At a glance, CBD can seem expensive. There are reasons why CBD oil is so expensive, however, that might make you rethink your perspective on CBD pricing. In this guide, learn 10 of the reasons why CBD products might seem more expensive than comparable alternatives, and find out how to get the most value out of your CBD purchases.
1. Extraction, Purification, and Refinement Costs
Cannabis sativa is a complex plant requiring a great deal of different types of equipment for extraction and purification. Learn why the particularities of CBD oil extraction naturally drive up the cost of this coveted natural concentrate:
CBD extraction requires large and complex equipment, usually custom-made. Larger CBD operations must devote entire rooms or even warehouses just to extraction and purification, and the equipment required can often cost in excess of $500,000, even for smaller operations. Once purchased and installed, CBD extraction equipment must be maintained by skilled technicians, an added cost to the price of doing business as a CBD producer.
Employee Operating Expenses
A CBD producer that provides end-to-end vertical integration must often employ dozens of employees at a time, all of whom must be skilled in different areas of expertise. It is ethical to pay valued employees fair living wages, and some employees hired by CBD producers have extensive qualifications, allowing these individuals to demand high salaries.
2. Removal of THC for Compliance & THC-Free Options
Crude hemp extract often contains more than 6% THC, approximately 1000% over the legal limit of 0.3% THC, as defined by the 2018 Farm Bill. Extensive purification processes must be used to lower this THC concentration. If a CBD product is intended to be entirely THC-free, even more purification is required.
Out of the two techniques commonly used to remove THC from CBD oil, one is considerably more effective and desirable but also much more expensive. Learn about both THC degradation and chromatography THC removal below to better understand why Colorado Botanicals CBD oil is exclusively produced using chromatography:
Most CBD producers remove THC from their hemp extract using degradation, which usually results in THC degrading into CBN. Not only can the process of THC degradation damage the underlying extract, though, but it can also be less efficient at removing THC, resulting in a lower-quality product.
THC degradation costs far less than more thorough and gentle methods, which is the main reason behind the drastic price disparity noticeable between CBD products made by different producers. Cheap CBD is usually made with THC degradation, while high-quality CBD oil is made with other means.
- Substantially lower costs
- Damages other components of hemp extract
- Does not actually remove THC, it just converts it to CBN and other unknown compounds
- Inexact and unreliable
- No terpenes, flavonoids, or other beneficial compounds survive
- Less cannabinoids present
Chromatography and Purification
Chromatography is the exact science of separating chemicals present in a substance. In the context of CBD extraction, chromatography flawlessly removes all THC without damaging any of the other components of cannabis concentrate.
The result is full-spectrum CBD oil with far higher concentrations of CBG, CBC, CBN, CBDV, CBT, CBE, and the other minor cannabinoids that naturally occur in Cannabis sativa, which are often destroyed in the process of forced THC degradation. Cheap CBD oil is less effective due to its lack of these minor cannabinoids.
- Higher-quality oil
- No bad smell or taste
- Does not damage the underlying extract
- Entirely and reliably removes THC (0.0% THC)
- Ability to retain more cannabinoids
- At Colorado Botanicals, we’re able to retain CBG, CBC, CBN, CBDV, CBT, CBE, and CBL, along with CBD in our extracts.
- Naturally retain terpenes, flavonoids, polyphenols, and phytonutrients
- Substantially higher costs
- Specific engineering and science background to operate the equipment
- Product loss and lower yields in the process
3. Hemp Cultivation Challenges
Hemp is an inherently finicky crop to cultivate. Nicknamed “weed” for its ability to grow practically anywhere, Cannabis sativa is nonetheless very much a product of its environment. If it is cultivated in excellent conditions, hemp will turn out excellent. If anything but the utmost care is given to the hemp farming process, however, contamination and substandard yields are unavoidable.
To cultivate hemp properly, you must invest heavily in an adequate setup. This naturally leads to higher costs than those seen in comparable industries, all due to the peculiarities of Cannabis sativa as a plant.
4. GMP and ISO 9001 Certification, Implementation, and Management
It may not be legally required for a CBD producer to pursue some forms of optional compliance and certification, but doing so ensures a level of professionalism and quality that non-certified CBD producers cannot provide. Colorado Botanicals, for instance, has attained full Good Manufacturing Practice (GMP) and ISO 9001 certification, which are considered to be the most prestigious forms of safety and compliance certification available in the manufacturing field.
Implementing compliant systems and then maintaining them to remain compliant is a full-time effort that we have allocated to a special quality control team and Colorado Botanicals. This extra step provides quality assurance, but it can contribute to the increased price of CBD products.
