Gaia Herbs ex-CEO joins Charlotte’s Web board amid shakeup

LOUISVILLE — Louisville-based CBD company Charlotte’s Web Holdings Inc. (TSX: CWEB) (OTCQX: CWBHF) has tapped Angela McElwee, former CEO of supplements company Gaia Herbs Inc., for its board of directors, a move that comes amid a top-level shakeup of the organization that resulted from a shareholder revolt this summer led by CW founders Jesse Stanley and Joel Stanley.

McElwee, who will serve on the board’s compensation committee, joins the company a month after William Morachnick was named CW’s new CEO, succeeding Jacques Tortoroli, who resigned in September.

“Angela has an excellent track record of profitably scaling vertically integrated brands with effective go-to-market strategies and channel management,” CW board chairman John Held said in a prepared statement. “She also brings extensive knowledge in marketing mission driven companies as a force for good, both through executive leadership and board seats.”

In June, the Stanley brothers, who founded the company but had stepped away from day-to-day management, began publicly pressuring shareholders to oust board members and executives. The revolt came during a prolonged period of financial struggle for the Boulder-born hemp-derivatives producer. 

The Stanleys, in a June letter written on behalf of a group of “concerned shareholders” that own nearly a quarter of Charlotte’s Web shares, said that they are moving against a group of board nominees because the company’s stock had plummeted 95% since they departed the board in 2021. Additionally, “revenues have decreased by 22.8% (from approximately $96 million in 2021 to approximately $74 million in 2022) and the value of the company is at its lowest levels since going public,” the Stanleys said.

Charlotte’s Web’s “significant cash burn rate with decreasing revenues must end immediately. The leadership blames general industry decline and regulatory headwinds to avoid taking responsibility for their actions,” the letter said. “The truth is that the actions of this board have clearly contributed to the destruction of shareholder value.”

The Stanleys accuse company leadership of “uncontrolled spending without consequences,” “failure to maximize potential,” “poor hiring practices” and “lack of accountability.”

Among the “concerned shareholders,” the Stanleys said, was Major League Baseball, with which CW inked a sponsorship deal, making it the first CBD company to partner with a professional sports league. Simultaneously, the company launched a line of sports products starting with Daily Edge, a CBD tincture that underwent strict testing and was uniquely designed to adhere to MLB’s banned substances policy.

The Stanleys effort drew mixed results in a June vote of shareholders. While four board members, including ex-CEO Tortoroli, were jettisoned, a trio of members — Held, Thomas Lardieri and Alicia Morgan — retained their seats. 

McElwee was a candidate put forth by the “concerned shareholders” group as a potential replacement for one of the members who were ultimately ousted.

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