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09/07/2020

Why Is CBD So Expensive? We Investigate

Why Is CBD So Expensive? We Investigate
By Penguin CBD

No matter if you’re brand new to the CBD wellness trend or if you’ve been exploring it for a while, you’ve probably asked yourself why everything is so expensive.

For those of you who are brand new to CBD oil, you might even think that the prices are unnecessarily high – especially for such small amounts! But if you’ve been reading our blog, you know that the quality of your CBD matters. So, let’s take a look to see if the prices are justified.

Creating CBD-Rich Strains

For many people, CBD is a convenient way to reach their wellness goals. This little beneficial compound goes through many steps to come to you in the form of tinctures, gummies and salves.

The road from production to retail is long and expensive, which is one of the many reasons why it’s so costly. Let’s unpack how the industry works to create CBD-rich strains, and what that means for you as a consumer.

Producers of CBD have to create a high-quality, CBD-rich strain of cannabis. That means they work on engineering a strain that has higher levels of CBD than other cannabinoids. This is a tricky part of the process, because there are so many legal gray areas in this country. The producers have a doubly difficult job – creating a high-quality strain and making sure not to step outside of what the law allows. 

CBD-rich plants can be grown in specific states around the country, but overall, the process is limited to what each state deems lawful. On top of that, producers must pay steep taxes. That means that even before it gets to the extraction process, a producer is already spending a decent amount of money. The high price of licensing fees is just another one of the reasons why CBD is expensive.

But that’s not how it is everywhere. In other countries, problems are more complex and challenging. For example, in the U.K., the government only allows a specific number of producers to get licenses to grow.

That means the limitations on the market make it even more expensive. Licenses are hard to get and usually go to people's family and friends in the U.K. government. In this way, the market is even more restricted and controlled than it is here. 

Trickle-Down Effect on Farmers

Since the base cost of production includes so many additional fees, it shouldn’t surprise you that hemp farmers have it pretty bad as well. Hemp is taxed higher than other crops, so there’s not much incentive for farmers to switch from growing, say, corn, to growing hemp.

Let’s unpack this a bit, because it does factor into the bottom line and affects what you end up paying for your gummies and tinctures. 

The American hemp market is expected to reach more than $26 billion by the middle of the next decade, but farmers aren’t seeing many financial gains. The opposite is true.

Many hemp farmers are worried about the myriad issues that are plaguing the industry. Here are the top five complaints of hemp farmers.

1. Low first-year yields. When growing hemp outdoors, farmers are subject to the weather. When there are heavy rains and low growing seasons, their crops suffer. While it’s true that an acre of hemp can sometimes bring $40-50,000 per acre, hemp farmers say that there’s no way this year’s crops are going to yield that much.

2. Growing hemp is hard. Farmers might end up seeing decent returns at some point, but the fact is that growing hemp is difficult. Modern machinery can help, but many new farmers have had to invest tens of thousands of dollars to get the harvest in. Hemp seedlings are placed in the ground by hand, which involves manual labor and time.

3. There’s a shortage of hempseeds. CBD products require using all-female plants, and many farmers have been getting ripped off when some of their seeds turn out to be male. For CBD farmers, the male plants are entirely worthless, which means they’ve just wasted their time and their money.

4. Thievery is rampant. People think that hemp and its cousin marijuana are the same, so some folks out there are stealing hemp plants. Farmers all over the States have been complaining about losing crops to theft, and the problem seems to be getting worse. This means that farmers are forced to either invest in expensive security measures or assemble a team of lookouts to keep thieves out at night.

5. The market is saturated. Okay, so this one is pretty crazy. The 2018 Farm Bill helped usher in the era of CBD, and naturally, lots of farmers wanted to take advantage of the new trend. But there might be too many farmers. A new report shows that in 2019, there was a 72 percent increase in the number of acres dedicated to hemp farming. That’s good news, right? Well, not so fast. Now that the first harvest of 2020 is just about finished, lots of farmers are looking for places to sell their crops.

Wheat, corn and other commercial crops can quickly be sold to local grain elevators, but it's not that easy with CBD. The bulk of the hemp market is currently overseas, where hemp has been legal for a long time. 

To make matters even more pressing, now farmers are forced to look for places to store their crops, or it’ll all go to waste. Because the market is flooded and no one is buying it, the value is much less than farmers initially anticipated.

All of these issues aside, hemp farmers are also experiencing significant problems with crop insurance, banking and a lack of access to the right kinds of pesticides and herbicides. 

Growing Challenges

Thievery and low crop yield aside, the process of growing quality CBD is complicated. Sure, hemp is a hardy plant and can usually withstand lots of different weather conditions. But to obtain a quality yield requires a lot of finesse. 

