Why Charlotte’s Web Stock Zoomed 44% Higher Today

© Provided by The Motley Fool Why Charlotte’s Web Stock Zoomed 44% Higher Today

What happened

Wednesday was a banner day for cannabidiol (CBD) products specialist Charlotte’s Web Holdings (OTC: CWBHF). The company announced a new sponsorship deal, and as a result happy investors traded it up by a massive 44%.

So what

Charlotte’s Web’s counterparty is none other than Major League Baseball (MLB). Under the terms of a multiyear agreement, the company’s brand will be the official CBD of the storied pro sports league. 

The terms of the deal weren’t provided in full. Charlotte’s Web will issue just over 6.1 million of its common shares to MLB, an amount that represents around 4% of the outstanding total. It has also granted the league revenue-sharing rights on co-branded products, and will hand over rights fee payments through the end of 2025. It did not get more specific about those latter two terms.

Charlotte’s Web wasn’t shy to mention that this is the first such sponsorship arrangement between a CBD company and a top-tier professional athletic league. 

The deal coincides with the launch of a new product line aimed at athletes. This is the appropriately named Sport, which according to its maker conforms to MLB’s scientific benchmarks. Sport products will be available in tincture, gummy, topical, and spray forms. 

Now what

In its press release trumpeting the deal, the CBD specialist quoted its CEO Jacques Tortoroli as saying that “this pioneering partnership validates Charlotte’s Web’s core business principle and founding mission to open access to safe, quality and consistent CBD through our proprietary hemp genetics and industry-forging vision.”

While this won’t necessarily be a giant revenue earner for the company, it is sure to dramatically increase the visibility of both its brand and the reputation of CBD products in general. Perhaps more sponsorships will come from this deal. 

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