For the last few years, cannabidiol (CBD) has become one of the hottest wellness trends. Touted for its potential health benefits, CBD oil is one of the most popular items in this space, with products popping up in nail salons, spas, big-box retailers, and health stores throughout the US.
The 2018 Farm Bill defined industrial hemp as cannabis containing up to 0.3% tetrahydrocannabinol (THC) and legalized its cultivation nationwide. CBD oil and other products manufactured in accordance with the bill were no longer on the government's schedule of banned drugs. Though some states still outlaw CBD in any form other than the prescription epilepsy medication Epidiolex, it is now easier than ever to access and purchase CBD products. In addition to being able to buy CBD oil online, you can also find everything from CBD capsules to CBD topicals, CBD gummies, CBD beverages, and a massive range of other CBD products in such unlikely places as Bed, Bath, and Beyond.
But for curious newcomers, CBD oil cost might raise some eyebrows. A 1 ounce (30 milliliters) bottle of CBD oil could cost anywhere from $30 to more than $200, leaving many wondering how something so small can cost so much, and why CBD prices vary so widely. What accounts for the discrepancies and, perhaps most importantly, how much does CBD oil really cost?
Any attempt to account for CBD prices is a bit complicated, as there are many factors and variables that affect the average cost of products in the CBD industry. The process of extracting CBD oil can be expensive while additional costs may arise from creating specific products. Plus, the potency of a bottle can greatly affect the price. Additionally, variables such as whether or not the product is a full spectrum CBD oil, if it's an organic CBD oil, or if it was extracted from organic hemp plants can also play a part in how CBD brands establish their CBD oil cost. Here's a primer on the different types of CBD and how much you should expect to spend.
According to Katie Stem of Peak Extracts, a cannabis and CBD product manufacturer, CBD as a bulk commodity ranges from $3 to $15 per gram, or a fraction of a cent to 1.5 cents per mg CBD. This could mean that a 1,000-milligram bottle of CBD tincture could contain $3 to $25 worth of CBD, but that wouldn't account for production costs, materials, or labor.
Some companies might do all the production work in-house, but many CBD companies use a larger manufacturer for production. The CBD companies then must market and ship their products. Stem said this can cost around $25,000 to launch, plus a per-unit cost between $2.50 and $12.50.
“In most other industries, the labor, materials, and profit are often divided into three equal portions,” Stem said. “Given the exposure to this industry with regard to legal, regulatory, and testing standards, it stands to reason that the profit margin must be higher to accommodate potential risk. The markup may be closer to 400% rather than the 40% seen in many other packaged goods.”
There may also be significant markups on the retail side, as cannabis dispensaries are not allowed any type of business write-offs per Section 280E of the Internal Revenue Code.
Stem said that when she is personally trying to decide if a CBD product is a good deal, she goes straight to the source material. Is it grown organically? Is it grown domestically? She also looks for readily available certificates of analysis (COA), which must be issued by a licensed laboratory that tests for potency and safety.
Stem said that those products will probably cost at least $50 to $60 per 1,000-milligram bottle, which comes out to a total cost of 5 cents per milligram (mg) of CBD or more.
However, for most brands Weedmaps looked at, 5 cents seemed to be the low end, while the majority cost between 10 to 15 cents per mg of CBD and rarely exceeded 20 cents per mg.
Because there is such a vast range of CBD products, companies, extraction techniques, and market factors, it can be difficult to pin down a clear average cost per mg CBD. But, as a general ballpark, here is an example CBD oil price comparison, using prices found in Los Angeles, and broken down as price per mg of CBD:
CBD can be derived from either hemp or marijuana plants. From a legal perspective, the cannabis plant from which the CBD is extracted makes a big difference. In the United States, a hemp plant must contain less than 0.3% THC. These plants are sometimes referred to as industrial hemp, and they are generally grown for industrial fiber and other uses. Marijuana may have various amounts of CBD and THC and is typically grown for medicinal or recreational purposes. If it's legal or not is really the only distinction that matters when choosing whether to purchase CBD derived from marijuana or from hemp.
“One thing I always say is that a molecule does not know its mother, so CBD is coming from cannabis or hemp, but it's the same compound,” said Robby Flannery, Ph.D., CEO of California-based cannabis brand Dr. Robb Farms.
Instead of hemp-derived vs. marijuana-derived, it might be more relevant to compare whole-plant CBD, which can be full-spectrum or broad-spectrum, with isolate CBD. The latter results from refining the CBD compound into its pure form, minus other cannabinoid compounds such as terpenes, which provide flavors, aromas, or enhanced physiological or cerebral effects.
Full-spectrum, or whole-plant, CBD contains THC and all of the compounds originally present in the plant, such as terpenes and other cannabinoids. Broad-spectrum hemp is similar to full-spectrum, except that the THC is removed.
