Why CBD May Remain Highly Priced for Longer

August 8, 2019 08:00:14

If you have decided to try using a CBD product, such as CBD tinctures or oils, you may have noticed that the items are a bit on the pricey end, and this is cause for concern since many people who would benefit from the therapeutic effects of this compound are on the lower side of the purchasing power continuum. But why are these products expensive?

Costly Extraction Methods

In the U.S., industrial hemp was legalized across the country at the end of last year, so the supply end of the raw material from which CBD is extracted is still on the lower side. As you may know, when supply is low and demand is high, prices go up. It shouldn’t therefore surprise you that high-quality hemp from which CBD is extracted can sell for upwards of $200 a pound.

The method that a processor uses to extract the CBD also adds to the cost of getting the final product to you. The CBD products which aren’t so expensive are usually extracted using a lot of solvents, and those chemicals reduce the effectiveness of the resultant products.

The processors who sell CBD products of the highest quality use costly methods, such as carbon dioxide (CO2) extraction, which maintains the purity of the CBD extracted. These non-chemical extraction methods are very costly, and this could explain why estimates put the price of an ounce of pure CBD at nearly $3,000. For comparison, an ounce of gold costs half of that!

In short, until the farm gate price of industrial hemp goes down and more efficient and less costly extraction methods are invented, CBD products are likely to remain highly priced (at least the quality ones).

The Uncertain Regulatory Climate

Regulators, such as the FDA, are scrambling to play catchup with the CBD industry. So far, the FDA has written that it is illegal to infuse food items with CBD, and sellers of wellness products containing CBD have been warned not to make unsubstantiated therapeutic claims on product packaging.

The USDA and the FDA are working to release draft rules which will regulate the hemp-CBD industry, and until that happens, producers are operating in a legal grey area.

Such a regulatory environment isn’t good for investment, so this is holding back how deeply involved entrepreneurs and innovators can get until the cloud lifts.

Consequently, companies will remain hesitant to put a lot of money into developing better ways to bring CBD products to market at an affordable price for the average Joe.

This is a pity, because industry analysts believe that entities like Marijuana Company of America Inc. (OTCQB: MCOA) and Nabis Holdings (CSE: NAB) (OTC: NABIF) (FRA: 71P) would like to put in place systems that would make CBD products affordable for everyone who needs them.

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