How do you make CBD oil and how much does it cost?

The CBD oil process

There are over 500 different mixtures of components present in Cannabis plants, although hallucinatory Δ9-tetrahydrocannabinol (THC) and non- hallucinatory cannabidiol (CBD) are the most readily absorbed and used by consumers1.

Due to strict legislation regarding the use of THC due to the hallucinogenic effects, there is an increasing global market for the use of CBD, which typically comes in the form of an oil extract. These oil extracts of Cannabis are created when the active ingredients of the plant have been grinded and separated from the other parts of the plant1.

This article discusses the whole manufacturing process for CBD oil from inception to conclusion along with insights into the cost analysis for CBD oil.

Methods for preparing CBD oil

There are currently three common methods for preparing CBD oil. The first two involve finely chopping the Cannabis plant before mixing it with a carrier oil. This mixture is then heated, ranging from two hours in a boiling water bath to two hours at 230°F (110°C).  In order to obtain the oil extract, this solution is then filtered.

The third method involves finely chopping the Cannabis plant then preheating it at 230°F (115°C) for 40 min before adding the crushed plant to the carrier oil. This method then involves further grinding the plant and oil mixture with a turbo emulsifier for three minutes prior to heating it in a boiling water bath for 40 min and finally filtering it1.

A turbo emulsifier is a machine that constantly powers a wheel or rotor to quickly spin products around and ranges in cost from $700 to $2000. Lastly, the third method included is adding 0.02% butyloxytoluene, which is an edible fat antioxidant2 that costs about $15 per unit, depending on which biotech company it is purchased from.

Regardless of the method used to prepare CBD oil, manufacturers crush up and separate different components of the Cannabis plant and oil mixture using an instrument such as liquid or gas chromatography used together with mass spectroscopy1.

These instruments essentially package the plant and oil mixture into columns to separate the different components based on their ability to divide into different phases7. Analyzing these samples can take multiple hours since the Cannabis plant is so complex, and prices for these machines can cost upwards of $50,000 with the columns costs anywhere from around $200 to $10007.

A recent study in Italy found that the third method discussed is the most efficient way to create CBD oil, producing a maximum CBD concentration of about 0.7%, or 6.40 mg/ml1. In addition, this study found that increasing the amount of Cannabis plant used leads to an increase in the amount of CBD extracted, but the products typically have the same concentrations of CBD if there is a fixed ratio of Cannabis plant to the volume of the solvent product used 1.

Solvent products used to extract CBD

The solvent products used during CBD extraction play a role in the steep cost of CBD oil. Carbon dioxide (CO2) and ethanol are the most common products used to extract CBD and manufacturers argue that using CO2 as the extraction product is more expensive but the only way to create a solvent free product, whereas methods using ethanol extraction techniques do not completely remove solvents in the final product.

In the latter method, the Cannabis is soaked in ethanol to get rid of excess cannabinoids and the remaining liquid is evaporated away3.

 

Growing and harvesting the Cannabis plant

Additionally, extracting CBD oil is a labor-intensive process and besides extracting the CBD from the Cannabis plant, manufacturers wait a full growing season of the plant as well as an average of 10 days for harvesting the plant.

Before hanging the plants to dry and removing any aerial plant components from the plant’s stalk3. Labor costs are estimated to be approximately $140 per week for 20 weeks, averaging $2,800 for plants grown in an outdoor space, along with $140 per week for 14 weeks, averaging $1,960 for plants grown in a 6′ x 6′ indoor space8.

The total cost of growing and harvesting the Cannabis plant ranges from $1,575 to $2,320 for a 6' x 6' grow space a well as $1,830-$2,940 per five pots grown outdoors8. This cost comes from purchasing soil, nutrients, watering tanks, mixing tanks, water pumps, as well as various hardware such as trellising, zip ties, stakes hoses, and valves8.

One Cannabis clone to begin growing a whole plant can cost between $10 and $30 on the lower end, and these plants spend approximately one month in vegetative growth following by 8-10 weeks flowering8.

Global market for CBD oil

A recent Global Info Research study has projected that the global market for CBD oil will grow at approximately 44.1% over the next five years, reaching nearly 2420 million USD in 2024, a vast increase from the 270 million USD generated in 20194.

It is also important to consider the cost of CBD oil per milligram of CBD rather than the total cost of the bottle purchased since different manufacturers produce various amounts of CBD content in their products. CBD itself ranges from $3-15 per gram, which can be about a fraction of a cent to 1.5 cents per milligram5.

Testing CBD oil

Manufacturers regularly test their products throughout the manufacturing process to ensure safety5. Various legislation regarding how to evaluate the safety of CBD oil exist worldwide, but reputable manufacturers who want retailers and consumers to feel confident in the quality of their product increase the price of their CBD oil to cover the price of lab work to ensure safety5.  

As an example, manufacturers in California are required to maintain certificates of analysis, which are issued by a licensed laboratory that test for potency and safety of products and result in increased costs6. This testing is usually done by using a chromatography instrument, which again can be very costly depending on how many samples are ran.

All the variation in legal, regulatory, and testing standards account for the steep cost of CBD oil so manufacturers have a reasonable profit margin to accommodate any risks for producing CBD oil. As such, markups for CBD can exceed 400% as opposed to the 40% typically seen with other products5.

Putting it all together: how much does it cost to produce CBD oil?

Considering the cost of equipment, labor, resources, time, and quality analysis, a Cannabis plant grown outdoors in a 10-gallon pot that produces 1-2 pounds of flower takes about four months grow (typically from July to October), costs approximately $2,385 to grow in terms of equipment, which is about $2,800 in labor costs.8

These 1-2 pounds of flower produce about 0.3-0.6%% THC10 and, if the remainder of the plant consists of CBD that can be successfully extracted using oil and the correct distillation process would produce 0.97-1.94 pounds of CBD, which is 440-880 grams of CBD. Since CBD can cost between $3-15 per gram5, this comes up to $1,320-$13,2000 per gram of CBD oil.

 If the manufacturing was using that 400% markup to brand their product, one gram of CBD oil can cost between $5,280 and $52,800.

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