Why is CBD oil so expensive?2020-10-02T21:11:19BST
We receive a substantial amount of CBD-related questions every day, but the one that appears to perplex those interested in purchasing and using CBD oil the most is 'Why is CBD oil so expensive?'. Usually, a quick trip to Google will provide a straightforwardly digestible answer to most queries, but in the case of CBD oil there seems to be a shortage of easy-to-understand answers; and it is for this reason that we've written this article.
You’ll find out about the costs involved in growing, extracting, testing, marketing and distributing CBD and how these affect the quality of the different CBD oil brands.
An introduction to the cost of CBD oil
With such a variety of products, suppliers, and, of course, terminology, the world of CBD, hemp and cannabis can leave even the most knowledgeable of folks scratching their heads. One area which certainly bemuses most people is the price of CBD.
For example, if you were to head over to Google and search for a phrase related to purchasing CBD oil, you'd be presented with a plethora of products – the prices for which would vary wildly. Naturally, this will lead to one question popping up in your mind:
Is a higher price an indicator of higher quality?
In short, the answer to this question is: yes. Of course, there will always be exceptions to this, and no-one can ever guarantee 100% that a product with a high price is of greater quality than a lower-priced product, but, in most instances, this tends to be correct.
The key to understanding why CBD products are so expensive is to get your head around the costs involved in manufacturing, marketing and selling CBD.
What are the costs of growing hemp?
There is far more to growing hemp then merely throwing a few seeds in the ground, watering them frequently and simply watching them grow. Unfortunately, it takes quite a bit more than that to ensure both the quality and quantity of a hemp crop.
Instead of looking at the growing costs per se (as they will vary from country to country, state to state etc.), it is more prudent to ask (and answer) the following question:
What drives the cost of hemp up?
To answer this both comprehensively and succinctly, we will split this into two sections.
Firstly, we will look at the barriers to entry (and growth) of hemp growing, and then we will follow that up by discussing the costs of raw materials.
Hemp Growing: Barriers to entry and growth
As you can see, even before we examine barriers that hemp growers may face, there are numerous factors that affect the quality and quantity of hemp growth and harvesting.
So, what are these barriers? The supply chain as a whole, the requirement for specialised equipment, access to permitted seeds, competition (2), and legal restrictions (such as being unable to process the whole plant). (3)
The cost of hemp's raw materials
The hemp plant is made up of several different parts: root, seed, stem, leaves, pollen and flower. Typically, the latter (the flower) contains a far higher concentration of CBD (cannabidiol) (4) compared to the root, the stem (5), the seed (6), and pollen (7).
With this being the case it makes far more sense to utilise those parts of the plant that are rich in CBD (such as the flower). However, in reality, it is not a straightforward as this. The cost of the flower compared to other parts such as the seed is far greater (sometimes up to 200 times more expensive). (8)
Do they purchase (a lower quantity of) the more expensive parts of the hemp plant that contains more CBD?
Or, do they purchase a larger quantity of the less expensive parts of the hemp plant that contains less CBD?
(Please note, in the UK it is illegal to use any other part of the hemp aside from the seeds and fibres). (9)
No matter which route they decided to take the cost of purchasing sufficient quantities of (hemp-containing) CBD will be expensive. A cost that is passed on to you, the consumer.
The manufacturing process continues...
It doesn't stop there.
There are several stages to the manufacturing process – all of which add extra cost.
Costs of CBD oil’s extraction process
The manufacturing process of CBD is far beyond that of both hemp and cannabis. CBD needs to be extracted from the hemp, which involves separating it from other cannabinoids and impurities.
There are three main types of extraction methods, all of which have their pros and cons. They are as follows: Liquid solvents, CO2 extraction and Oil extraction.
'The downsides?', you're no doubt wondering.
Well, there is one: The cost.
CO2 extraction is one of the most expensive forms of extraction. Although it may work out less expensive in the long run when compared to solvent-based extraction methods (if you purchase the equipment outright), the startup costs are very high (13).
Either way, any company that manufactures CBD oil products should strive to use CO2 extraction for their products where possible, which, as you've probably guessed by now, increases the end cost to you, the end user.
(Liquid solvent extraction can also be used, but extensive testing is required to ensure the end product is safe as it possibly can be).
The above leads us on the next step perfectly...
Costs for testing CBD oil
Some of you might be wondering why testing is needed if CO2 extraction is exceptionally safe, clean and pure.
An understandable question, sure, but testing of products such as CBD oil goes way beyond testing for the levels of Cannabidiol present in the product.
There is far more to the testing of CBD products than you'd think. Rigorous analysis involves a multitude of testing procedures (14) (see below); procedures that are used to ensure that the product meets a vast set of criteria. These include:
Residual solvent analysis: If the CBD has been extracted using solvents, the final product must be tested to ensure that the highest percentage of solvents has been removed.
