When out shopping for CBD, it’s hard not to notice how expensive the products are. Even at face value, without considering potency, quality, or quantity, it still feels like a lot. Unfortunately, that feeling tends to get worse when you consider the newer research which seems to encourage higher doses of CBD .

While it’s easy for us to associate higher costs with higher quality, this isn’t always the case, especially when it comes to CBD products. We did a considerable amount of research when developing our first CBD product and we learned a lot about the Canadian CBD market. One of the first thing that stood out to us was ongoing conversation between consumers about why CBD products were so expensive. We think it’s a fair question and we’d like to provide some answers.

So why is CBD so expensive? A lot of it comes down to licencing and regulation.

How CBD is Made

Cannabidiol (CBD) is a phytocannabinoid found within the oily resin of the cannabis plant. For the most part, this resin is located in the plant’s flowering buds and serves to protect it from things like insects and heat. However, cannabis resin is also contains compounds like terpenes, flavonoids, and other cannabinoids that interact with our own bodies.

To make a CBD product, you first have to farm and cultivate large amounts of high-CBD cannabis. Under the Canadian cannabis regulations, if your high-CBD cannabis is below 0.3% THC, it’s classified as hemp. Currently, in Canada, it’s common to make CBD products from cannabis instead of hemp.

Once a plant (hemp or cannabis) supply has been secured, CBD must then be extracted, refined, and mixed with additional ingredients. Depending on the kind of product being produc ed, whether it be Full Spectrum, Distillate, or Isolate, these steps can look different. Typically, the process of extracting, refining, and producing a CBD product requires the use of expensive machinery owned by licensed businesses who specialize in these stages of production.

Canadian Regulations and Cannabis Cultivation

The high cost of CBD products can be traced all the way back to the plants being cultivated for its resin content. As of right now, CBD is largely being made from cannabis plants. However, because the Cannabis Act imposes stricter rules around the cultivation and sale of cannabis, these plants can be expensive to farm. Currently, acquiring a cultivation licence for cannabis is a lengthy process that almost always requires significant investment. More often than not, that significant investment and a desire to recover it quickly encourages higher prices.

Hemp is more accessible to grow within Canada because Canadian regulations provide of a lower barrier to entry. While this is a viable low-cost alternative, there’s a misconception that CBD derived from hemp is of a lower quality. This simply isn’t true. Whether or not a particular strain of hemp is suitable for CBD extraction is dependent on the properties of the plant itself.

To date, the majority of Canadian hemp plants have been grown for things like animal feed, textiles, or health foods. This makes sense, since most of the hemp cultivars approved for use within Canada are low-CBD plants. This, of course, does makes them unsuitable for CBD extraction. However, as Health Canada continues to approve more high-CBD cultivars for use by licensed hemp farmers, we expect hemp to become the primary source for Canadian CBD products.

The Effects of Legalization

Since the sale and consumption of cannabis was legalized in 2017, extractors, producers, and businesses have been rushing to meet market demand. Not unlike the upfront costs and investments it takes to acquire a cannabis cultivation licence, these companies require expensive machinery and expertise. For those who were first to be licensed, there was an opportunity to charge top dollar for services that no one else could legally provide. While that dynamic may have contributed to higher prices towards the beginning of legalization, increased competition and stockpiled inventories over the last year seem to be turning things around.

Shenanigans aside, when it comes to the actual cost of producing CBD products, the math doesn’t reflect the pricing that we’ve seen in the market. When pricing things out for ourselves, depending on the price of hemp we were using, we found that it only costs a few dollars to produce 1000mg of CBD. In our humble opinion, a 1000mg bottle of CBD oil shouldn’t cost $50 or more.

How LoFi Does it

Just because we understand why others are doing things differently doesn’t mean we have to agree with what they’re doing. We think that CBD should be accessible, which means that it needs to be affordable. As far as we’re concerned, if we can make great CBD products at affordable prices, everything else will take care of itself.

Thankfully, we’ve been able to find a high-quality, high-CBD hemp flower, which helps us cut out a lot of the legal and regulatory costs associated with growing cannabis plants. By sourcing the hemp ourselves, we can apply our own quality assurance process while paying much less than we would through a broker. Finally, we’ve been able to build our supply chain with like-minded companies who are on board with our mission of CBD for All.

TL;DR

While we often assume that higher prices mean better quality, this isn’t necessarily the case when it comes to CBD. In our experience, expensive prices for CBD products have more to do with profits than the cost of production. At LoFi, we prefer the long game. If we can make high-quality CBD products that are super affordable for the average consumer, we suspect the rest will take care of itself.