One thing that continuously baffles CBD oil users is its high price point. People wonder why getting their hands on a bottle of CBD oil can cost a pretty penny. Let’s see why CBD oil is so expensive.
To fully understand it, let’s paint a little picture of its production process. Read on to learn everything CBD and the costs involved in it.
Why is CBD oil so expensive?
CBD oil has become a sought-after supplement in recent years. It is getting the attention of numerous health enthusiasts, athletes, celebrities and medical practitioners. This has led to a growing CBD industry, with a much higher demand than supply. As more people become interested in CBD oil, it begs the question:
1. Extraction Process
The most popular method is CO2 extraction, which requires expensive equipment and skilled labor. The equipment needed to extract a small amount of quality CBD oil is quite pricey.
2. Quality Assurance
Quality assurance ensures that CBD oil is free from contaminants and harmful compounds like pesticides and heavy metals. Doing so can add to the cost of CBD oil production.
3. Packaging and Shipping
Using high-quality packaging materials can increase longevity of the product, but this will also add to the cost. Additionally, shipping CBD oil can be tricky, expensive, and subject to regulations.
4. Raw Materials
The cost of raw materials needed for CBD oil production varies depending on a range of factors. The quality of raw materials used to create CBD oil is crucial. Cultivating hemp plants is not cheap. CBD oil production requires high-quality hemp plants.
5. Retail Markup
Once CBD oil products are manufactured and tested, they’re sold to retailers who in turn sell them to consumers. Retailers must add their own markup to the price of CBD oil products to cover their overhead costs and profits.
Obtaining pure and safe CBD oil takes a lot of work, science and investment. If you look at the big picture, you’ll appreciate the cost. The process is careful, and the end product is one that is worth the investment.
How Regulations Impact CBD Oil Prices
The CBD oil legality remains a murky area in many parts of the world, and this has a direct impact on its price. So, what exactly is the legal tangle that impacts the cost?
1. Federal and state regulations
While the 2018 Farm Bill legalized the cultivation and sale of industrial hemp, each state can set its own regulations governing the production and sale of CBD oil. This means that CBD oil companies have to comply with a host of federal and state laws, which can be time-consuming and costly.
2. Lack of FDA regulation
The FDA has approved a CBD-based drug for the treatment of certain medical conditions. It has not yet established clear guidelines for the production and sale of CBD oil. CBD oil manufacturers have to undertake expensive tests and studies to demonstrate the safety and efficacy of their products.
3. Limited access to banking services
Many banks are hesitant to work with CBD oil manufacturers due to the legal complications associated with the product. It’s difficult for CBD oil companies to obtain loans and maintain cash flow. It can contribute to higher prices.
4. High taxes
CBD oil demand has also attracted significant tax levies. It is driving up the cost of the product. In some states, CBD oil is subject to a higher tax rate than other products that impacts the price that consumers pay.
As regulations continue to evolve, there is hope that prices will eventually come down, making CBD oil more accessible to all.
A Look at the Numbers
ROI is a term used to describe the amount of money you can expect to make in relation to the amount you invested. In the case of CBD oil, let’s understand the potential ROI.
1. Product Type
CBD oil comes in a variety of forms like tinctures, edibles, topicals, and more. Each product type has its own production and marketing costs. For instance, tinctures require less production costs but may have a higher marketing cost due to the competition in the market. On the other hand, edibles may have a higher production cost but a lower marketing cost since they are a less common form of CBD product.
2. Farming and Manufacturing
Organic and outdoor hemp can have a higher cost of production but can result in a higher-quality product that appeals to consumers.
Indoor hemp has a lower cost of production but not the quality of a product.
Additionally, using a CO2 extraction method can result in a higher-quality product, but may also increase production costs.
3. Market Demand
The ROI may increase because of increased sales as the market expands. But as more companies enter with competition, companies can lower their prices to stay competitive.
The ROI may vary based on these factors, but the growing demand for CBD oil suggests that the industry may be a worthwhile investment.
Where Does the CBD Oil Price Point Stand?
Here’s what we can expect from the future of CBD oil prices:
- Increasing competition will drive prices down. With companies entering the scene and the hemp markets continuing to expand, customers will see a wider range of price points.
- Advances in production technology and techniques may help lower costs. Until recently, most CBD extracts had to come from hand-cut plants, but advances in automation and cultivation could make the process more streamlined and production-friendly.
- Federal regulations could change the cost of production quite dramatically. With the current state of applications and potential legislation, it’s unclear how the regulatory environment will play out. Changing regulations could hinder or help production, which would ultimately change the final price point.
- Market fluctuations could create variations in pricing. In case CBD oil demand continues to grow at the current rate, prices could stay high. But if the market levels out or even become over-saturated prices can drop.
The future of the hemp market is still unclear. But one thing is certain: high-quality, effective CBD oil requires a significant investment of resources. That’s why it may be more expensive than many other supplements.
That said, with the right company and product, that investment will pay off in terms of quality and results. And as competition, production techniques, regulations, and market stability change and develop, it’s quite possible that prices will shift accordingly.
CBD oil costs may seem exorbitant, but we must understand all the factors that contribute to its price. From the labor-intensive cultivation process to the rigorous testing requirements, every step of the manufacturing process requires painstaking effort and investment.
And if you’re on the fence about making the jump, just remember: quality CBD oil is worth its weight in gold.