Why Is CBD So Expensive?
If you’ve shopped around for CBD products before, you will notice they generally carry an expensive price tag. This is due to the complex process that it takes to extract CBD, and the added cost to their production: from sourcing raw materials, to distribution, and sale of the final CBD product. In addition, each CBD and hemp product are heavily taxed, increasing the final cost even more.
The price of certain CBD products may appear to be unnecessarily high compared to different non-cannabis-connected products that bear similar production and distribution processes, but is this the case? After all, many have claimed that CBD products have worked better for their condition than other wellness products on the market.
So, what about the CBD extraction process makes the final product so expensive, and what are some ways you can save money while shopping for CBD?
Reasons for Pricey CBD Products
It’s easy to justify the price of certain CBD products, but others may, at times, seem unreasonable. Before you decide to avoid the product altogether, take into consideration a few of the reasons for pricey CBD products:
- The cannabinoid extraction process is complex
- Hemp can be challenging to grow
- Machinery is expensive to obtain
- Business loans are hard to obtain
- Pricing is misunderstood
The Cannabinoid Extraction Process Is Complex
It takes around four months to prepare hemp for harvest. At this point, the hemp biomass should undergo a CBD extraction procedure.
The cannabinoids like CBD, in conjunction with all terpenes and flavonoids, must be expressed out of the rosin, which is often the main target from the darkened trichomes from the hemp blossom (smaller quantities from the leaves and stalks).
The CBD extraction process itself does not prepare the CBD to be “ready to perform” for the bodily process. This process is a significant expense for CBD-producing firms and manufacturers. It involves high-priced extraction equipment, as well as conjoint efforts from a large team of trained professionals.
C02 extraction is one of the most effective ways to produce high-quality CBD. However, it’s also one of the most expensive.
Hemp Can Be Challenging to Grow
Consumer-ready CBD is a specialized compound derived from industrial hemp, and industrial hemp presents a few particular challenges for growers.
People who cultivate hemp need to be trained and have an appropriate amount of square-footage in order to produce a profitable yield. They need to understand what hemp needs in order to flourish in quality, taste, and efficiency. Hemp, whereas almost like some food crops, has some different necessities and particularities that it needs to be the best quality possible.
For instance, growers should keep in mind latitude, longitude, and soil variances to grow low THC-producing plants. Hemp is classified as a form of cannabis, so growers should often examine their hemp to avoid the risk of having the whole crop destroyed due to lack of regulation compliance.
Inspections also take up valuable time, and this typically boosts up the total costs. As well as frequent inspections, aggregation of the hemp will boost the ultimate price.
Machinery Is Expensive to Obtain
The machinery needed to make CBD oil is very specific and expensive, requiring all types of complicated components in order to process the hemp crop. This makes it very capital-intensive, which puts small and independent farmers at a disadvantage.
During the process, the industrial hemp must be prepped and placed through the extraction method. The hemp goes into an enormous vat within the appropriate extraction chamber and is then subjected to critical greenhouse emissions.
More so, there is a lot of analysis and maintenance that goes into every use of the machinery. For processing dispensaries that have the proper square footage, they will have to adjust to the laws set in place for the machinery to be created, shipped, managed, and, most importantly, operated.
All these factors add up and contribute to the CBD product’s final value.
Pricing is Misunderstood
The cost of your CBD will primarily be determined by the production strategy, quality of raw materials used, and the overall level of efficiency during the production and extraction process.
Internal quality control is another critical factor affecting CBD prices. Most CBD is sent in and put through third-party laboratory testing, something that can be put on the label to ensure consumers are not getting ripped off or put in danger. Some firms solely check for basic CBD/THC levels, whereas others strictly check for residual solvents, mold, pesticides, and so on.
The extensive testing on the product is definitely going to affect the price per mg. However, CBD products that have been laboratory tested are highly recommended over others that skip this step, even if that means paying a few dollars more. It’s always better to be safe than sorry.
Try to avoid gas stations, corner stores, smoke outlets, and websites that don’t seem credible and don’t have third-party certification on their CBD products. The majority of reputable vape and smoke outlets currently stock a wide range of premium CBD liquids, along with some tinctures, edibles, and smokables. Pharmacies and food stores are also some reputable places to do some CBD shopping.
Make sure the product you’re obtaining is pure CBD oil and not hemp seed oil; learn the distinction. Cannabis dispensaries conjointly tend to hold full-spectrum CBD oil. However, most of them contain higher ratios of THC, which is understood to supply mind-altering effects.
Business Loans Are Hard to Obtain
If you’re running a CBD business, it is onerous to get a commercial loan. You’ve seemingly already discovered this if you’ve got a CBD business, and you’ve tried to secure funding for it at some point.
This process was even more difficult until the enactment of the 2018 Farm Bill, which legalized industrial hemp and made banking options more available.
Even though growing and cultivating hemp has been legal for a few years now, loaning and banking establishments haven’t engineered up much institutional memory. It involves navigating the complexities that also exist close to the sale of a product derived from the marijuana plant. Hence, several banks still retreat from loaning to CBD firms, whereas different lenders would possibly cope with some sectors of the CBD business, however not others.
Regardless of the headaches concerned, it’s potentially possible for you to receive a loan for your CBD business. In fact, the USDA has recently been making an effort to make it easier for hemp farmers to obtain these loans.