When trying to decide between whole-plant CBD and isolate, it may be helpful to know that researchers have identified a synergistic interaction between the plant's various compounds, known as the ensemble effect or entourage effect. According to this theory, taking CBD alongside the multiple cannabinoids, terpenes, and other chemical compounds produced by the cannabis plant may produce stronger overall effects. That's one reason some may seek out full- or broad-spectrum CBD, but there are various reasons why a person might prefer one over the other. If, for instance, you dislike the smell and/or taste of cannabis or want to avoid THC entirely, you might choose to stick to isolate.
Flannery noted that “cannabis tends to be a little more resinous, so the entourage effect and ensemble effect that you would be able to achieve [by] including some of those other cannabinoids is more profound. But if you're just consuming an isolate product, it does not matter [which plant] it comes from.”
CBD oil prices are also affected by legal requirements related to lab testing. Third-party testing ensures that a product is safe and correctly measured and that consumers are getting clean, lab-grade CBD. A licensed lab will make sure a product's listed potency is accurate, meaning you're actually getting the amount of CBD or THC you're paying for, or alternatively, that the THC content is zero for those who want to avoid any possible intoxicating effects or drug-testing surprises. Lab tests also analyze moisture content and screen for pesticides, mold, fungus, heavy metals, and residual solvents — chemicals that may remain after the extraction process.
How do you know you're getting a lab-tested product? If a company lists its certificates of analysis on its website and packaging, shoppers can usually be assured the product has been lab-tested.
“If you are a cannabis consumer and you go to a licensed retailer, you are close to 100% certain that all of that product has been tested by a third-party lab and it passed very stringent restrictions and regulations,” Flannery said.
Testing can get pricey, especially in a state such as California, where regulations implemented in late 2018 increased testing costs 40% to 55% for some manufacturers, according to MJBizDaily. This can have an impact on how cost-effective the overall production process is, which in turn impacts the cost per milligram to the consumer. Flannery estimated testing can cost a company between $100 and $400 per sample, and they may have to test several samples. Those that produce flower — from which the oil is derived — have to test incrementally, such as every 55 pounds.
“If you're a large farm, that's a lot of testing,” Flannery said. “I know some groups who are spending in the seven-figure range on testing on an annual basis.”
All of these costs are shouldered by the manufacturer and ultimately raise the retail prices.
The label on any CBD oil or other CBD product will tell you several important details. Perhaps the most obvious detail is the name of the company, which you may want to research so you can read reviews of the brand (most are available on Weedmaps) or the individual product. Or, you might want to visit the company website's FAQ page for additional product information.
The label will also tell you how many milligrams of CBD the oil contains. This number may be the total amount or how many milligrams are in each serving.
Topicals and oils usually list the total amount of CBD. Balms, lotions, and other topicals are products you're likely rubbing into your skin and therefore, you might not be concerned about measuring out a particular dosage.
Since you'll be ingesting CBD oils or tinctures, you may wish to find out how much CBD is in each serving — a serving is usually a 1 milliliter (ml) dropper full. To do that, determine the number of milligrams of CBD within the whole product then divide by the number of total milliliters. For example, if the CBD oil contains 30ml of liquid and 500mg of CBD, then you divide 500 by 30 to get about 16.6mg of CBD per serving, dropper, or milliliter.
If your product is an edible — chocolate, candy, etc. — or capsule, you may find that the package lists how many milligrams of CBD are in the individual items. If a bottle of capsules says that each capsule contains 30mg of CBD and there are 30 capsules in the bottle, that would be 900 total mg of CBD. Knowing the total number of milligrams of CBD in a package, whether it's chocolate or tincture, can help you better compare costs across CBD products.
If the product contains THC, the label will tell you that as well. It may tell you the ratio of THC to CBD, such as 18:1, which would be a particularly THC-rich product, or 1:1, which would be more balanced.
The package will also specify whether the product contains full-spectrum, whole-plant, or isolate CBD, as previously mentioned. And, like any other product, the label will list what else is in it (coconut oil or medium-chain triglyceride oil derived from coconuts are common carrier oils), where it was made, and how it ought to be stored.
According to Flannery, yes, the price of CBD oil and other CBD products will come down, but not for a few years. “I think the primary driver is just the regulatory environment that we've lived in for so long has limited the amount of production we can do,” he said.
Beyond the legal landscape, there are many other factors that impact the average cost of CBD oil and other CBD products. Flannery noted it takes time to put together the capital expenditures and build out the infrastructure needed to produce CBD. A new hemp farm requires a minimum of two months to produce any crop, and in many places, the 2018 Farm Bill marked the first time it was legal. Plus, testing regulations are often much stricter when it comes to CBD oil and cannabis than to other similar herbal supplements or oils. Additionally, the quality of plants being grown, extraction methods, and other factors related to the production process all play a role in the average cost-per-milligram of CBD by the time the final product makes it to retail shelves.
“CBD is never going to be, in my opinion, as cheap as any off-the-shelf pharmaceutical or herbal supplements, but prices are still going to be going down,” Flannery said. That cost savings may come about, he said, when lawmakers begin to understand that cannabis is not, “the devil's lettuce we were told it was.”
Reviewed by Lesley Nickus on 7/7/21
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