Things like specific temperatures and regulated moisture content mean that most farmers aren’t going to experience the same level of success growing outside as they would if they were growing inside. That means that it’s impossible in some locations to grow hemp successfully, which is causing some farmers to turn to indoor growing choices. 

Outdoor cultivation allows crops to photosynthesize using sunlight. Even the best indoor operations can’t recreate the nourishment provided by good old-fashioned sunlight. But outdoor crops are subject to lots of issues, like the ones we’ve mentioned above. Aside from the human pests, farmers must consider other pests and animals who like to munch on hemp plants' tasty green leaves. 

Comparatively, outdoor farming is less expensive than indoor agriculture. It’s typically lower maintenance for farmers and generally yields a higher crop and a higher-quality product. Pests are a big challenge, and farmers must have ideal weather – which is just about impossible to control. 

Sure, outdoor farming might be the most organic and original way to go, but it also might not be the best choice for hemp farmers. Here’s why. 

Indoor farming offers farmers a lot more control over their crops and yields. It helps produce quality hemp, even in incredibly inhospitable conditions. For this reason, indoor farming is quickly becoming the go-to choice for hemp farmers, especially after the disastrous 2019 growing season. 

Pests, animals and thieves all have a more challenging time reaching the indoor plants, which is a plus. But indoor farming comes at a cost since it’s a significant financial investment. The equipment has to be bought, which can add up fast. Since the indoor farming approach requires artificial lighting and water sources, farmers have to foot that bill. 

Manufacturing CBD Oil

Now that you see what kind of pressure and strain farmers are under to get the product to the market, you might have a clearer understanding of why your favorite gummies are a little pricy. But CBD's actual cost doesn’t stop with the farmers – there are also the manufacturing costs to factor in.

Extraction methods are necessary to isolate the CBD from other cannabinoids and distill it into a viable product added to gummies or made into cream. This extraction process requires expensive equipment, no matter if the farmer chooses a CO2 extraction method or an ethanol extraction method.

CO2 extraction machines use crazy levels of heat and pressure to transform carbon dioxide into a state with properties of both a liquid and a gas. In this supercritical state, the CO2 can permeate solid plant matter – in other words, it pulls things like CBD from the plant.

After the CBD is extracted, the mixture has to be frozen and purified. This process is called winterization, and it allows producers to separate specific compounds before finalizing the product that ultimately finds its way to you.

After winterization, the final product is left in an inert oil for a specific period. Oils like coconut and MCT permeate the CBD, helping with the CBD product's overall taste. After winterization is complete, the oil is bottled and prepared for you. 

Okay, so that has to be the last step in getting CBD from plant to you, right? Well, not exactly. There’s still one more step – and it’s expensive.

Getting your CBD oil ready for the marketplace involves navigating the tricky legal issues relating to the product. That means the oil has to be tested in labs and other regulatory bodies to ensure it meets federal guidelines. These tests are expensive, because the CBD has to be assessed against all kinds of criteria, including individual efficacy and overall chemical composition.

But keep in mind that these tests and accreditations are all to benefit you, the consumer. Farmers want to ensure they’re bringing the best possible product to the market, and that involves making sure the CBD levels are where they want them to be.

If you’re a savvy consumer, you might be considering price-shopping between brands to find the “best price” for CBD. The reality is that you might be wasting your time, since there’s no way to determine precisely how much CBD costs. There are so many factors that contribute to the cost of CBD. 

Farmers are at a significant disadvantage right now as the legality of this product continues to unfold. They’re at the mercy of pests, thieves and the weather, making it difficult to profit from CBD. The extraction process is complex and challenging – not to mention expensive, all of which factors into the bottom line. And because the industry is trying its best to produce potency standards, lab tests are rigorous and expensive. 

Here’s what you need to keep in mind: Regardless of the price, you have to put your safety first. Given the high cost of CBD, you might be tempted to go with the cheapest available. But you might also be putting yourself at risk.

The market is full of cheap, low-grade oils, and some of these might contain questionable and potentially harmful additives and fillers.

It might be tempting to go with the less-expensive version, but you’re not going to know exactly what’s in the bottle. Instead, it would be best if you searched for high-quality, lab-verified products like Penguin CBD. It’s worth it to avoid exposing yourself to unwanted and unneeded contaminants. 

Final Thoughts

CBD is expensive. There’s no getting around that. But so too are lots of other things. It’s important to remember that CBD oil production is full of lots of challenges from start to finish, all of which contribute to the overall cost.

CBD is heavily taxed, farmers have distinct challenges and the regulatory aspect is expensive. Remember to go low and slow with your CBD. Chances are you can take a lot less than you expected, and that small bottle you just bought will last for a long time to come. 

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