What’s drawing both consumers and product manufacturers to CBD oil are its highly promising purported health benefits, from reduced anxiety to help with nausea, inflammation, and insomnia. And though we still need more comprehensive research on the effectiveness of CBD oil, the World Health Organization has reported that “CBD exhibits no effects indicative of any abuse or dependence potential…there is no evidence of public health related problems associated with the use of pure CBD.” Thanks to all of the above, CBD is sneaking its way into snacks, drinks, beauty products, even dog food. And understandably so—who wouldn’t want to sleep soundly, reduce chronic pain, and feel more relaxed? However, there’s one key complaint we hear time and again regarding CBD products: the price. You’ll see a range of price points in the CBD market, of course, but many of them cost upwards of $50 to $100 for a small-sized vial (typically one fluid ounce) of CBD oil or a box of CBD gummy bears. In an effort to understand why—and to find out if and when this crazy cost might lower—we checked in with Brian J. Baum, the President & CEO of CBD giant CANNOVIA.
So, why is CBD so expensive?
According to Baum, there are several factors driving the price of CBD. The most significant is the limited supply vs. the overwhelming demand. “On the supply side, the imbalance is due to the fact that hemp farming was generally illegal prior to the passage of the Farm Bill of 2018 (Agricultural Improvement Act of 2018), signed into law on December 20, 2018,” he says. Prior to that, hemp farming was only permitted in several states and mainly for research purposes. The Farm bill authorized the farming of “industrial hemp,” that is, hemp with less than 0.3 percent THC (the psychoactive element of cannabis). Given the reality that hemp is a “crop,” we are just now in the first full growing season for new crops. “This first season is limited due to the lack of defined hemp farming guidelines issued by the USDA. Each state must then either implement the federal guidelines or develop their own plan for regulating hemp farming,” Baum explains. On the demand side, consumers are increasingly looking for natural treatments for supporting health and wellness. A product that the National Library of Medicine reports was first used for therapeutic benefit in 400 AD, that has never been associated with overdose or death, certainly appeals to this consumer interest.
Will the price of CBD come down over time?
Good news: “The cost of CBD will absolutely drop over time,” says Baum. One of the main drivers for legalizing hemp farming was the potential for farmers to have a new cash crop to replace tobacco. As a result of hemp legalization, the transition to hemp is occurring in states across the country. “We will see the first full yield of a hemp crop in 2020 in states that have implemented farming regulations,” he says. Another factor driving the cost of CBD is the extraction process. Currently, the extraction of CBD crude from hemp biomass is a bottleneck in the production cycle. There are a limited number of processors equipped to extract hemp biomass. The shortage of processors and the actual cost of extraction is keeping the cost of extraction high. The laws of supply and demand are quickly rebalancing this function as well. Many new extraction providers are coming in to the market, and innovations in the extraction process are already on the horizon which will drive down extraction costs. “Within the next two to three years we should begin to see the CBD market supply and demand come into balance and result in lower priced CBD products,” Baum says.
How can we tell if we’re overpaying or underpaying for CBD?
There are many great CBD products on the market today. But according to Baum, there are also many products that are substandard for a variety of reasons: 2. Some products contain quality CBD but their concentrations are so low that they offer no therapeutic benefit. “For example, a 30 milliliter (1 ounce) full-spectrum CBD tincture listed with 50 milligrams of CBD. An average dose of 0.75 milliliters would contain about 1.1 milligrams of CBD. At that level, consumers would not see any CBD benefits.” 3. Inferior CBD is an issue. Given the shortage of domestically produced CBD, much of the CBD in the US has been sourced from overseas markets, such as China. Hemp is a bio accumulator, meaning it absorbs everything in the soil in which it is planted. If the soil is not properly tested, soil contamination from prior crops is quite likely. This could include herbicides, pesticides and metals.
How can we assess the value of CBD products?
One of the best methods of evaluating the quality of a CBD product is the “Certificate of Analysis” (COA). Any reputable CBD source should readily supply the consumer with a certificate of analysis. The COA will provide test results of the actual of the CBD used in a given product. These lab results will provide the concentrations of CBD in the product.