Let’s discuss the kinds of loans best fitted for firms making and selling CBD products.
Best Kinds of Loans for CBD Producers & Sellers
The type of loan you’ll wish to apply for can rely upon the sort of expenses you propose to put the money toward. In other words, banks and lenders want to know your plans for the loan, so make sure you have one developed when applying.
Let’s discuss the various kinds of loans a CBD business would usually pursue:
- Equipment loans
- Merchant money advances
- Lines of credit
- Term loans
With an associate equipment loan, the machinery you need the loan to shop for is applicable as collateral for the loan. In other words, failing to repay this loan can ultimately result in you losing what you purchase with it, which is typical of most loans.
If you’re within the business of growing hemp, you’ll want an associate machinery loan to buy machines to gather and extract the flower.
However, say you run a minor store operation, and you would like to grow inside. In this case, you may use an associate machinery loan to buy grow lights, inline fans, different aquaculture supplies, and any other gear associated with growing hemp.
Once you’ve repaid the loan, the machinery is yours to keep and use as you like and need. However, if you default, say adios to your assets.
Merchant Cash Advances
A merchant cash advance is one of the most popular and realistic for a CBD startup with no business history or a CBD business troubled to qualify for a standard commercial loan.
Merchant money advances offer you a short money infusion. In exchange, you repay the advance either by providing the investor a proportion of your sales on a commonplace basis (though some suppliers could allow you to pay weekly or monthly) or by repaying a set quantity daily (or weekly/monthly) basis.
Lines of Credit
If you don’t want an oversized payment of money and instead need a credit line you’ll be able to draw from almost like a MasterCard, a line of credit may be best for your CBD business.
With a revolving line of credit, the overall quantity you’ll be able to borrow (referred to as a credit facility) gets replenished as you repay the cash you’ve already borrowed. This way, you borrow the money you want/ would like, you wish for.
The biggest caveat here is that a line of credit is tough to qualify for — maybe even more difficult to qualify for than a standard commercial loan. CBD businesses with a minimum of six months of business are much more likely to qualify for lines of credit.
We’ve mentioned alternatives to “regular” business loans here; however, depending on wherever you look, you may be able to qualify for a standard business term loan.
Let’s say you are interested in expanding your operations considerably, or want to interact in the industry in different money-intensive ways. In this case, a term loan can satisfy your desires more effectively than a number of the “alternative” kinds of loans, several of which involve smaller amounts of cash and shorter reimbursement terms.
Of course, with no business history, business loans are quite tough to be approved for. So CBD startups may have to apply for more than one method of funding.
How to Save Money When Buying CBD Products
High-quality CBD oil doesn’t carry a low cost (in regard to other products in the industry). It is often the one reason why you must be smarter when it comes to your buying habits.
To save cash on CBD oil, here are some tips you may find helpful on your next purchase:
- Look for online coupons
- Buy in bulk
- Watch for Sales
- Provide some feedback
- Refer people
- Be a part of a loyalty program
Look for Online Coupons
Everybody loves coupons! (And yes, you better have pronounced that as “coop-ins” when you read it in your mind).
Coupons are a lifesaver when you are tight on money. These online coupons enable you to enjoy discounts and, at times, freebies once you purchase related products like health foods and hygiene products.
Just be aware and take note that there are loads of fake codes on the web. If you’re searching for and gathering them, make sure to confirm that you solely use reputable sites for such CBD coupon codes.
Also, be sure to read the fine print on the coupon. Nobody wants a Karen situation.
Buy In bulk
Some stores aim to provide customers excellent discounts for bulk purchases, to help them gain capital for their business. If you buy just a few bottles of CBD, or other various CBD products, you’ll find yourself paying more per mg as compared to buying a case.
Plus, buying in bulk online may help you save on delivery prices. You’ll get to pay once for the bottles.
Watch for Sales
The best CBD vendors and other retailers run regular sales on their products. This often leads to huge savings on several discounted products.
Make sure you read the fine print before diving head first into a sale. Certain sales require you to buy a set amount of products in order to claim the offer. Other sales will only apply to certain products as well.
Provide Some Feedback
Some CBD vendors reward regular shoppers for providing some feedback regarding their purchased products. A number of them provide coupons whereas others offer exclusive discounts.
Feedback is important for all companies, but even more so for start up niche businesses/ Your feedback will significantly impact their methods in the future.
Most CBD vendors supply discounts to customers who refer other people to their products, therefore adding to their customer base. Similar to sales, referral programs typically come with specific guidelines for earning a reward.
For example, the person you refer may have to spend a minimum of $50 on their first purchase. Alternatively, some CBD companies will base your reward depending on how much your referral spends, and if they refer people as well.
Be a Part of A Loyalty Program
Most CBD vendors have a rewards or loyalty program. You can usually join by submitting your email address, and they’ll send you every kind of discount and coupons they have available throughout the year.
The decision of whether or not CBD oil is a worthwhile investment is up to you, and if you are someone who enjoys CBD and the benefits it provides, then you most likely aren’t bothered by the price tags on most products.
However, it never hurts to save a little money and be informed on the reasons that certain CBD products carry a heavy price tag with them. In the end, there are many ways to save while CBD shopping, and knowing which products are right for you, or which are your favorite, makes it easier to keep an eye out for exclusive deals and coupons.
Thanks for reading, and happy CBD shopping!