5. Misrepresentation By CBD Companies
Some CBD products are offered at high prices for precisely no reason. Certain less-than-ethical CBD companies have purposefully misrepresented the cost of producing their products, achieving unreasonably high-profit margins by deceiving their customers.
A company may claim to produce its CBD extract using chromatography or that it commissions third-party test results. Upon further examination, though, these claims may not always be substantiated. It’s easy for dishonest CBD companies to recognize that CBD products often fetch high prices, and they might set their prices just as high despite not providing similar value.
How can you tell if a CBD company is properly representing its products? Follow this checklist:
- Reference third-party review sites and verified customer reviews
- Research the processes the company uses to produce and test its products
- Ask customer service representatives anything you like, noting any evasive answers
6. The Cost of Third-Party Testing
Having each batch of your products tested by a reputable independent lab is a reality that CBD producers must face. It is undeniable CBD is so expensive when you have to have your CBD products tested properly, so companies that do so often charge higher prices.
You are receiving more value for your money, though. A company that properly tests its CBD products can be counted on to not include contaminants in its formulations, which should be a high priority if you take your health seriously.
Every batch of Colorado Botanicals products is tested for over 300 contaminants, including:
- Heavy metals
- Microbial contaminants
7. High Credit Card Transaction Fees
To sell products online, credit card transactions must be handled by a processor. Credit card transaction processors, however, do not look kindly upon CBD companies and often charge outrageous fees per transaction — a cost that is unfortunately passed on to the consumer. It simply costs more to sell CBD products online per transaction than products in comparable categories, another factor adding to the increased price of CBD products sold on the internet.
8. Marketing Difficulties & Higher Costs for CBD Companies
Transaction fees are far from the only service that costs more for CBD companies. Barred from using conventional forms of online marketing, CBD companies must pursue alternative options such as content marketing, which offers higher-quality results but at an increased price.
When CBD companies can use normal marketing, higher prices are charged due to hemp being viewed as a “risky” commodity. Almost everything in the world of marketing and other business services costs more for CBD companies simply because they handle CBD.
9. Financial Institutions Don’t Support CBD Companies
Mainstream financial institutions have traditionally had a complicated relationship with hemp and cannabis companies. To this day, most CBD companies cannot access conventional banking due to federal regulations viewing their business operations as technically illicit.
This situation persists despite the 2018 Farm Bill seemingly putting hemp in the clear. Much more needs to be done to fully normalize the regulation of the American CBD industry. Lack of access to conventional banking services forces CBD companies to find alternatives, which often cost more than mainstream options.
10. The CBD Market Is Evolving
The standards of the CBD industry have changed rapidly, with important news stories often playing out on the state or local level. At the same time, CBD is gradually making headway federally, both opening up new opportunities and producing unprecedented challenges.
To give an example, some CBD companies still charge the same prices for the same products they’ve made the same way since 2014 or even earlier. In the interim, better processes and products have come along that offer more value, but these companies still charge high prices simply because they haven’t adapted to new market dynamics.
Here are our key takeaway points:
- The cost of CBD is gradually tracking down over time as the market stabilizes.
- Expect prices at the consumer level to drop even more whenever CBD receives a more authoritative nod from the federal government.
Frequently Asked Questions
Learn more about CBD pricing in the following FAQ section:
How much should good CBD cost?
The average price per milligram for high-quality CBD products can vary depending on the type of product. Here are some general CBD pricing principles to keep in mind:
- CBD tinctures (CBD oil) are the simplest to make, so pricing is relatively low. Expect good CBD tinctures to cost around $0.07 to $0.10 per milligram.
- CBD softgels and CBD gummies can cost a bit more to make, but prices in this category still tend to trend around $0.07 to $0.10 per milligram.
- CBD topicals are comparatively complicated to formulate. As such, high-quality CBD topicals can sometimes cost around $0.10 to $0.15 per milligram.
Ethical CBD companies try to keep their prices as low as possible while still providing the highest possible quality and value.
Will CBD prices come down?
Yes, CBD prices are expected to continue to drop as the industrial hemp industry becomes more respected and acknowledged. Many of the business pressures discussed in this guide are expected to be alleviated in the near future, triggering the next wave of increased CBD affordability.
Is CBD oil overpriced?
In some cases, CBD oil may be overpriced. Many CBD companies, however, operate on ethical grounds and charge fair prices for their products. Before determining if CBD is overpriced or not, make sure to properly research all the factors that can impact the price of manufacturing and marketing CBD products.
How to Save on CBD
Colorado Botanicals makes it easy to save on your CBD purchases. Here are three ways how:
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