Cronos has launched their THC + CBG gummies under a new brand ‘Feelz’. Each package contains 10mg of THC and 5mg of CBG. They’ve changed it up a bit from their old THC gummies under the brand ‘Sourz’, instead of offering five gummies per package ‘Feelz’ only has two gummies per package. The change from five to two is interesting, it reduces the cost of gummy ingredients and makes it harder for consumers to titrate their doses if they want to consume more or less than 5mg and 10mg of THC.

Time to do some math to see how much Cronos is selling their CBG for to consumers. I’m assuming that provincial margins are the same for Cronos’s gummy offerings and I’m not accounting for the reduction in gummy raw material costs for ‘Feelz’. I’m also assuming the $1,000/KG CBG production cost is all in and the cost of adding CBG isolate to gummies is minimal. 

Price of Sourz on OCS (10mg THC): $7.80 

Price of Feelz on OCS (10mg THC, 5mg CBG): $8.50 

Price for 5mg CBG: $0.70

Price per mg CBG $0.14

Price per KG CBG: $140,000

Profit per KG of CBG sold: $139,000

This profit may seem high compared to the cost of production, but we have to remember Cronos needs to recoup all their R&D expenses and only have a brief window to charge these margins. If their CBG products become wildly successful, CBG from the cannabis plant will flood the market and the race to the bottom will begin again (just like with CBD and THC). 

The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author has no position in Cronos Group.