Why is CBD so Expensive?

The popularity of CBD has grown significantly in recent years. Cannabidiol, better known as CBD, is a compound extracted from hemp plants. Recently, there has been an increase in research supporting its use in helping many ailments and promoting wellness. Nowadays, you can find CBD in all sorts of products, like gummies or lotions, or even in soaps. However, a lot of people are hesitant to buying CBD products due to their significant price for such a small concentration. But why is CBD so expensive? To answer that you’ll have to understand the product’s lifecycle.

Why is CBD so Expensive?

CBD is currently sold as a supplement, and is not FDA approved for most of its uses. This leads to people hesitating when buying CBD products when they see its price-tag. The average dose of CBD is around 10mg, the dose costs on average between $0.05 and $0.2 which is a lot for something you take on a daily basis. So, what makes CBD so expensive?

1. Hemp Cultivation

It’s very expensive to cultivate, maintain and produce hemp. It requires a ton of manual labor and assessment during development. Farmers are required by law to destroy any crop that has a THC content above a certain limit, for example. 

Collecting hemp has its own difficulties and extra expenses. Harvesting the crop manually is very tedious and labor intensive, and buying a harvester can be very expensive. Furthermore, the drying process can be very expensive to provide the proper space and conditions.

2. CBD Extraction and Purification

The difficulties don’t end as soon as you have your hemp plant. The process of CBD extraction is very technical and needs expensive equipment. There are two main methods to extracting CBD from a hemp plant:

Ethanol extraction:

Ethanol extraction is the least expensive of the two methods, but it’s still not cheap at all. Larger scale companies tend to us this method to save money that will be significant if added up.

Supercritical CO2 extraction

This method (as the name implies) is a much more delicate process. It requires a lot of expensive equipment that are even expensive in terms of running cost. However, CO2 extraction generally produces a higher CBD yield, that is also purer.

The differences in operation size and extraction method explains why smaller brands can have a higher price-tag.

It’s important to note that both methods produce something called “full spectrum CBD oil” which contains a significant percentage of THC. In order to further purify this extract, more cycles of purification are required to produce “broad spectrum CBD.”

3. Quality Control

So, you’ve cultivated your hemp properly and did the CBD oil extraction by the book. Is your CBD ready for the market? Sadly, not. Good CBD companies have a certain quality standard to keep, so they have to run extensive research and development. At the end of the day, even the most skilled farmers will have a difference in CBD content in each crop, and even between parts of the same plant. Not to mention the difference in final concentrations after extraction.

To do this, a company needs to employ highly skilled people, as well as, complex equipment. Better yet, some companies opt to third-party test their produced CBD in certified labs. That can also be very expensive, especially if done regularly. All of these reasons contribute to why is CBD so expensive.

The problem here is that the right way to do it costs a lot of money. So, any reputable CBD manufacturer will have to price their product at a certain level. Unfortunately, others can cut corners at every level of the process, and still price their “CBD” at market value. Therefore, a third-party testing certificate is a good indicator for transparency.

4. Marketing and Distribution

It’s extremely rare to find CBD products in mainstream shops. Even on Amazon it’s not allowed to sell CBD products, although some still do. That’s because of the lack of FDA regulation, as well as, some bad apples in the CBD business. If you owned a retail shop you wouldn’t want to risk your reputation or risk legal problems for any product.

All this limits the channels of distribution, as well as, the marketing for CBD products. A lot of products are cheaper simply because they have access to large retailers, bulk buying, and shipping networks. Sadly, the CBD industry doesn’t have this luxury for the time being.

The solution to this problem is scaling down operations and limiting marketing efforts to online platforms. A lot of CBD manufacturers opt to sell on their own websites or small shops. Therefore, their marketing strategy is limited to search engines and social media, which requires a lot of time and money to get an edge.

5. Financing

Because of its strong and understandable association with cannabis, banks consider CBD a high-risk business. This has a lot of consequences for CBD businesses. For example, loans come at a much higher interest rate, if they are approved at all. This leads most CBD manufacturers to rely on private investors. This creates a business plan that is aimed at breaking even as quickly as possible, which I turn increases prices.

Even if you were to start your CBD business with your own pocket, that won’t solve the problem. Because as we discussed, CBD is a high expenses business and you must become profitable to maintain it. Therefore, difficulty in financing also contributes to why is CBD so expensive.

6. Pricing Different Concentrations

Most people asking the question “why is CBD so expensive?” are influenced by the standard price of a smaller dosage. That’s because naturally you want to try it first before buying a large concentration or quantity. That’s a smart way to go about trying CBD products, but it doesn’t necessarily reflect what you’d pay as a regular user.

For example, if you try low concentration CBD gummies, you’ll normally find it cheaper (per dose) to buy a larger quantity. This may not make a big difference for a one time buy, but on the long run, you’ll be saving a lot.

How to Get the Best Value for Money

If you shouldn’t look at the price-tag of CBD products, and if they’re not sold by trusted retailers how can you tell that you’re getting your money’s worth? The short answer is to always buy from trusted sources of course. But that’s easier said than done. Here are some tips that can help you buy better CBD products.

1.     Look at Reputation

Because CBD oil is not regulated by the FDA, you can find many counterfeit oils and products that barely have CBD content in them. Therefore, it’s always better to buy from the well-established brands that have a lot of customer reviews. Simply put, the better the brand’s reputation, the more it has to lose. There are plenty of reviews online that can help you find the best CBD gummies or oils.

2.     Buy Directly from Brands

Whenever possible, it’s better to always buy from the brand itself. This is because you can buy a product that claims to be associated with a well-known brand but is actually a fake. Furthermore, if your CBD brand of interest doesn’t have their own selling platform, that might seem a little shady.

3.     Transparency

Nowadays, it’s easy for a sub-par brand to give its CBD products an attractive packaging. An expensive looking bottle with CBD written on it claiming to sell pure CBD seems a bit too reductive doesn’t it? There’s more to it than that. Look for brands that communicate as much details on the cultivation process and the method of extraction and how they develop their product. Of course, it’s not fool proof, but it’s an effective method to find more trustworthy sources.

4.     Lab Certification

As we’ve mentioned before, a good sign of good manufacturing practice (GMP) in the CBD industry is to perform third-party lab testing. A certificate of analysis (COA) basically tells you that this product contains the things it claims to. A COA can also include a toxicology report that ensures that a product is free of certain toxic substances.

Conclusion

There are a lot of reasons to why is CBD so expensive. However, is it really expensive considering its benefits? For example, if you suffer from an anxiety disorders, CBD oil can help relieve anxiety. There are multiple studies on the health benefits of CBD. Recently, the FDA approved a drug that contains CBD as an active constituent for the treatment of certain kinds of epilepsy. When you compare its price to conventional medicine or even supplements, you will find that CBD isn’t as expensive as you think.