Considering that many consumers of CBD are fighting serious illnesses, it is morally incumbent that product manufacturers source the cleanest and most responsibly manufactured CBD available. It takes experience and knowledge to circumvent the hype and questionable business practices that exist around any industry that is growing as fast as today’s medical cannabinoid market.
The human endocannabinoid system produces cannabinoids naturally to stimulate the millions of cannabinoid receptors in the human body. CBD stimulates the release of these natural cannabinoids returning the body to homeostasis. In a balanced state, inflammation decreases, muscles relax, cerebral blood flow increases, over-stimulated nerves are calmed and the body is able to heal itself.
The importance of purity for consumers who may be struggling with a compromised immune system puts a deep level of responsibility on product manufacturers to follow safety standards that mirror the best practices of other high-compliance industries. This is especially important, particularly when operating in a space that has no regulatory board for the purpose of monitoring, validating and certifying the practices of hemp product manufacturers. This monitoring should extend to the quality, safety, and transparency of the ingredients these companies source to develop their products.
Who’s protecting the consumer? How do patients know what safety and transparency practices are in place to ensure the CBD company is doing what they say and the ability to prove it!
So how does a company go about finding a reliable and safe supplier of high-quality CBD that is consistent and standardized? Many would say it’s pretty easy, likely, without lending much thought into what they are buying and where it really comes from. The true differentiating question becomes…do they care?
Time has proven that rock bottom pricing is priority #1 for most companies who are willing to overlook a product’s lack of documentation in order to save on costs. Costs that sometimes vary by just 1/10th of a cent per/mg. $0.001 may be the difference of thousands of dollars when purchasing multiple Kg of activated CBD, however, very few companies are truly operating at this production level.
If so few companies are operating at a scale that would make fractions of cents per/mg a major issue, what’s really going on? Why is price still the primary buying driver?
The answer is that CBD is typically bought and resold several times over before it ever gets into the hands of actual product manufacturers. The price needs to start low when multiple resellers are marking it up a few points between every exchange.
Upon an initial search, there appear to be numerous wholesalers of CBD in the marketplace. In reality, the majority of these businesses are reselling another distributor’s product. They initially request special reduced bulk pricing to bring their cost down.They then sell in smaller size increments at higher prices, but just under the cost of the manufacturer’s own pricing for the same quantity. This allows them to fund their own CBD needs while making a margin on the remaining over-purchased product. An unfortunate result of this behavior is that that it creates a false perception that there are more manufacturers than really exist. It additionally provides inaccurate numbers to investors who are interested in the CBD market as they are not looking at revenue models built on consumer buying trends, but those of wholesalers.
Retailers end up believing they have multiple product supply options available to choose from. When in fact, they are typically speaking to different companies who are selling the exact same product that has been split and re-sold several times over. However, this also makes it possible for an inferior product to easily be slipped into the mix.
In a matter of 18 months, the industry has watched the price of CBD plummet roughly 500% from $0.10/mg to $0.025/mg. Again, this is not driven by buying behaviors of consumers, as retail prices remain around a 1,000% markup floating around $0.25/mg in competitive products.
When the wholesale market is then supplied by products with very different levels of quality and documentation, and forced to sell at the same drop out prices, we end up in a situation where business are pressured to make buying decisions that weigh economic vs. ethical risks and rewards.This is a poor environment for medicine that is in high demand from patients with serious illness and compromised immune systems.
I hold the belief that there are some things in life one should never buy the cheapest versions of, particularly at the expense of quality; underwear, toilet paper, running shoes, parachutes and rock climbing gear. Perhaps we should add to this list, medicine, and healthcare.
So now what? How does one navigate the space to source CBD responsibly and economically?
Know the players
US CBD inventories are primarily supplied by two geographies; Europe and China. A very small contribution is made by US domestic farms. US domestic supplies currently suffer from two other challenges. The first is a lack of adequate inventory to meet demand forcing them to often backfill orders with foreign product. The second and more important issue is that US supplies often contain amounts of regulated THC above the legal limits of 0.3% by weight, rendering the product entirely illegal. Any company found to be involved with this product is just a sitting duck, buying time before the DEA raids their facilities. This is gamble high-compliance businesses can’t afford to take. Be sure you are testing each batch you buy.
An issue with Chinese product is that China has no environmental laws. Their CBD oils are notorious for containing pesticides, heavy metals, microbial and residual solvents upon importation. Some product has even tested hot for small amounts of radioactivity.
There is one Chinese company that has gone as far as to incorporate a satellite office in Europe prior to exporting to the United States in order to mask its true origin.
Choose a strategic partnership based on more than price.
Work with companies who bring value-add services to your business and not someone who just “knows a CBD guy”. There are several companies who do compounding and formulation services that deserve modest markups on ingredients for the value and convenience they bring to their customers.
Develop strong relationships that value shared beliefs of safety, quality and transparency.
Ask questions and request documentation!
How the CBD you’re buying was grown, extracted and processed all requires close scrutiny. Insistence on soil-up transparency documentation of the entire chain of custody process,and third party lab testing, are the best ways to ensure that you are sourcing truly pure CBD. Purity protects the consumer, enables trust in your brand and grows your market share.
Here’s a checklist of the documentation you should be asking your supplier for each time you purchase:
- Certificate of Origin (COO) – shows where the product is exported from.
- Farming Certification – shows where the product is grown (Organic farms are much harder to find but do exist).
If the product has a COO, but no farm certificates, it is possible the product was grown in one region and shipped to another prior to importing to the United States (this is the current modality for all product derived from China). - Certificates of Analysis (COAs) – testing for Potency, Pesticides, Heavy Metals and Residual Solvents.
- Some companies may go even further and provide an MSDS sheet or cGMP standard facility certifications.
When looking for organic farms, consider nuances of marketing. For example, Organic Practices do not mean a farm is actually Certified Organic. An EU organic certification reflects a far more stringent set of guidelines than that of the US. The US and the EU do have what is called the US-EU organic Equivalency Arrangement, which was established to standardize organic definitions and certification requirements. However, the agreement falls short in its actual enforcement, where EU regulatory agencies are managed by consumer protection boards and the US is largely made up of agricultural and pharmaceutical special interest conglomerates.
Quality – Know Your Oils
CBD product ranges in form from dark and pasty first phase extraction hemp tars, to beautifully cleaned and refined amber colored oil that is fluid and translucent. Dark tar is the lowest quality product in the market. Further refining cleans out the chlorophyll and biomass, waxy lipids and other unwanted constituents. Even further refined product can be made into a final 99% pure crystal isolate powder, though trace amounts of dangerous solvents can be found in these when tested. Organic CBD powder tends to have a slight amber hue and the smell of hemp to it. Some synthetics have a chemical odor.
Up and coming in popularity is water soluble CBD powder and oils. CBD can be rendered water soluble through several processes including dry-spray micro-encapsulation, emulsification agents, lipid profile augmentation and nanoparticle liposomes agents.Water solubility increases the bio-availability of CBD in the human body by up to 40-50%. This means that products such as medicine and edibles require 40-50% less CBD for any given dose to have the same physiological effect.
We hope this article is helpful in assisting your company to make both economical and responsible buying decisions. You are in a pioneering space and the future of your business may depend on it.
By Scott Holden, CEO of CBD Global. With hemp farms in the Czech Republic and the strictest purity standards in the industry, CBD Global is committed to consumer safety. CBD Global manufactures cGMP and EU certified organic CBD in oil, isolate and water soluble forms. For more information, contact [email protected]
