Charlotte's Web Holdings, Inc.

Type · Location · Leased / Owned

Manufacturing, Production, Research and Development · 700 Tech Court, Louisville, Colorado · Leased

Office · 1801 California Street, Denver, Colorado* · Sublease

Office · 1600 Pearl Street, Boulder, Colorado* · Lease was terminated as of August 31, 2025

*As of September 1, 2024, the Company executed a sublease agreement to cover a portion of its obligations concerning 1801 California Street property.

Facilities Overview

The Company operates several Colorado-based facilities to house administrative work, processing, R&D, distribution, horticulture, breeding and greenhouse space. In 2019, the Company leased a 136,610-square-foot industrial building located at 700 Tech Court in the Colorado Technology Center in Louisville, Colorado. This cGMP facility, the LOFT, enables the Company for production, distribution, quality control and R&D expansion. This facility was used for supply chain activities commencing in the second quarter of 2020 and manufacturing and operations commencing in the third quarter of 2020.

Through its subsidiaries, the Company has entered into material lease agreements related to its operations. Those agreements are discussed below.

700 Tech Court

On May 7, 2019, EJ 700 Tech Court LLC entered into a lease agreement with Charlotte’s Web, Inc. for a period of 126 months commencing on September 1, 2019 for the premises located at the LOFT at 700 Tech Court, Louisville, Colorado (the "Tech Court Lease Agreement"), a cGMP facility. Following a lease abatement period for the first six months of no monthly rent payments, the monthly base rent for the remainder of the term of the lease is an average of $143,732 per month. The foregoing description is qualified in its entirety by reference to the Tech Court Lease Agreement.

1801 California Street

On May 11, 2021, Molson Coors Beverage Company ("Molson Coors"), as tenant and sublandlord, and Charlotte’s Web, Inc., as subtenant, entered in a sublease agreement covering and describing the premises known as the entire 47th floor of a building located at 1801 California Street in Denver, Colorado comprising 22,389 rentable square feet (the "1801 California Sublease"), leased by Molson Coors from BOP 1801 California Street II LLC and BPREP 1801 California Street JV, LLC (collectively, as the landlord), in that certain Lease of Office Space agreement dated November 26, 2014, as amended from time-to-time. Pursuant to the terms of the 1801 California Sublease, the term of the sublease was to begin on July 1, 2021 and end on March 31, 2027. The 1801 California Sublease contained a lease abatement provision for the first seven months with no rent due, and a monthly base rent for the remainder of the first 12 months of the lease term of $37,315.00. The foregoing description is qualified in its entirety by reference to the 1801 California Sublease.

On June 15, 2021, Molson Coors and the Company entered into that certain First Amendment to Sublease Agreement (the "First Amendment to the 1801 California Sublease"), whereby the Company agreed to sublease the 48th floor of 1801 California Street given that the 47th floor as contemplated in the 1801 California Sublease was unavailable to the Company. The First Amendment to the 1801 California Sublease contained same rent abatement term for the first seven months of the lease term, and thereafter includes a monthly installment for the term of the lease of approximately $39,269. The foregoing description is qualified in its entirety by reference to the First Amendment to the 1801 California Sublease.

On May 24, 2024, Charlotte’s Web, Inc. and Bachus & Schanker, LLC (“B&S”). entered into a sublease agreement whereby Charlotte’s Web, Inc. agreed to sublease to B&S, as subtenant, the entirety of the rentable square feet under the 1801 California Sublease. The B&S Sublease Agreement average monthly installment for the term of the lease is $31,289. The foregoing description is qualified in its entirety by reference to the B&S Sublease Agreement.

