The favorable health benefits promised by CBD are attracting more and more consumers as well as producers towards the supplement. Many consumers have reported the benefits of using CBD products in various medical conditions. These conditions include chronic pain, inflammation, anxiety, stomach issues, sleep disorders, etc.
Moreover, recent relaxation in the legal status of the product has also contributed to the high demand for it. However, the consumers who are experiencing positive health benefits of using the supplement always question why CBD is so expensive!
Well, there are multiple factors influencing the cost of these products. Let us delve into some of these factors impacting the final price of CBD.
Demand and Supply
Whenever the gap between the demand and supply of any item widens it becomes expensive. The same holds true with CBD. The demand for CBD products is growing due to the favorable research outcomes and positive health benefits it offers.
On the other hand, the supply side is not able to match the demand side. The basic reason for this slow response is that growing hemp-plants was illegal in the country before the federal government passed the 2018 Farm Bill. Now, as the government has lifted sanctions on growing industrial hemp with less than 0.3%, it will take some time to grow enough hemp to meet the market demand.
Moreover, it would also require a more conducive legal environment to encourage the farmers to cultivate the crop. There is still a lot of ambiguity in the rules and regulations for industrial hemp farming.
Laws and Regulations
As we see above, there is ambiguity in the guidelines for hemp farming. The laws not only lack clarity for the farmers but the confusion pervades all the areas of the CBD business.
Non-uniformity of Law
Except for Nebraska, CBD is legal in all the other states of the USA. However, there are still many dissimilarities and vagueness in the laws in different states. On top of that, frequent changes in the law make the matter even worse. The role of USFDA on the matter is also not quite encouraging.
Impact on Manufacturing
All these factors are definitely not quite supporting the cause of CBD products. The manufacturers have to make extra efforts to understand the relevant laws and in aligning their procedures & practices with the frequently changing rules & regulations.
This forces CBD manufacturers to appoint a permanent legal team to guide them on all the aspects of the business from product development to customer complaints. This adds to the company’s expenses and thus contributes to the high CBD oil cost.
The ambiguity in the legal status also creates apprehensions in the mind of the financial institutions. They consider it to be risky to partner in with the companies dealing in an already long-time blemished product. And even if they do partner with the company, they do it on their terms by charging higher processing or consultancy fees compared to other industries. This again adds to the cost of the product.
The common hemp plant generally grows as a common weed and takes everything present in the land. This means the plants would take all the heavy metals also present in the land and transfer it to the CBD thus extracted. So, to obtain good quality CBD, farmers have to follow good agriculture procedures until delivering it for extraction.
To get the best quality CBD, the farmers have to breed the CBD-Rich strains of the Cannabis plant which do not contain more than 0.3% of THC.
Despite being legal in almost all states across the country, there are still some CBD-rich varieties of hemp plants that are permissible to grow only in some specific states. So, only a very small area is available for the cultivation of these plants, and that too only in a few states.
Now, even in these states, growing these CBD-rich plants is pretty expensive. It requires specific environmental conditions to get the desired breed of the hemp plants. There are very few locations having such an environment.
So, most of the locations require highly advanced & expensive technology to grow the plants in controlled conditions. This calls for high investments in creating enclosed spaces along with expensive high-end equipment to create desired environmental conditions.
There is another important factor that needs to be considered while growing the hemp plant. As the extract has to be eventually used in the health supplements, it should be free from all the harmful chemicals including pesticides, herbicides, and chemical fertilizers. It means the hemp plant should be grown organically.
It requires adherence to many agricultural practices defined by the respective state. All these high-quality farming practices add to the cost of production and eventually cause a hike in the final price of the supplement.
To make matters worse, there are higher taxes levied on the farmers cultivating the hemp plants as compared to the other crops. Furthermore, the sale of cannabis plants for producing CBD oil also attracts additional taxes.
These expenses again add to the manufacturing cost and eventually impact the final price of the product.
