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What Is The Real Cost Of Converting Your CBD To Delta-8- THC?
Often derivative products are taken at face value when being compared. Currently, this is the case when we speak with operators about CBD and Delta-8 THC. The decision-making process always centers around comparing the price of 1 kg of CBD isolate (~$533.00 / kg) to the price of 1 kg of CBG isolate (~$1,150.00 / kg), which at the surface shows the potential to double the gross revenue.
Once you dive into the hard costs of converting your CBD inventory to Delta-8, the story changes dramatically. Below, we go through a calculation that takes into consideration a variety of variables when calculating the costs of converting CBD. The fixed costs in this calculation are based on conversations we had with an R&D research chemist working at a licensed facility in Colorado.
What Is The Real Cost Of Converting Your CBD To Delta-8?
Based on our calculations, there’s still room for Delta-8’s price per kilogram to drop before the conversion becomes unprofitable. Our model suggests that, on this scale, the breakeven price per kilogram is around ~$923.00. Based on our forecast published in last month’s report, this could happen as early as May of this year. We advise our clients not to keep large inventories of Delta-8 in house due to the current Delta-8 pricing volatility.
| Input Categories | Assumptions | |||||
|---|---|---|---|---|---|---|
| CBD quantity (kg) | 10 | |||||
| Market value of CBD isolate | $ 533.00 | |||||
| Total cost of CBD | $ 5,330.00 | |||||
| Solvent quantity (Liters) | 15 | |||||
| Total estimated solvent cost | $ 1,400.00 | |||||
| Catalyst quantity (grams) | 50 | |||||
| Total estimated catalyst cost | $ 50.00 | |||||
| Total estimated labor cost* | $ 500.00 | |||||
| Total analytical testing cost (QA / QC) | $ 300.00 | |||||
NoteS:
*Labor cost is estimated based on 20 hours
of labor @ $25.00/hr
**Conversion yield is calculated after conversion,
work up, and purification to final product.
| OUTPUT Categories | Assumptions | ||||
|---|---|---|---|---|---|
| Conversion yield* | 85% | ||||
| Delta-8 THC quantity (kg) | 8.5 | ||||
| Market value of Delta-8 THC / kg | $1,150.00 | ||||
| Potential Revenue Estimated Profit |
$ 9,775.00 $ 2,195.00 |
Total Input Cost = ( Cost of CBD + Cost of Solvent + Cost of Catalyst + Labor + Analytical Testing )
Potential Revenue=( (Percent Yield from Reaction * Input Quantity of CBD) * Delta-8 Market Value )
Estimated Profit = Revenue – Input Cost
