Why is CBD so expensive?

More detail on this concern is provided in this article.

The costs associated with control testing and growing quality strains

Since the approval of CBD for sale, ensuring product quality has become a priority for companies positioning themselves in this sector. They are required to adopt good manufacturing practices and apply strict quality control measures. They are therefore required to perform safety and purity tests on their products. These tests are performed by laboratories required to follow standard legal procedures to approve the quality of a product. The cost of these tests performed by third parties to the company influences the final price of the CBD product.

In addition, the demand for quality has created an obligation for CBD manufacturers to ensure that the raw materials supplied to them are of high quality. To do this, they require reliable cannabis suppliers. With this requirement, they try to ensure that the raw materials contain only CBD-rich strains. However, growing quality strains comes with a non-negligible cost due to legislation. 

First, the amount of licensing fees paid by cannabis growers is high. Second, some states may allow the use of medicinal CBD, but restrict the process of growing cannabis. Better yet, the CBD industry has become a source of revenue for these states that should not be overlooked. To take advantage of this, the states are imposing heavy taxes on the cultivation of hemp and cannabis. The cultivation is also strictly monitored by the governments. On the other hand, while other crops are supported by governments, cannabis cultivation does not benefit from any form of incentive. All of these factors related to growing quality strains influence the final CBD price.

Labor, the other factor in the high cost of CBD

Labor is one of the explanatory factors for the high cost of CBD products. This is because the manufacturing of CBD products first involves the extraction of CBD from the raw material. This is a very important process. The effective extraction of CBD requires not only operators of extraction machines, but also many other professionals. In addition, the extraction process takes place over a long period of time. Yet, at the end of the extraction process, the amount of CBD obtained is very small compared to the amount of raw material used. 

So, not only is the labor required for extraction significant, but it is required for the entire process. This represents a significant cost to companies. The extraction method employed requires a capital investment in expensive equipment and highly paid professionals.

In addition, after extraction, additional purification is required. This is even more necessary if it is a CBD isolate, that is, an oil that consists only of CBD. All these processes, whether it is the production of CBD isolate or CBD oil, require a succession of steps and high-tech machines that are expensive to use and maintain. Since the labor involved is significant, this is reflected in the price of CBD.

Reseller expenses or import/export costs

Extending supply chains is one of the reasons CBD is so expensive. On the one hand, there are manufacturers who make sure to supply their products directly to users. By doing so, they eliminate the middleman. However, this category of manufacturers is insignificant in number. The majority of manufacturers rely on retailers to sell their products. The retailers in question, in order to make a profit margin, increase the total price of the product on sale. 

This increase in the price of CBD is also applied by online and physical retail stores. This is because in order to go and get supplies from the countries where cannabis is grown, there are mandatory procedures that cause additional costs. These costs vary according to the origin and the quantity of CBD. In addition to the costs related to the procedures, there are the transportation costs which can be classified in two orders. On the one hand, there are the transportation costs related to the supply of raw material. On the other hand, there are the costs of shipping the CBD product. All of these transportation costs added to the profit motive influence the final cost of the CBD product.

The supply and demand game

The price of a product in the market also depends on a play between supply and demand. When supply is greater than demand, the price of the product is low. Conversely, when demand is much higher than supply, the price of the product increases. CBD does not escape this classic commercial market game. Indeed, as a raw material, it is the cannabis plant that is used for the production of CBD products. Not just any cannabis plant, but one with a high CBD content and a low THC content. These plants can only be produced by licensed cannabis farms. Since the number of such farms is limited, they are not able to meet the ever-increasing demand. 

In addition, while the legal status of CBD was still a taboo subject, many farmers often let demand outstrip the actual supply. This state of affairs allows growers who are active in hemp cultivation to demand a higher price for their crops. Today, we can see that even after the acceptance of CBD sales, the industry is still suffering from the effects of decades of prohibition. Unquestionably, this affects the final price of finished products.

Will we see a decrease in the price of CBD over time?

The ability for growers to have a new cash crop to replace tobacco is an issue with legalizing hemp cultivation. For example, in many countries, with the advent of hemp legalization, farmers began a process of transitioning to hemp. Over time, it is possible that the price of CBD will decrease.

How do you price a CBD product?

A CBD product that claims to be of quality must have its certificate of analysis. Companies must be able to provide the consumer with this document that attests to what the product is reliable. The certificate of analysis is therefore one of the ways to evaluate the price of a CBD product