Despite the approved legality of hemp, the government has not been proactive in enacting appropriate regulations for the industry.
There is a clear disparity in the prices of CBD products globally. This difference has become more obvious over the last year due to the increased demand for CBD products.
Currently, it has been observed that the difference in the prices of the most expensive and least expensive products is around 4718%.
Not only is the cost of CBD products running high, but demand is also at its highest point and still increasing exponentially. The relaxed laws regarding the use of cannabis products have changed the stance of a high population of people on the usefulness of CBD products. Now, it’s been used to lessen the symptoms of medical conditions like pain, insomnia, PTSD, anxiety, depression, amongst others.
Since the COVID-19 pandemic started, the demand has gone higher, so has the production of expensive and cheap CBD products. Makes one think if the reason for this is that the producers are trying to meet the demands of the different classes of individuals in the country.
However, this difference is too much to be overlooked. CBD products are used by all for common reasons, such as treating medical conditions. These products should be priced evenly for all to have access to the best products. Not to mention that the cannabis market has not been regulated or legalized on a federal level.
So What’s Going On?
Once in a while, sales representatives of several CBD companies release statements to justify the high cost of their products, after which they either increase the cost of the products or continue with the same exorbitant price being complained about.
We decided to take it upon ourselves to figure out the main causes for this cost disparity in the CBD market. First of all, we considered the discrepancies in the quality of the cheapest and most expensive products. We also took into account the popularity of the brands and how it relates to the quality of the product.
We came to a few conclusions, but the highlight of it all is that these companies are charging a premium price for the best products in the market and selling them to elite society. The shady products are charged at cheap prices and sold to those that can afford them.
The Reasons For This Cost Difference
Type of product
CBD is a versatile compound and has been infused into various products. From gummies, topicals, creams, tinctures, oils, to edibles for pets. For now, CBD oil and et edibles are two of the most expensive CBD products in the market. Demand for CBD oil is currently at an all-time high and the hype may be here to stay for a while.
Method of cultivation
Hemp and marijuana are the major types of cannabis plants. Hemp is a cannabis plant with less than 0.3% thx, while marijuana has more than 0.3% THC. Legally, hemp has been approved for use in some states.
The price of CBD depends on the type of cannabis plant grown. Very few people have access to grow CBD rich cannabis plants.
In states where more people can grow CBD high cannabis plants, the prices tend to be reduced.
The method used by a CBD company to extract the CBD compound from the cannabis plant also determines the price of the products.
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Some methods are more expensive than others—although CBD extracted through these methods are always of high quality. CO2 extraction is the most expensive and certainly worth it. Not all companies can afford to mass produce using this extraction method, they use cheaper methods like infusions and ethanol extractions, hence they sell out their products at reduced prices. Companies using the CO2 extraction method cannot cut prices.
Some CBD companies invest a lot in how their products are packaged and sold. It is good to note that a good and appealing packaging does not imply that the product is of the best quality, but it is enough for the company to place an expensive price on it.
The ingredients used also play a part in determining the cost. Regardless of this, many companies sometimes claim to make use of quality organic ingredients such as MCT oil, or olive oil, to justify attaching an expensive price tag to their products.
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On the other hand, some companies sometimes make use of toxic substances to save costs to maintain the cheap prices the products are sold at.
CBD products are tested by third-party laboratories to ascertain the quality of the products. CBD product testing is not cheap and there are so many tests that need to be done.
The number of tests carried out on a product determines its price. Expensive products have been tested for other qualities beyond the CBD content like the presence of toxins, quality and level of terpenes. The price of a CBD product is a partial reflection of the quality of tests carried out.
Other factors include;
- Business location
- Cost of labour
- Number of product producers
The next step is to discover ways to reduce the disparities in the cost of expensive and cheap CBD products.
Despite the approved legality of hemp, the government has not been proactive in enacting appropriate regulations for the industry. Due to this, the end-users have borne the brunt of the irregular prices and high tax rates charged to the end products.
For a high-profit margin, CBD companies have conveniently chosen to charge the bulk of the production costs to the consumers.
The government has to take action by giving standard prices to different CBD products in the market. To protect the producers, farmers and consumers, a standard range of prices will significantly reduce the huge difference in cost.
Consumers will also have access to the best products at affordable prices depending on the price range approved by the government. If this is done, soon enough the price of products like CBD oil may be as low as four cents per bottle depending on the percentage of CBD present in the oil.