we lack regulation from the FDA. So, MLB came in and chose NSF to certify their products for what they would recommend to their players. We know that more than 40 million Americans are using CBD including professional athletes. MLB wanted to ensure their athletes had a reliable, safe source of the product in the lack of a regulated market.

But getting in and working with them doing the deal, there were two things that we really wanted to hit: supporting sleep and mental wellness. And going through the partnership, it was about humanizing professional sports. It's transforming the future athlete, which is seeking natural alternative health options. And so, with MLB coming in, we've kept saying the game is really played within the six inches between your ears, and we can create products that will support calm, clarity, focus, sleep, and this is the athlete of the future. If an athlete is struggling with any of these areas, their whole universe starts to fall apart. So, us doing this deal is really supporting the future state of the athlete.

Knox: As it relates to the category overall, where is the FDA headed on regulation for CBD and how is that dictating the approach that Charlotte's Web is taking to the business?

Stanley: We need independently tested and accurately labeled CBD products and it's time for the FDA to regulate CBD as a dietary supplement. There is broad, bipartisan support for this in Congress.

In January 26 of this year, the FDA took a bold position that the current regulatory framework for foods and supplements is not appropriate for CBD and that they will work with Congress on a new way forward for CBD. Specifically, the FDA addressed concerns about liver toxicity and reproductive toxicity. We are very active in Washington DC and it is our job to now educate Congress on both Charlotte's Web’s safety and tox studies and unite strong companies in the industry who have similar safety and tox studies that address the FDA’s concerns. We must keep in mind, The FDA does not tell Congress what to do, but it is the other way around. In the 2018 Farm Bill, Congress made CBD legal to all 50 states and now needs to finish the job by authorizing the FDA to regulate CBD as a dietary supplement, but the industry must come together to support Congress with science. In doing this, we are hopeful we can land a regulated dietary supplement market faster than creating a new regulatory regime for CBD. 45 million mothers, veterans, seniors, athletes, caregivers and others rely on the benefits of CBD every day and these Americans deserve safe, consistent CBD products and so, it’s incumbent on Congress to put guardrails in place to ensure high standards. Keep in mind, per the FDA’s dietary supplement guidance, both liver toxicity and reproductive toxicity are addressed through multiple tox studies and reproductive tox studies. Charlotte’s Web and other strong companies have completed these studies, but the industry has done a poor job at educating Congress, ultimately the decision maker for where the CBD category will land. Although we disagree with the FDA’s position, we have the foundation to navigate the direction of Congress and look forward to working with the FDA in the future.

Knox: Sleep is a category that has really emerged in the last few years as a benefit that consumers are seeking and it’s a big focus of CBD. As you design products, how do you think about the synergistic effect of CBD?

Stanley: One of the biggest issues in dietary supplements is companies look at buzzwords and then they put what buzzword is trending onto a pack and sell it. For instance, one ingredient that I’m passionate about is Lion's Mane. This is an ingredient today that you can find all over grocery store shelves. But what we often forget is that the ingredient in Lion's Mane is a compound called erinacines. Erinacines are clinically proven to enter your blood membrane and promote neuron growth. This is what gives you a clarity or focus effect, the stay-in-the-zone effect. But the problem is we have no testing standards for erinacines. So, companies go and put a little Lion’s Mane in a product so they can sell the buzzword.

Our goal is to take certain botanicals that we believe work synergically for how their efficacy claims have been studied and how we know CBD works within our body and find something that has a bit of a lock and key to come in and work together. So we're very excited about some of these other botanicals and efficacy claims that some of these botanicals meet. But instead of just sourcing the botanical to put it on a pack, we go into that botanical, we study that botanical and we ensure that the active compound ingredient in that botanical that gives us the structure function claim is what we're giving to our consumers to meet their needs states.

Knox: As you look at 2023 and beyond, where do you want to see Charlotte’s Web and the industry as a whole go?

Stanley: There are good players who are independently testing and holding quality to a high standard. But the industry overall doesn't want what we're pushing for with the FDA because most of them won't make it through once that dietary supplement pathway is in place. There are over 4,000 brands in our industry, so that's why the industry is so clouded and why you don't see the right industry coalitions moving forward to pass a bill. You see, even the coalitions that do exist, they're very divided because many of them have built their businesses on what is the only growing segment in CBD right now, which is smoke and vape shops. So if you're a company and you've built your whole business on delta- 8 THC, I believe those companies are just making hay while the sun shines and taking advantage of a clouded and unregulated category. What we see on the heels of regulation is the quality consistent products that are in the market and companies that have built the foundation to go down the regulatory path will start to rise to the top. Over time you'll start to see that there just isn't a place for what we call this Achilles' heel in the industry, misleading consumers, mislabeling products, scientific claims that aren't proven. All of that will start to phase out as the FDA steps in to ensure that the 45 million Americans using CBD are using safe, quality and consistent products. Because the biggest issue we have is, again, I've said this before, but we know how important this compound is for the Charlotte Figi’s of the world. But a consumer comes in and buys CBD in a lollipop in a gas station and then they never come back to the category. That's been a huge disservice to the CBD industry and to consumers as a whole.

Charlotte’s Web’s was the first mover in the category and will hold its ground as long as it takes to see the industry rise. There is remarkable innovation and good companies, and we will see a coming together to support a regulated landscape and rise the tide of the industry.