By Timothy S. Donahue
Top Takeaways:
Debt wiped: Charlotte’s Web Holdings reduces approximately $65M in debt, becoming debt-free.
Ownership shift: British American Tobacco will hold about a 40% stake, doubling its share.
Nicotine crossover: Deal highlights BAT’s expansion beyond nicotine into cannabinoids and reduced-risk products.
Charlotte’s Web Holdings has finalized a major restructuring agreement with British American Tobacco that eliminates its biggest liability while establishing the tobacco giant as its main shareholder.
The transaction converts approximately $65 million of debt into equity and adds $10 million in new cash, resulting in the issuance of about 110 million shares to BAT and a total equity investment of around $75 million.
The immediate impact makes a cleaner balance sheet. “BAT’s decision to convert its debenture to equity and invest additional capital removes our largest remaining liability and strengthens our shareholders’ equity,” said BAT CEO Bill Morachnick. The company will now operate without long-term debt and eliminate future interest obligations that could have added up to millions more over the life of the debenture.
But that involves significant dilution and a change in control dynamics. Following the deal, BAT’s stake increases to about 40%, up from roughly 20% after its initial 2022 investment, giving it significant influence over the company’s direction, including board representation.
For BAT, the move aligns well with a larger transformation plan. The company—best known for combustible cigarette brands—has been rapidly expanding into reduced-risk nicotine products like vaping, heated tobacco, and modern oral products. At the same time, it has quietly been building a presence in cannabinoids, viewing the category as a long-term growth opportunity nearby.
Charlotte’s Web provides a foothold in that market.
The company, once a leading name in CBD wellness, has faced financial difficulties in recent years, reporting approximately $30 million in losses against about $50 million in revenue in 2025. This highlights the challenges the U.S. CBD market faces amid regulatory uncertainty and pricing pressure.
The fresh capital is allocated for immediate priorities, including joining a Centers for Medicare & Medicaid Innovation (CMMI) pilot program and ongoing development of its clinical pipeline. “The additional $10 million in new capital… provides greater flexibility to participate in the upcoming CMMI Medicare pilot program,” Morachnick said.
The company is also progressing clinical work through partnerships linked to FDA-regulated pathways, indicating a shift toward medical and healthcare integration rather than solely focusing on consumer wellness products. For the nicotine industry, this deal illustrates how major tobacco companies are diversifying beyond nicotine by using their capital and regulatory expertise to enter related areas like cannabinoids.
There is now a much bigger partner sitting at the table for Charlotte’s Web.
