3 Reasons Why CBD Is So Expensive
Why Are CBD Product Prices So High?
Have you ever gone shopping for CBD and been shocked at the prices of common tinctures and CBD edibles?
If you require multiple high doses of CBD per day, the expense of many CBD products on the market today can quickly become as restrictive as prescribed pharmaceuticals!
The price of CBD becomes even more of a barrier when you consider that many folks report feeling no effects from some CBD products they’ve tried - who can afford to waste hundreds of dollars on something that might not even work?!
In this quick discussion, we’ll explain the 3 big factors driving CBD product prices so high, and how you can shop for quality CBD that doesn’t break the bank.
1. “Whitelabel” Production & 3rd Party Costs
The demand for CBD products has exploded since the passage of the 2018 Farm Bill, and many businesses have jumped to get into the CBD industry as quickly as possible.
Graph 1: Example of CBD Edible Production Steps & costs
As such, many CBD companies are not making their own products - instead, they are using a process called “whitelabel production”.
Whitelabel production, or “whitelabeling” as it’s often called, involves producing a product line in a large-scale central production facility which also makes other similar products for many brands in that industry, and simply applying the brand’s labeling and final packaging just before distribution.
The brand on the label usually has very little involvement in the actual production of the CBD product made by the whitelabel production facility - the quality of the product may suffer from a lack of specialized oversight during every step of the production process, and the brand has to pay a high percentage to the producer to make their products for them.
Whitelabel production comes along with added costs from each step of the CBD product’s creation process.
Between buying the starting CBD source, possibly isolating CBD from hemp using extractor services, creating the final CBD-infused product, producing & applying all packaging, and distribution to points of sale, these 3rd party costs quickly add up to one very expensive final CBD product.
This is why even common CBD gummies are so expensive in many cases - a simple product on paper quickly becomes expensive when each production step is adding 10-30% markups!
If you’re buying from a CBD store or website platform selling many CBD brands, the cost to get the product from the producer to the distributor may be passed on to you directly as well.
If your CBD cost per day is rivaling that of prescriptions, it can quickly become unsustainable to use, so looking for CBD products you can buy direct from the producer is one great way to cut your final CBD costs - eliminating the middle man eliminates their fees!
At Periodic Caramels, we make our craft hemp-infused butter in house and immeditely use it to make our hemp CBD caramel edibles in the same commercial kitchen, ensuring a fresh full-spectrum CBD edible without all the added production costs & quality concerns that come along with whitelabel CBD production.
2. Regulation & Compliance Fees
While Hemp CBD is far less regulated & less taxed than the high-THC products made in state legal markets, it is still a substantially costly industry in which to operate a business.
Graph 2: Some Common CBD Cost Contributors
Hemp crops are subject to special taxes from state & federal governments, increasing the amount of profit lost to business expenses.
Hemp plants are very work-intensive to grow properly at large scale & process into final useable hemp flower, requiring careful farming processes & lots of man hours.
Hemp farms in established hemp states must also pay to acquire & maintain their hemp license to be legally compliant with the state, as well as extra operational fees to comply with licensee regulations on things like safety & transparency - including expenses like building security systems, camera surveillance systems for inspections by regulatory agencies, labeling & packaging that meets state CBD disclosure requirements, and other important regulatory compliance items.
The cost of doing business in such a regulated industry must be built into the final product price to keep the business profitable enough to stay afloat.
Though not all states have clear CBD product testing requirements just yet (as you can read in our CBD Rules By State blog), any quality CBD product for sale online will be lab tested at several points in its production.
These lab tests add a small bit of cost to the production process, which can add up if the starting CBD source and CBD product being made are tested at several points - but these results are well worth their price to ensure your CBD product is safe & effective.
If you don’t see accurate lab results and a commitment to transparent & compliant procedures, don’t buy that CBD!
3. Artifically Inflated Prices to Project "Quality"
Because CBD is a new and very popular functional ingredient, many companies will use the somewhat-limited supply of quality hemp and/or CBD isolate (depending on the CBD infusion method used) and very high customer demand as a reason to increase their CBD prices beyond fair margins needed to survive & grow as a business.
Many bad actors in CBD are looking to pass off second-hand quality products as top-notch selections worthy of higher price tags, placing profits over consumer safety.
For a guide on how to determine CBD product quality, check out our blog series on Understanding CBD Lab Results!
It’s not uncommon for high-priced CBD products to deliver underwhelming or unpredictable results because they don’t contain the CBD percentage they claim or have contaminants like undisclosed THC amounts or residual solvents & pesticides.
High price alone is not an indicator of CBD quality!
Always verify the lab results and explore how transparent the CBD company is about its production processes to determine whether or not the CBD product is worth the price.
While supply & demand does account for some natural inflation in CBD products in the still-young industry, the good news is that CBD prices look set to stabilize in the coming years as more high-quality cannabis flower is produced by ethical growers and more infrastructure is established to allow CBD products to be made quickly without relying on centralized whitelabel production facilities.
Final Thoughts
We hope that this review of CBD product price contributors has helped you understand the reasons, both good & bad, why some CBD products are so expensive.
We’ve taken all of these price drivers into consideration in our hemp CBD edible production process, and strive to eliminate them as much as possible to deliver the highest-quality CBD products possible at the lowest price to you.