1600 Pearl Street

On May 12, 2021, Charlotte’s Web, Inc. and Outside Interactive, Inc. ("Outside Interactive") entered into a sublease agreement whereby Charlotte’s Web, Inc. agreed to sublease to Outside Interactive, as subtenant, the entirety of the 42,191 of rentable square feet (consisting of Suite 300, Suite 100, and the Basement/Garden Level) under the 1600 Pearl Street Sublease Agreement commencing on June 1, 2021 and expiring on August 31, 2025 (the "Outside Interactive Sublease Agreement"). The Outside Interactive Sublease Agreement included a rent abatement period during the first seven months of the lease providing for $0 monthly rent. The average monthly installment for the term of the lease after the rent abatement period is $90,695. Upon receiving the landlord’s consent to the sublease, Outside Interactive delivered to Charlotte’s Web, Inc. an unconditional, irrevocable, and transferrable letter of credit in the amount of $500,000 to secure Outside Interactive’s full performance of its obligations under the Outside Interactive Sublease Agreement, naming Charlotte’s Web, Inc. as beneficiary. The sublease agreement with Outside Interactive has been terminated as of August 31, 2025. The foregoing description is qualified in its entirety by reference to the Outside Interactive Sublease Agreement.

• Any inability to obtain required regulatory approval and permits could limit the Company’s ability to conduct its business.
• The Company is subject to environmental, health and safety laws, compliance with such laws may be costly, and any failure to comply with such laws could negatively impact the Company’s results of operations or financial position.
• Regulatory uncertainty with respect to anti-money laundering laws and regulations impact on the CBD and cannabis related businesses, if revised or resolved unfavorably to the Company’s interests, may have an adverse effect on the Company’s business.
• The Company could be adversely affected by violations of the Corruption of Foreign Public Officials Act (Canada), the U.S. Foreign Corrupt Practices Act and other similar anti-bribery laws.
• As a cannabis-related business, the Company may have difficulty accessing banking services due to the illegality of marijuana under federal law.
• The Company may have difficulty accessing public and private capital and banking services, which could negatively impact its ability to finance its operations.
• The Company could be liable for fraudulent or illegal activity by its employees, contractors and consultants resulting in significant financial losses due to claims against the Company.
• Risks Relating to the Company’s Business and Industry
• The Company faces security risks related to its physical facilities.
• The Company depends on the success of its products, and those products may not achieve the desired market acceptance.
• There is no assurance that the Company’s cash flows and debt or other financing will be sufficient to fund the Company’s operations.
• The Company’s products have a stated shelf life and product inventory may reach its expiration prior to sale.
• The Company’s quality control systems may not prove successful.
• The Company depends on various third parties for the supply, manufacture, and testing of some of the Company’s products. No assurance can be given that these relationships will continue on favorable terms, or at all.
• The Company’s manufacturers and suppliers must meet cGMP requirements and failure on their part to do so could have adverse consequences for the Company.
• The Company’s manufacturers and suppliers must remain in compliance with the hemp production and manufacturing laws of the states in which they operate.
• If product liability claims are brought against the Company, it could incur substantial liabilities.
• The Company's operations and industry may be subject to reputational risk.
• The Company is dependent upon agricultural production of hemp for part of the Company’s operations, which are subject to seasonal and weather-related risks.
• There may be adverse consequences to the Company's end users should they test positive for trace amounts of THC attributed to use of the Company's products.
• The Company may be unable to obtain or maintain farming contracts sufficient for its hemp cultivation needs.
• Climate change could exacerbate certain of the risks inherent in the Company’s agricultural operations.
• Hemp is subject to specific agricultural risks, which could negatively impact the Company’s cultivation efforts.
• The Company relies on third-parties for the transportation of its hemp and hemp-derived products; any delay or failure by these third-parties to meet the Company’s transport needs could impact the Company’s operations and financial performance.
• The Company faces intense competition.
• Changing consumer preferences could impact the Company’s ability to attract and retain customers.
• The Company depends on the popularity and acceptance of its brand portfolio.
• Supply chain issues, including significant price fluctuations or shortages of materials, and distribution challenges may increase the Company’s cost of goods sold and cause its results of operations and financial condition to suffer.
• The Company may not be able to successfully implement its growth strategy on a timely basis, or at all.
• The market for the Company's products and industry is difficult to forecast due to limited and unreliable market data.
