Disruptions from Pandemic Spur Hemp Companies to Delay Q2 Postings

By William Sumner, Hemp Content Manager, New Frontier Data

August is typically the time of year when publicly traded U.S. companies file their financial results for the year’s second fiscal quarter (Q2). However, as the COVID-19 pandemic spreads throughout the United States, companies in the hemp industry increasingly are seeking filing extensions to sort out their financial statements.

In a survey of publicly traded companies, the Hemp Business Journal found that 17 out of the 31 leading ones offering hemp and CBD products have delayed filing their financial results for the fiscal period ending on June 30.

Though some companies chose not to disclose their specific reasons, other companies that shared comment about their late filing, such as Charlotte’s Web Holdings (TSX: CWEB) (OTCQX: CWBHF), cited the COVID-19 outbreak as the prevailing factor.

Filing extensions are enabled by actions taken on behalf of securities regulators in both the U.S. and Canada to allow companies an additional 45 days to submit financial statements, management’s discussion and analysis (MD&A), management reports of fund performance, annual information forms (AIFs), and technical reports.

While the growing number of hemp companies seeking filing extensions has frustrated some financial analysts and investors looking to gauge how the hemp industry is fairing during the COVID outbreak, information can yet be gleaned from information already available.

Unsurprisingly, companies like GW Pharmaceuticals (NASDAQ: GWPH), manufacturer of Epidiolex (the only FDA-approved, CBD-based medication), were relatively unaffected by the pandemic. In Q2-2020, the company saw its revenue skyrocket to $121.3 million, enjoying a strong boost from the FDA’s approval of the drug for the treatment of seizures associated with tuberous sclerosis complex (TSC).

Other brands were not so lucky.CV Sciences (OTCMKTS: CVSI), once a strong leader in the hemp-CBD market, suffered greatly in Q2. Year-over-year, the company’s quarterly revenue plummeted 68%, from $16.9 million in 2019 to $5.4 million this year. Though the company’s nationwide retail presence grew 37.8% from 4,591 stores in 2019 to 6,325 stores as of June 30, company executives cited the COVID outbreak, regulatory uncertainty, and increased competition as major factors in its revenue drop.

Not every CBD brand suffered so greatly as CV Sciences over the last quarter; Neptune Wellness Solutions (NASDAQ: NEPT) saw Q2 revenue nearly quintuple, from $4.3 million in 2019 to $21.3 million this year (up 395%).

Presently, it seems as if hemp industry is holding steady despite disruptions both from the COVID-19 outbreak and growing difficulties within the hemp supply chain. Though Hemp Grower Magazine reported that online purchasing of CBD increased by 61% over the last quarter, it will be difficult to precisely gauge how the industry overall is faring until more companies report their financial results.