Since production of CBD cannabis and hemp gets regulated in more and more countries around the world, selling prices for CBD plant material decrease steadily. In Switzerland for example it was possible to sell one kilogram of dried indoor CBD flowers for more than 6000 CHF in 2017, which dropped down to 700-1200 CHF in 2021.
At these prices, many producers struggle to break through their production cost with every single batch. Selling prices especially in Switzerland are now more or less the same as production prices, depending on the specific buyer and the specific production cost of a facility.
Thinking this further makes clear that production facilities with low production costs can still operate profitable – given they produce a decent quality at the same time.
Some buyer groups require detailed specified product quality
We want to emphasize that Cannabis companies not only have to produce at low production costs to operate profitable. With certain certifications for example, cannabis products at any point of the value chain can reach buyer groups that were inaccessible before. With these buyer groups, also selling prices rise to new heights.
What we’re talking about are industry standards like Global GAP, GACP or GMP. You might heart from them as they make up the foundation for products that can be used and found in food (Global GAP) or pharmaceutical products (GMP). Being certified on one or maybe all of them opens up new, higher valued markets for cannabis production companies.
To get an overview at which points of the value chain which compliance standard come into account, we want to share the following graphics with you:
As can be seen, GACP – Good Agriculture Collection Practice – is the medical compliance standard that takes part during the stage of medical plant cultivation. To get any end product or Active Pharmaceutical Ingredient EU GMP certified, it’s a necessity to produce all plants in the supply chain according to the GACP framework which can be found in EU GMP Annex 7 EMA GACP.
After the plants got harvested or dried, the GMP standard comes into account and has to be followed for every further step of processing. So, in the end it all comes down to be compliant with GMP which includes being compliant with GACP for the cultivation stages of product creation. Producers that aim for the good paying medical market can decide if they wanna get certified themselves to full GMP or just wanna document their processes and movements according to GACP which gives them the ability to sell their products to GMP licensed manufacturers.
GMP = Good Manufacturing Practices. This standard is the “gold standard” for the production of pharmaceutical products. GMP frameworks can be found in several countries while the EU GMP has one of the most strict rules. They’re written down in the EUDRALEX, collection of rules and regulations governing medicinal products in the European Union.
As a cannabis company you can decide which compliance standard you want to fulfill at point of sale
It belongs to the decision of every single cannabis production company where its own processes begin and end. Some might keep a focus on just the production of biomass / plant material, while others also want to process their products to value added products like CBD crude oil or CBD isolate. If the company focuses on producing pharmaceutical grade biomass, it just has to follow the GACP guidelines and don’t need a GMP certification. Note that there is no certification possibility for GACP – but GMP certified buyers of GACP biomass have to audit their suppliers if they produce according to the GACP guidelines to fulfill their own duties for their GMP certification. This is why producing according to GACP guideline increases selling prices compared to producing according to lower standards like Global GAP or no standard at all.
When properly logging your cultivation site activities in the Cannavigia software you get a comprehensive culture journal that works as a GACP compliant documentation of your plant or product batch which makes it easier for GMP certified processing companies to assess your product. This report can also be attached at the wholesale marketplace https://www.canxchange.eu where you are able to sell your product to large scale buyers. Feel invited to also read our blog post about their exciting market report.
Another strategy for a cannabis production company might be to get full GMP certification. This includes external audits from governmental approved auditors which increases the whole company overhead expenses, but also further increases selling prices. Note that for any extraction and further processing steps certification for GMP is mandatory as this exceeds the scope of GACP. This includes manufacturing of CBD oils or isolate.
It’s important to point out that whether you aim for a GACP or GMP product at point of sale, selling prices increase with every step to higher compliance standards. When not aiming for the medical market, you should aim for the Global GAP or GAP (Good Agricultural Practice) standard to increase selling prices.
Higher prices for GMP certified CBD isolate
For example, the price for CBD isolate without certification can be around 50% less than CBD isolate that’s GMP certified. Note that EU GMP certified produced CBD isolate achieves higher selling prices in Europe than non-EU GMP certified CBD isolate from e.g. Canada or the US due to their slightly different GMP requirements.
The Cannavigia Cannabis Compliance Suite as a foundation for certified Cannabis products
The Cannavigia software comes in four modules: The cultivation module, the processing module, the distribution module and the customer engagement module. The cultivation module supports you in collecting the required data for producing GACP compliant plant material as a basis for further products. The processing module takes care that you can document all required steps and information about any processing processes, e.g. drying plants or making a topical out of your CBD raw material.