Mr. Bill Morachnick reports

CHARLOTTE'S WEB RESPONDS TO NEW REGULATORY DEVELOPMENTS IN CALIFORNIA AFFECTING THE SALE OF HEMP CBD PRODUCTS

Charlotte's Web Holdings Inc. stands in firm opposition to the new regulations in California that restrict the sale of many ingestible full-spectrum hemp CBD (cannabidiol) products that meet federal requirements. As a leader in the hemp industry, the company will continue working directly with the governor and state legislators to push for changes or new legislation to preserve consumer access to non-intoxicating hemp-derived products in California. Charlotte's Web is actively collaborating with industry group, One Hemp, and consumer advocacy group Coalition for Access Now to support access to hemp-derived wellness products in California.

"While we fully support efforts to regulate synthetic and intoxicating products, we strongly oppose the inclusion of non-intoxicating, natural CBD products within this regulatory framework," said Bill Morachnick, Chief Executive Officer of Charlotte's Web. "We believe these regulations are overreaching and unnecessarily restrict access to safe, non-intoxicating hemp products by lumping them in with an entirely different class of products. Other states like Colorado and Virginia have set shining examples of how to clean up the market while safeguarding products that consumers depend upon for their health and wellness."

On Sept. 23, 2024, California's Office of Administrative Law approved new emergency regulations filed by the California Department of Public Health as part of governor Gavin Newsom's response to the failure of Bill AB 2223 to pass through the state legislature. Bill AB 2223 was designed to regulate intoxicating delta-8 products; however, it did not have the merits or nuanced language to pass through the senate appropriations committee. These new emergency regulations, effective immediately, circumvent the legislative process and impose significant limitations on the manufacture, distribution and sale of a wide range of hemp-derived CBD products in California, including non-intoxicating, natural CBD products used by 5.4 million Californians.

The governor's office has stated that the emergency regulations are necessary to ensure consumer safety and to close gaps in the oversight of hemp-derived products, particularly those containing delta-8 THC (tetrahydrocannabinol). Yet, the overly broad language also impacts the sale, distribution and package size of non-intoxicating, natural CBD products like those offered by Charlotte's Web, including products without detectable THC that are NSF Certified for Sport.

Consumers who rely on non-intoxicating hemp products will face limited access as 57 per cent of the cities and counties in the state do not allow any retail cannabis business.

Jared Stanley, a founding member of One Hemp, stated: "We have supported efforts to address bad actors in the hemp industry, but we were shocked that responsible hemp companies were included in this overreach. These companies have long advocated for quality and safety standards backed by science and research. The governor's decision will harm the good actors in the industry and have dire consequences for families and veterans who depend on these products for their quality of life."

The new regulations will directly impact the sale of many of Charlotte's Web's ingestible full-spectrum and broad-spectrum hemp extract CBD products in California. The impact is limited to California and is not anticipated to materially affect the company's overall 2024 sales and revenue. Charlotte's Web is evaluating the longer-term implications, alternatives and actions for California.

"These products are vital to the well-being of many consumers, particularly those in vulnerable communities, and they must be safeguarded," added Mr. Morachnick. "To help address this, we are exploring alternative solutions in light of these misguided regulations."

Charlotte's Web remains committed to the highest standards of quality, safety and transparency.

About Charlotte's Web Holdings Inc.

Charlotte's Web Holdings is the market leader in innovative hemp extract wellness products that include Charlotte's Web whole-plant full-spectrum CBD, extracts as well as broad-spectrum CBD certified NSF for Sport. Charlotte's Web is the official CBD of Major League Baseball, Angel City Football Club and the Premier Lacrosse League. Charlotte's Web branded premium quality products start with proprietary hemp genetics that are North American farm grown using organic and regenerative cultivation practices.

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