WHY IS CBD OIL SO EXPENSIVE?

Cannabidiol(CBD) belongs to a group of at least 100 other cannabinoids found in cannabis plants such as hemp and marijuana. CBD is a phytocannabinoid and, together with THC, tetrahydrocannabinol, account for almost 40% of the extracts from cannabis-related plants. Cannabidiol is a hydrocarbon with a melting point of around sixty-six degrees centigrade and is insoluble in water. Several key issues influence the price of CBD products which include; the fact that it is a relatively new product in the market, which was legalized in 2018 by the 2018 Farm Bill, which made it possible to plant hemp as a cash crop. Hemp is a major source of CBD oil. Cultivation of hemp is capital intensive. In addition, processing CBD oil from the hemp plant is laborious and highly mechanized, making this oil very expensive. The price of CBD oil and products are affected by several issues discussed below.

Factors Affecting the Price of CBD Oil

Hemp Farming is Very Expensive

Hemp farming in the United States was legalized by the Farm Bill 2018, which commercialized the plant. This presented a new challenge to farmers, especially those switching from cultivating fruits and vegetables. Hemp farming is labor-intensive in that it requires a constant physical inspection to monitor the levels of THC in the plant during its growth. In addition, harvesting is done manually, requiring many hands to complete the task. Harvested hemp plants require a sheltered space to dry them in the right conditions. If stored in a hot area, it may lose its potency as some of the CBD is lost through evaporation. If stored in a cold storage area, plants might get stale, making them unfit for the production of CBD oils. Finally, if the plant overproduces THC, it must be destroyed, resulting in huge losses for farmers. The high cost of farming is passed on to CBD products, making them expensive.

Extraction and Refining of CBD are Expensive

Extracting CBD from hemp is a sophisticated process that requires specialized and highly calibrated machines. CBD is extracted from hemp mainly through two primary solutions, i.e., dissolution in ethanol and supercritical carbon dioxide extraction. Both methods produce perfectly safe products when done correctly, although ethanol extraction is the less expensive option of the two. Manufacturers using the ethanol extraction method may also scale up easily.

Companies that produce tiny batches of CBD oil using supercritical carbon dioxide extraction have exceptionally high-quality products. However, carbon dioxide extraction is a very costly procedure with many possibilities of error. As a result, small batches produced by ’boutique’ brands are generally more expensive. Both processes can yield full-spectrum oils which contain CBD, THC, and other minor cannabinoids. Manufacturers pass these costs to the consumer, making CBD oil prices very expensive.

Distribution and Marketing are Expensive

CBD is majorly produced in small quantities and has a small-scale distribution system. Major retail outlets don’t sell CBD products in very small quantities. This is due to regulatory issues, myths, misconceptions regarding hemp, and negative publicity. CBD outlets face limited marketing opportunities, especially on online platforms. Social media platforms and media outlets severely ban the advertising of CBD products, making it difficult for retailers to reach out to their customers. This causes high advertising costs as retailers are often forced to look for other alternatives which are quite expensive and labor-intensive. These marketing costs are a barrier to cheap CBD products.

Research, Development, and Quality Control Practices are Expensive

Producing high-quality CBD oil requires extensive research and development practices. In addition, the produced CBD oil has to undergo extensive testing in private laboratories to ensure it is safe for user consumption. Moreover, the CBD has to meet legal requirements to be licensed for commercial purposes. These practices require highly specialized skills, which are highly absent, making acquisition of these services expensive. Maintaining quality control practices requires constant funding, which puts pressure on the price of the CBD produced, rendering it more expensive.

CBD Companies Rarely Receive Financial Support From Financial Institutions

Despite the past market developments that led to severe financial market crashes, banks and other financial institutions view CBD companies as risky investments, thus rarely extending their financial services to these companies. This makes the cost of acquiring debt from external sources quite expensive for CBD-producing firms. High cost of debt results in slow research and the development process. It also delays the time to lay up infrastructure to ease better manufacturing equipment. These all add up to raising the cost of purchasing CBD products.

Poorly Made Products and Rip-offs are Expensive in Nature

CBD products are relatively new, making their users highly susceptible to fraud. In addition, there are a lot of companies that blatantly produce low-quality CBD products and sell them for the price of the original products. The majority of CBD users lack knowledge of where to acquire CBD products and often get scammed, especially on online platforms. These issues have raised eyebrows among authorities who put up expensive legislation to certify retail outlets that trade in genuine CBD products. Some of the legislative conditions include an annual renewal of certificates that take a long time to produce and are also expensive to acquire. These issues raise the price of CBD products in the market.

Conclusion

CBD products, especially in the United States, are relatively new. As such, lack of proper infrastructure, high farming costs, high production costs, and a relatively high cost of acquiring capital compounds make CBD products expensive. In addition, research, development and the cost of acquiring skilled labor are scarce, and quality control measures add up to the high prices of CBD oil. However, CBD users should be wary of fake products in the market. They should conduct due diligence before purchasing some of these products.