Over and above this, as the farmers have to pay higher taxes on growing hemp plants and again in selling them to the CBD oil producers, it discourages them to grow the crop and sell it for CBD extraction. This worsens the supply situation even more and further widens the gap between demand & supply. This, in turn, leads to a further rise in the price of CBD products.
Cost of Extraction
CBD is one of the many compounds present in a cannabis plant. The maximum concentration of CBD is in the hemp flower with smaller quantities in the leaves & stems. It needs to be extracted from the plant through a specialized process. The extraction process begins after the harvesting of the hemp plants.
The extraction of CBD is a complex process that not only isolates CBD from the plant but also removes many impurities like lipids and chlorophyll present naturally in the plant. It also ensures that no microbial contamination remains in the final extract. All these impurities and contaminants can be very harmful if consumed.
Some cheaper brands use solvent extraction methods to isolate CBD from hemp plants. However, these methods are not only incapable to remove the harmful impurities from the extract but also introduce many harmful chemicals in the product.
Brands that sell high-quality contaminant-free CBD use the CO2 extraction method. This process requires big infrastructure, expensive extractors, and other costly machinery & equipment. Besides, operating the CO2 extraction plant requires highly skilled & trained workers.
Further to these expenses, there is a huge operational cost in the extraction process which requires CO2 to transform from gaseous to the supercritical fluid (SCF) state. In the SCF state only, CO2 can effuse through the plant and dissolve CBD & other compounds to isolate them from the plant.
To reach this SCF state CO2 has to be heated at an extremely high temperature under high-pressure conditions. And generating such heat at high pressures needs a lot of energy which again adds to the high operational cost of the CO2 extraction plant.
CBD extracted through this method contains all the compounds present in the original hemp plant including THC. This is called Full Spectrum oil. Full Spectrum oil offers benefits of all the compounds present in the CBD extract and gives entourage effect to the oil.
Many companies produce CBD oil with Broad Spectrum oil or CBD isolate to remove THC from the extract. Broad-spectrum oil does not contain any traces of THC while CBD isolate does not contain any component other than CBD in it.
So, making broad-spectrum oil or CBD isolate requires more purification to remove compounds other than CBD. Winterization and distillation are the additional processing steps to produce broad-spectrum oil and CBD isolates. These steps require more high-tech machinery, energy, and skilled workers to operate them.
All these high-quality processes add significantly to the CBD oil cost.
Cost of Minor Ingredients
High-quality ingredients used in making quality CBD are also pretty expensive.
Carrier oil is one of the most important ingredients in CBD oil. The type of carrier oil used in the process has a significant impact on the cost of the final product.
A high-quality coconut or hemp oil would impart taste to the other-wise weedy taste of CBD. These oils also provide weight & texture to the product to improve the overall mouth-feel of the product.
Apart from improving the taste profile, carrier oils also enhance the therapeutic value of the CBD product. Different oils transfer their distinct health benefits to the supplement but at the same time also add to the cost of the final product.
Other ingredients may include added flavors and colors to mask the raw flavor & color of CBD and provide soothing characteristics to the product. Genuine sellers would use only natural additives in their products. The natural plant extracts are extremely costly ingredients.
So, all the above minor ingredients too, add to the cost of production that gets reflected in the final price of the product.
Lab Testing Expenses
Being a food product utmost care is needed to ensure that the manufactured product is 100% safe for human consumption. A company producing food supplements has to ensure this at every step of its process.
So, from selecting the land to the final harvesting, each activity undergoes extensive testing to check that the hemp is organic and is free from heavy metals, chemicals, and microbial contaminations.
Post-harvesting testing processes are even more extensive. Each batch of CBD extract and the pre-packaged product is tested for multiple quality parameters in the in-house laboratories. Besides, samples of each batch are collected and sent for outside laboratory for more advanced third party testing.
The product finally packed is also tested for all the set quality parameters and released only after passing all the tests including the microbiological checks. The packed samples are also sent for testing to outside third-party laboratories.
Over and above these lab testings, most of the reputed companies also opt for quality assessment of their plants from the third party audit agencies. These companies have the cGMP certificate and OTC certificates. Besides, many of these companies are audited by the FDA as well.
