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.
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.
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.
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.
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.
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.”
Many medical marijuana and CBD isolate consumers prefer an edible such as a gummy to receive their dose of cannabinoids. Photo by: Gina Coleman/Weedmaps
Carbon dioxide extraction is the safest method because it doesn’t leave behind any toxic solvents that could contaminate the final product. It’s also the slowest and most expensive extraction method, due to the steep cost of the technology. For instance a 5-liter CO2 extraction machine can cost about $100,000. By comparison, a hydrocarbon machine costs about $20,000. This higher operating cost may warrant a higher wholesale price if the market understands its value, but extraction method does not necessarily have a 1:1 relationship with wholesale price.
Today’s wholesale trends looks bleak but it does not mean doom and gloom for the future. According to trading platform, PanXchange , this type of volatility and oversupply is normal in emerging markets and will ultimately correct itself. After all, the U.S. hemp market is projected to grow to $2.6 billion in sales by 2022 with plenty of profits to go around.
In order to process hemp using CO2 , it must first be pressurized in metal tanks to transform from a gas into a supercritical fluid. From there, the CO2 solution draws the desired components from the plant such as cannabinoids, terpenes or flavonoids. The CO2 solution is later evaporated leaving a concentrated oil, shatter or budder behind.
While wholesale prices are dropping across nearly all hemp products–from raw biomass, to flower, to isolates, and distillates–not all hemp products are created equal. Moreover the current drop may ultimately level out as the market stabilizes. As a hemp supplier, processor or consumer, it’s important to understand all of the factors that make up hemp and CBD pricing trends so that you can plan for the future.
When harvesting hemp for smokable flower, oils or isolates, cannabinoid levels matter. For example, CBD biomass pricing is directly dependent on the percentage of CBD per pound. With regards to distillates, THC content directly affects the wholesale price. As mentioned above, when hemp oil is 100% stripped of THC, it sells for nearly double the price of full spectrum oil.
Despite this seeming advantage, isolates are not as popular as refined oils. The average price of CBD isolate per kilo as of January 2020 is $1,624 which dropped from 66% at its price in June.
While the curing process itself does not directly dictate the price of hemp biomass or flower, the resulting quality of the product will. For example, slow curing may produce a higher concentration of CBD which will warrant a higher wholesale price, but if THC rises above the legal limit, the product is not sellable. Similarly, fast drying will improve output and ensure that the crop does not continue increasing in THC potency, but cracked seeds, contamination, and lower CBD content will all drive down pricing.