• The Company depends on key personnel and its ability to attract and retain employees.
• From time to time, the Company may rely on debt financing for some of its business activities, and there can be no assurance the Company will be able to access such credit, or that it will be able to comply with the terms of such credit.
• The Company may have difficulty obtaining insurance to cover its operational risks.
• The Company may be subject to growth-related risks, including capacity constraints and pressure on its internal systems and controls.
• The Company may acquire other companies, which could divert management’s attention, result in additional dilution to the Company’s Shareholders and otherwise disrupt the Company and harm its operating results.
• The Company’s intellectual property may be difficult to protect.
• If the Company is unable to protect the confidentiality of its trade secrets, the value of its technology could be materially adversely affected and the business would be harmed.
• Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies and the Company's patent protection could be reduced or eliminated for non-compliance with these requirements.
• The Company may become involved in lawsuits to protect or enforce its patents or other intellectual property rights, which could be expensive, time-consuming and unsuccessful.
• Third parties may initiate legal proceedings alleging that the Company is infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of the business.
• The Company is involved in litigation, including class action litigation, and there may be additional litigation in the future in which it will be involved.
• Trade Secrets may be difficult to protect.
• The Company’s status as a public benefit company may not result in the benefits that the Company anticipates.
• As a public benefit company, the Company has a duty to balance a variety of interests that may result in actions that do not maximize Shareholder value.
• As a public benefit company, the Company may be subject to increased legal proceedings concerning its duty to balance Shareholder and public benefit interests, the occurrence of which may have an adverse impact on the Company’s financial condition and results of operations.
• The Company contracts with certain third parties for portions of its operations; should a third party be subject to insolvency or otherwise be unable or unwilling to perform their obligations to the Company, it could negatively impact the Company's operations.
• Tariffs on imported packaging materials could increase costs.
• Risks Relating to the Company’s Securities
• The Company has a history of losses and may continue to incur losses in the future.
• Debt and the Convertible Debenture Agreement that the Company has in place may limit other future potential strategic investor interests.
• The Company has required and, in the future, may require additional financing to operate its business, and it may face difficulties acquiring additional financing on terms acceptable to the Company, if at all.
• The Company has discretion in the use of proceeds from its securities issuances.
• There is a limited market for the Company’s Common Shares.
• The market price of the Company’s Common Shares and other listed securities may be volatile.
• The Company does not intend to pay dividends on its Common Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation in the price of the Company’s Common Shares.
• The Company is a holding company and its earnings depend on the earnings and distributions of its subsidiaries.
• Future sales of Common Shares by Shareholders, directors or officers could create volatility in the Company’s share price.
• A small number of Shareholders may exercise significant influence on matters submitted to Shareholders for approval.
• The Company may issue an unlimited number of shares, and additional issuances could dilute a Shareholder’s holdings.
• Purchasers of the Company’s Common Shares may experience immediate and substantial dilution of their investment.
• The elimination of monetary liability against the Company’s directors, officers, and employees under British Columbia law and the existence of indemnification rights for the Company’s obligations to its directors, officers, and employees may result in substantial expenditures by the Company and may discourage lawsuits against its directors, officers, and employees.
• The Company’s Articles provide that the Supreme Court of British Columbia, Canada and the Court of Appeal of British Columbia, Canada shall, to the fullest extent permitted by law, be the sole and exclusive forum for derivative actions, actions relating to breaches of fiduciary duty, and other matters, creating a conflict with U.S. federal securities laws, which may limit the ability to obtain a favorable judicial forum for disputes with the Company.
• The Company is subject to U.S. and other income tax and is treated as a U.S. domestic company for U.S. federal income tax purposes.
• General Risk Factors
• Investment in the Company’s Common Shares is speculative, involves risk, and there is no guarantee of a return.
• Product recalls and returns could adversely affect the Company’s operating results and financial condition.
• The Company may be subject to impairment of intangible and long-lived assets, which could adversely impact the Company’s financial results.
• Certain employees or directors of the Company may have interests that conflict with those of the Company.