Microbial analysis: Without microbial analysis, the product may pose a safety threat to those using it (15). This typically includes microorganism testing, statistical sampling, validation and sound assay design.
Potency: All CBD oil products will be tested for the levels of Cannabidiol in it, but it should also be tested for THC too. There are strict laws related to the amount of THC that a product can have in it (16). The last thing a company would want is to have a product that contravenes legal regulations.
Terpene testing: For the flavour and fragrance of the product to be tested a terpene analysis must be carried out (17). Terpenes do also have effects of their own, which may or may not affect the product.
A very extensive testing list.
And yes, you guessed it, an expensive one too. Granted, not all companies will go the lengths of carrying out such a thorough analysis, but those that clearly value their customers (even if they do cost more).
I know which product I'd rather buy.
Costs for distributing CBD oil
Well, we have turned raw materials into an extract oil, which has then been tested, bottled and labelled. What next?
Distribution and its costs.
This, in layman's terms, is the cost(s) incurred to deliver the product from production to the consumer18. And, just as with most other areas covered in this piece, there is more to distribution costs than meets the eye (19).
Here are just a few of the costs that are involved: Business-to-customer selling, advertising & promotion, product and packaging, discounts (trade), market research, warehouse and handling, delivery and shipping, customer service, and sales returns (20).
Once again, these all add up and will increase the price paid by the end-user. We, for instance, stopped stocking Charlotte's Web Oils from Colorado because of these costs, which multiply as the oil needs to cross the ocean and be subjected to export-import taxes and customs.
Marketing costs for CBD oil
In fact, that's all we're going to discuss.
Social media has had both a positive and negative effect on marketing. On the one hand it has allowed businesses to reach a vast wealth of potential customers (potentially for free), yet on the other hand, it is increased competition due to the aforementioned fact.
Of course, there are more benefits to social media marketing than the one mentioned above (21), but to use it extensively and maximise its potential will increase the marketing and advertising costs of a business.
Companies require staff to run their social media accounts. These staff must be paid.
Adverts on social media platforms also must be accounted for.
Copywriters, research and articles for a companies' blog don't come free (or cheap) either.
There is no doubt that social media is the leader when it comes to marketing, but the notion that it can be used entirely free of charge while maximising results just isn't accurate.
Granted, social media marketing is cheaper than traditional advertising methods (22), but it still racks up eventually.
You know where I'm heading with this, don't you?
Yes, that's right, marketing costs increase the cost of the product even further.
The best way to compare CBD oil brands (beyond costs)
With the sheer number of CBD oil and products out there it can be an arduous task trying to decipher which product is a) of the highest quality and b) the right choice for you.
But don't worry, we've got you covered.
Luckily, figuring out the above two questions isn't rocket science.
Here are the things that should be looking for:
• Organic Hemp crops.
• CBD that has been extracted using supercritical CO2 extraction.
• Full and comprehensive product testing.
• Manufactures/suppliers that comply with current legislation.
• Manufactures/suppliers that are registered with The Cannabis Trades Association (CTA UK) or any other legit association.
We've made a selection of the best quality CBD oil products available in the UK and Europe.
CBD costs - To wrap it all up
If you've made it this far then you deserve a free bottle of CBD oil on me (just kidding, you'll still have to pay, sorry).
I hope I've made the entire process and timeline of CBD oil products transparent, in addition to the reasons why each specific area of production and manufacture increases the costs of the end product.
If you didn't quite follow then I shall not tell you off and send you back to the top of the article to reread it, I'll simply provide you with some easy-to-read nuggets of information (that explain why CBD is so expensive) instead.
• There are several barriers to both entry and growth within the Hemp growing industry.
• Parts of the hemp plant that contains the highest concentration of CBD are more expensive than those that don't (therefore a decision has to be made regarding the purchase of either a lower quantity of the more expensive parts or a higher quantity of the less expensive parts). Either way, the cost will be high.
• The safest and purest extraction techniques (CO2 extraction for example) are required to ensure correct purity. This is expensive.
• Complete analysis and testing must also be carried out to ensure the product has in it what it says on the label and so it doesn't fall foul of any laws.
• Distribution and marketing costs add even more onto the final price of the product.
I often hear the old adage, 'You get what you pay for', and where CBD oil is concerned, I believe this to be very true.
My parting piece of wisdom (yes, another piece of 42-carat gold) would be to carry out due diligence prior to committing to a purchase of any CBD (oil) product. You will be, after all, putting in or on your body, so it is better to spend time making sure you've gone for the right brand.
