To understand price discrepancies for 2020 compared to 2019, peer-reviewed CBD educational platform Leafreport conducted the study. The company said the purpose is to help consumers be more informed on how the popularity of CBD is affecting pricing structures in the market.
The report outlined the price differences for each product family and each brand name including full and broad spectrum tinctures, isolate tinctures, gummies, soft gels, topicals, vapes and isolates.
Some of the most striking findings is the varying product family prices. For example, the cost of CBD topicals is anywhere from $0.032 to $1.69 per mg, a dramatic 5222% gap. Another noteworthy discovery was the 1400% gap on CBD edibles for pets.
Overall, the report revealed 70% of brands lowered their prices in 2020. "This is great news for consumers, but reflects the heat of competition that many brands are feeling as more and more players enter the CBD market,” noted Lital Shafir, head of product at Leafreport.
Testing
So will these lowered prices and the saturated market lead to more high-quality CBD?
“We certainly hope so,” said naturopathic specialist and Leafreport writer Dr. Zora DeGrandpre. “Quality is the first characteristic that consumers should be looking for—and this is determined to a large extent through the testing process. The lab analyses are not cheap, nor should they be – we need to know CBD content, that there are no heavy metals, microbials or residual solvents.”
Since not all companies opt to test their products, it’s on the consumer to do their homework. "The CBD market is unregulated so products are not being tested for safety, efficacy or potency, so it's somewhat of a roll of the dice for consumers,” explained Shafir.
However, that could change. The FDA appears poised to release a long-awaited regulatory framework on CBD. DeGrandpre said while it depends to some degree on the specific regulations, “We would expect the prices of CBD (and other cannabinoids, potentially) to increase. In fact, if as expected, the FDA begins to require testing and more quality control as well as standardization, we would be surprised if the cost doesn’t increase. Some companies are better positioned than others, so their increases may be less.”
Don’t expect CBD scraps for Fido
While humans are seeing their CBD usage becoming cheaper, pets are a different story. In 2019 alone, Americans spent $95.7 billion on their pets, according to the American Pet Products Association.
"For years, people have been spending dollars on their pets and many have found real relief with CBD products,” said Shafir, who added. "This is the fastest growing segment of the CBD market.”
While the cost of CBD tinctures for pets dropped by 28%, the cost of CBD edibles for pets jumped by 44% in 2020.
“We think it is simply what the market is willing to bear — people will often be quite willing to pay a high price for CBD if they feel it may save their pet from surgery or drugs,” explained DeGrandpre. “Most companies that test also test the products for pets, so this adds to the cost as well. Also, they generally provide edibles for dogs and cats (they don’t take oils or capsules all that willingly!) and will use various flavorings that may be more expensive. Edibles can be more expensive in general as well.”
Looking ahead
The price drop can also help CBD developers tap new sales channels that attract value-oriented consumers.
During an earnings call in August, Charlotte’s Web CEO Deanie Elsner told investors she believes two-thirds of global CBD sales will eventually come from large retailers. “The impact of the retail channel entering into that hemp CBD category should not be underestimated," she said.
CBD brands are securing deals with national retailers such as CVS, Walgreens and The Vitamin Shoppe, illustrating mass retailers eagerness to hop on the CBD bandwagon in anticipation of a regulatory pathway.
In addition to regulations, DeGrandpre said to watch out for other other cannabinoids such as CBG to emerge and also be regulated. “We think combinations of THC+CBD in varying ratios may also become more available—these have been found to be useful in pain management and in the treatment of addictions, and I believe that these are promising future trends in the use of cannabinoids. It may be post-2021. I also think it likely that the terpenes found in the CBD products will become more important.”