All the above activities incur high costs and thus impact the final price of CBD.
Though most of the reputed supplement manufacturing companies follow these quality protocols, however, more stringent testing is needed for CBD owing to its controversial past and association with Marijuana & THC. A genuine producer would want to be doubly sure of the quality & purity of the final product to avoid any further controversies.
And this leads to some additional cost implications exclusive to these products.
It is pretty evident from the above processing steps that manufacturing CBD is a highly labor-intensive process. From the cultivation to harvesting and then drying, extraction, packaging, quality testing to support services, the process requires huge labor. And as the process requires special skills it needs workers with specialized skills. The company needs to pay higher packages to hire highly skilled workers. This further adds to the operational cost and subsequently to the CBD oil cost.
Cost of Quality
So, these are some of the practical reasons for the high cost of CBD. Most of these expenses occur mainly to supply high-quality, pure, and completely safe products to the consumers. Besides, many of the expenses are to combat the past image of CBD and to inculcate consumers’ trust & confidence in this wonderful product offering multiple health benefits in a natural way.
Good Quality vs. Bad Quality
Now, it is clear that manufacturing high-quality CBD requires high-quality ingredients, high-quality equipment, high-quality workers, and high-quality in-house & third party testing procedures.
However, there is another side of the coin as well. If there are brands that are investing so much in producing high-quality products, there are manufacturers who do not follow any of these processes.
Many such products are ineffective and some of them do not even contain CBD. The products offered by these sellers are cheap in quality and can even be harmful to the consumers. And as they do not follow any of the quality protocols, they offer them at cheap prices.
If you want to be sure and not risk your life with fake products then we highly recommend checking out these reliable CBD brands for buying your supplies.
Identifying the genuine CBD seller
So, if you ever find any seller offering a cheap CBD product be cautious and check its credentials thoroughly before buying the product. The best way to check it is to check for the third party test analysis report on its website or ask for a Certificate of Analysis (COA) from the seller.
In fact, you should follow this practice even with the sellers’ offering expensive CBD products as well because many sellers can cheat the consumers by supplying cheap products at a high cost.
CBD Type & Potency
As we learned, there are different types of CBD oils viz. Full Spectrum, Broad Spectrum, and CBD Isolate. Each one follows varied levels of the extraction process and has different benefits and thus has different manufacturing expenses.
Some companies believe Full Spectrum oil to be more beneficial due to the entourage effect while others consider broad-spectrum and CBD isolate to be better for not having any traces of THC in them. So, the type of product would also have an impact on the cost of CBD.
Potency or strength is another important factor that causes a difference in the final cost of the supplement. There are varied strengths of CBD offered by sellers like 250mg, 500mg, and 1000mg, etc. So, while comparing the cost of different brands check also the potency of the product and compare the per mg cost of each product.
However, the final assessment of a brand should be done based on the best manufacturing practices it follows.
What does the future hold?
Well, in terms of price, the future is quite optimistic. We have to wait for some time for hemp plants to enter into a profitable cycle. The process has already started with the relaxation of laws around CBD. The good news is that the manufacturers have responded positively to these relaxations besides; there is an increasing demand for these products.
Both of these factors will help in scaling up the production for the entire industry. This, in turn, would lead to the reduction of costs of raw material, equipment, and support services.
More clarity in the laws and regulations would further create a favorable environment for these products. It will enhance the trust of the consumers, manufacturers, and other stakeholders even further. This, in turn, would help in reducing the manufacturing cost and the price of the final CBD product even further.
So, we realized it as a fact that authentic and high-quality CBD oil is expensive. We also understood the genuine reasons for these high costs. However, we would also need to compare it with the right products. Besides, we should also check the prices on the basis of the value these products offer.
Consumers will be able to appreciate the cost of CBD products if they compare it with prescription drugs as these supplements promise to offer similar health benefits without the usual side-effects of traditional medications.
Having said, CBD product is not prescribed for treating any medical conditions as of now (with one exception). Therefore, we would highly recommend you to consult with an authorized doctor before you start to use CBD products.