You can't put a price on health after all, can you?
Join us to get updates and special deals monthly:
2 Climate CoLab. (2018). Growing Hemp - Materials Matter 2016 - Climate CoLab. [online] Available at: https://www.climatecolab.org/contests/2016/materials-matter/c/proposal/1330112 [Accessed 4 Dec. 2018].
3 British Hemp Association. (2018). British Hemp Association. [online] Available at: https://www.britishhempassociation.co.uk/ [Accessed 4 Dec. 2018].
4 Andre, C., Hausman, J. and Guerriero, G. (2018). Cannabis sativa: The Plant of the Thousand and One Molecules.
5 Stout JM, e. (2018). The hexanoyl-CoA precursor for cannabinoid biosynthesis is formed by an acyl-activating enzyme in Cannabis sativa trichomes. - PubMed - NCBI. [online] Ncbi.nlm.nih.gov. Available at: https://www.ncbi.nlm.nih.gov/pubmed/22353623/ [Accessed 4 Dec. 2018].
6 Petrović M, e. (2018). Relationship between cannabinoids content and composition of fatty acids in hempseed oils. - PubMed - NCBI. [online] Ncbi.nlm.nih.gov. Available at: https://www.ncbi.nlm.nih.gov/pubmed/25306338/ [Accessed 4 Dec. 2018].
7 Ross SA, e. (2018). Flavonoid glycosides and cannabinoids from the pollen of Cannabis sativa L. - PubMed - NCBI. [online] Ncbi.nlm.nih.gov. Available at: https://www.ncbi.nlm.nih.gov/pubmed/15688956/ [Accessed 4 Dec. 2018].
8 Mjbizdaily.com. (2018). [online] Available at: https://mjbizdaily.com/wp-content/uploads/2018/04/Hemp-Report_Top-10-US-States.pdf [Accessed 4 Dec. 2018].
9 Assets.publishing.service.gov.uk. (2018). [online] Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/757807/hemp-faqs-grower-notes-2018.pdf [Accessed 5 Dec. 2018].
10 Apeks Supercritical. (2018). Apeks Supercritical | CO2 Extraction Systems | Oil Extractors. [online] Available at: https://www.apekssupercritical.com/ [Accessed 4 Dec. 2018].
11 Tandfonline.com. (2018). [online] Available at: https://www.tandfonline.com/doi/abs/10.1080/10408699991279231 [Accessed 4 Dec. 2018].
12 Britishsoftdrinks.com. (2018). Ingredients. [online] Available at: http://www.britishsoftdrinks.com/Ingredients [Accessed 4 Dec. 2018].
13 Vitalis Extraction Technology. (2018). Vitalis Extraction | Supercritical Co2 Extraction for the Cannabis Industry. [online] Available at: https://vitaliset.com/understanding-supercritical-co2-extraction-for-the-cannabis-industry/ [Accessed 4 Dec. 2018].
14 Genie Scientific. (2018). What You Need to Know About Cannabis Testing Lab Setup and Training. [online] Available at: https://www.geniescientific.com/what-you-need-to-know-about-cannabis-testing-lab-setup-and-training/ [Accessed 4 Dec. 2018].
15 Hazekamp, A. (2018). The Trouble with CBD Oil.
16 BBC News. (2018). What are the rules about cannabis oil in the UK?. [online] Available at: https://www.bbc.co.uk/news/health-44534861 [Accessed 4 Dec. 2018].
17 Wikileaf. (2018). How Terpenes Affect Your High. [online] Available at: https://www.wikileaf.com/thestash/terpenes-affect-high/ [Accessed 4 Dec. 2018].
18 Business Pundit. (2018). Distribution cost - Business Pundit. [online] Available at: http://www.businesspundit.com/encyclopedia/general-business/distribution-cost/ [Accessed 4 Dec. 2018].
19 Nber.org. (2018). [online] Available at: https://www.nber.org/chapters/c2697.pdf [Accessed 4 Dec. 2018].
20 Bhasin, H. (2018). Understanding Distribution cost - 11 types of Distribution expenses. [online] Marketing91. Available at: https://www.marketing91.com/distribution-cost-distribution-expenses/ [Accessed 4 Dec. 2018].
21 Forbes.com. (2018). The Top 10 Benefits Of Social Media Marketing. [online] Available at: https://www.forbes.com/sites/jaysondemers/2014/08/11/the-top-10-benefits-of-social-media-marketing/#370a0e01f80d [Accessed 4 Dec. 2018].
22 LYFE Marketing. (2018). Traditional Media vs. Social Media Advertising - Cost Comparison. [online] Available at: https://www.lyfemarketing.com/traditional-media-versus-social-media/ [Accessed 4 Dec. 2018].