Why Is CBD So Expensive?
Jul 8, 2019 | Save On Cannabis
Cannabidiol (CBD) is all the rage. It’s being explored not just by cannabis enthusiasts but by everyday people seeking natural remedies. There’s even a booming market for CBD pet products. Still, one question that prospective and first-time users commonly ask is: Why Is CBD so expensive?
Like most things, the cost is dependent on a number of factors, and higher-priced products typically have more to offer. For instance, a CBD manufacturer may sell the same-sized bottle in multiple concentrations—350mg, 600mg, 1,000mg, etc… The number refers to the concentration of the active ingredient, cannabidiol. The higher the concentration, the higher the cost.
So why is CBD oil so expensive? The answer is a bit complicated, but it’s important to note that you are paying for a valuable product. Let’s break it down.
What’s In CBD Oil?
CBD oil is more than just cannabidiol. It typically contains some combination of the following:
A carrier liquid: The carrier liquid is what holds the cannabinoids and allows for easy ingestion. The liquid has its own costly production process and usually offers health or nutritional benefits of its own. Common carrier liquids for CBD include MCT (coconut) oil and hemp seed oil.
Terpenes: Terpenes are plant-derived oils that contribute to the color and flavor of the product. More notably, they can also enhance the effects of the CBD oil. It all depends on which terpenes are included. For example, limonene can contribute to stress relief, myrcene has relaxing effects, and pinene is associated with alertness.
It’s also worth noting that a one-ounce bottle of CBD oil—though small in its appearance—can pack up to 40 servings.
The Agricultural Cost of CBD
There are many factors that contribute to the cost of CBD, but agriculture is arguably the most significant. Cannabidiol is derived from marijuana and hemp, and so its manufacture requires costly labor, cultivation, farming equipment, seeds, and land.
The equipment and supplements required for a three-month indoor grow cycle can be considerable. When you factor in the pots, soil, nutrients, water, and equipment, the growing process alone can cost $2 to $4 per gram. For a 1,000-gram yield, that amounts to $2,000 to $4,000 in a season. That kind of price tag may be beneficial for DIY growers, but it can be a profit killer for businesses.
In addition, the cultivation of marijuana and marijuana-derived products can be far costlier than other farmed resources. Due to tight regulations and the complex legalities associated with marijuana and hemp, producers are required to follow a number of costly licensing, reporting, and testing requirements.
The specific requirements vary by state, but we’ll use California as an example. To produce marijuana and hemp in California, producers must get local approval, an environmental assessment, a state cultivation license, and other permits subject to local laws.
For a high-yield business, the state cannabis annual fee can cost $38,350 per year. Consulting fees can cost an additional $20,000 to $40,000. Environmental permits can add another $30,000 to the bill, and the cultivation license fee can add an additional $4,435.
And those are just the costs associated with licensure. They don’t even factor in the farming or production costs. Which leads us to our next point.
The Production and Extraction Cost of CBD
Once the cannabis has been farmed, there’s still a lot of work required. The CBD must be extracted from the plant and converted into a marketable product. It’s a lengthy process, and a large amount of cannabis cultivation is required for a small amount of CBD extraction.
There are a number of extraction processes used, but the most common are CO2 extraction and ethanol extraction.
CO2 Extraction: A CO2 extraction machine can cost as much as $150,000. The CBD oil is extracted from the plant using pressurized carbon dioxide. The result is a high-quality, nearly pure CBD oil with few to no contaminants and no leftover solvents. The production process results in small batches, so the resulting CBD oil tends to be costlier when it hits the market.
Ethanol Extraction: Ethanol extraction tends to be the more cost-effective method, as it requires less heavy-duty equipment and can produce larger batches. It works by using alcohol to break down the plant. The leftover cannabidiol is distilled, and the ethanol ultimately evaporates. Though ethanol-derived CBD products tend to cost less, they’re also noted for having lower potency and higher concentrations of contaminants.
Once the CBD is extracted, it needs to be decarboxylated so that the acids are removed and the oil is ready for market. A decarboxylation oven can cost around $7,000.
The Cost of Testing CBD
Due to ongoing federal prohibitions, cannabidiol products are not reviewed by the FDA. Top cannabis and CBD brands typically spend thousands of their own dollars monthly on having their products tested by third-party laboratories.
CBD producers receive a certificate of analysis for products that have undergone the proper testing. Though these certificates are not a legal requirement in most states, they are required to stay competitive. Because these products are unregulated, the third-party stamps of approval provide consumers with added peace of mind.
Labs use expensive equipment such as high-performance liquid chromatographs to test CBD products for purity and concentration. They publish detailed results to confirm that the marketing claims are, in fact, true.
Here are some typical costs that a manufacturer may incur for various tests as needed:
- Cannabinoid testing — $50 per bottle
- Mycotoxin testing — $50 per bottle
- Microbial contamination testing — $50 per bottle
- Residual solvent testing — $50 per bottle
So when you pay a high price for CBD products, you’re in part paying for the assurance that the product is safe and accurately presented.
The Demand Cost of CBD
The high cost of CBD oil can largely be attributed to the expensive cultivation, licensing, and production, but there’s also something to be said for the sheer demand and the growing buzz behind the product.
Consider that CBD is already a $390 million industry and is expected to grow to at least $1.3 billion over the next three years—this is one of the more conservative estimates. The market is largely subject to supply and demand, and the popularity of cannabidiol undoubtedly has an impact on the price.
To clarify, we’re not implying that CBD is expensive simply because manufacturers can charge whatever they want. On the contrary, because there’s so much demand for the product, the supply is struggling to keep up.
U.S. farmers are relatively new to the production of CBD, and recent news reports have indicated that they’re unable to meet the growing demand in many cases. Some estimates even place the CBD industry at $2 billion by 2020, which would account for a 700% increase that our farming industry is scarcely prepared for.
Thankfully, the cannabis farming sector is growing at a rapid pace, but it will take some time for the industry to fully catch up with the demand.
The Insurance Cost of CBD
The cannabis industry is still largely unregulated, high-risk, and subject to a host of legal complications. Because of this, a general liability business insurance policy costs a cannabis manufacturer 10 to 12 times what it would cost a standard business.
It’s not uncommon to see insurance policies that cost over $500 per month. This, too, has an impact on cost of the final product.
Finding Quality, Affordable CBD Oil
Now that we’ve answered the question of why CBD is so expensive, one important question still remains: How can you find affordable CBD?
First, it’s important to stress quality over price. Bargain CBD won’t provide any benefit if it’s non-potent or poorly cultivated. So always look for the certificate of analysis. Specifically, note how the product performed on tests, and observe the levels of contaminants found.
It’s also a good idea to see if the lab meets ISO/IEC 17025 standards. This means that the lab adheres to uncompromising scientific standards.
In addition, make sure that the THC level falls below 0.3% — anything more than that is considered marijuana by the federal government. CO2 extraction is best, but ethanol-derived THC can also be high-quality. Avoid other extraction methods.
Now that we’ve got the safety and quality disclaimers out of the way, the next step is finding affordable CBD products that meet these criteria. The best thing you can do is to find verified CBD coupons and not settle for retail price. A number of cannabidiol providers offer valuable discount codes and coupons that can save you a fortune.
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Reading CBD lab tests can be complicated, but important. A COA (Certificate of Analysis) is the only way to see what is in your CBD, learn what to look for.