Why are hemp products so expensive?
This is a sad but common question among CBD users. Average new users may find the prices costly, and they are right to think in that direction. However, the key market participants often overlook this question.
For those curious as to why are hemp products so expensive, this article is a must-read. It seeks to give a proper explanation as to why hemp products are so expensive and, hopefully, provide reasons to continue using these products.
Why Are Hemp Products So Expensive
Costs Start Even Before Hemp Planting
For most crops, the initial expenses are land, farming, and cultivation costs, like seeds, labor, machinery, and regulatory licenses. With hemp farming, there are other reporting and testing expenses, as well. This is because every state has its own rules and fees related to hemp farming and processing. These charges can range from $25 to $1000 or more based on license type and other applicable licensing fees.
Moreover, some states also issue exclusive certification programs for hemp seed distributors and producers, making the seeds costly to farmers.
High Cost of Harvesting and Extraction
When hemp plants mature, they require specialized harvesting. Coolbean states that the cost of harvesting one acre of hemp in Minnesota ranges from $300-$600, down from $970-$2,500 in 2017.
Immediately after harvesting, farmers must separate various components using a Decorticator. The equipment costs almost $2 million. Farmers must also extract the cannabinoids, terpenes, flavonoids, and so on using extraction methods like supercritical CO2 extraction or ethanol extraction. The cost of CO2 extraction equipment is approximately $150,000 plus $35,000 for a rotary evaporator and centrifuge.
From Extraction to Packaging
Hemp farming expenses do not stop after harvesting and processing. In fact, there are still several hemp production processes required before the hemp can reach consumers.
The initial extraction produces a hemp concentrate, and it comprises acids that must undergo decarboxylation. The process requires ovens with a capacity of 10 cubic feet to 38 cubic feet and roughly $7,000.
However, many hemp users prefer oil rich in cannabidiol (CBD) as opposed to thick plant concentrates. Processers carry out winterization and distillation to separate the concentrated plant matter from the oil. The distilled product then passes through a chromatography machine to remove any excess THC. The price of this machine can hit hundreds of thousands, including labor.
Third-Party Laboratory Tests
Processors should also test the extracted products to evaluate their purity and cannabinoid concentration. The costs of these tests vary from state to state. After testing, the hemp products are packaged and distributed for sale. These additional lab tests are for the benefit of the consumer, and may help further answer the questions “Why are hemp products so expensive?”
Legal Fees, Banking and Other Financial Factors
The bulk of hemp farming costs are from the manufacturing process, but the distribution process also affects the prices. The operating expenses of CBD companies are almost twice those of other industries. Moreover, because of the ‘gray’ nature of hemp laws, distributors take extra caution to protect themselves.
A Stabilizing Market
The good news is that hemp market prices are steadily stabilizing. One of the primary reasons for legalizing hemp farming was to have an alternative cash crop to tobacco. Not only is smokable hemp an excellent alternative to tobacco, but it is more versatile, as well.
Another aspect influencing a stabilized market is the hemp extraction process. Previously, there were few processors equipped to remove hemp biomass. The shortage of processors and the actual cost of extraction kept the price of extraction quite high. However, the principles of supply and demand are rapidly rebalancing these costs, and new processors are venturing into the cannabis industry.
Within the next three years, the market prices for hemp products will stabilize, and farmers will be in a better position to calculate their average returns from the onset of hemp farming.
Final Thoughts: Why are Hemp Products so Expensive?
Right now, farming, market, and legal factors compel consumers to pay dearly for hemp products. While this may be unfortunate, remember that every time you buy a hemp product, you are contributing to a sector that has a high potential for social well-being. Your contribution helps make hemp farming and products cost-effective for the welfare of every member of the community.
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