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FTC Cracking Down and Issuing Fines for Deceptive Claims by CBD Companies

On December 17, the FTC issued a press release announcing its first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products. According to the press release, a number of “companies made unsupported claims that their oils, balms, gummies, coffee, and other goods could treat serious diseases such as cancer and diabetes.” We’ve written extensively about the FDA’s role in preventing CBD companies from making health claims about their products, and covered the overlap between the FDA and FTC’s enforcement roles here.

The federal Food, Drug & Cosmetic Act (“FDCA”) provides the FDA with regulatory authority over product labeling and seeks to ensure that consumer products (foods, dietary supplements, cosmetics, tobacco products and drugs) are not misbranded, meaning that the labels do not contain false and misleading statements. The role of the FTC under the Federal Trade Commission Act (“FTC Act”), however, is to regulate “advertising” to protect the public from unfair and deceptive claims.

The overlap is apparent, but the distinction between packaging/labeling and advertising is not always clear. Some courts have expanded the authority of both the FDA and FTC by interpreting “labeling” to include products sold on the Internet, especially where the products are purchased directly from a website. This has led the two agencies to increased collaboration in regulating the advertising of food and dietary supplement products and has blurred the line between where each agency’s authority ends and the other’s begins.

In this particular enforcement instance, the FTC announced it is taking action against six sellers of CBD-containing products for allegedly making a number of scientifically unsupported claims about their ability to treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others. In addition to requiring each of the companies to immediately cease making these unsupported health claims, the companies will be required to pay monetary judgments to the agency. The orders settling the FTC’s complaints “bar the respondents from similar deceptive advertising in the future, and require that they have scientific evidence to support any health claims they make for CBD and other products.”

According to Andrew Smith, Director of the FTC’s Bureau of Consumer Protection:

The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science. Otherwise, don’t be surprised if you hear from the FTC. In particular, this crackdown against CBD companies is attempting to protect consumers from false, deceptive, and misleading health claims made in advertisements on websites and via social media.

The six offenders in this crackdown are as follows:

  1. Bionatrol Health, LLC, based out of Utah, sold CBD oil and claimed, without substantiation, that their product was “safe for all users, treats pain better than prescription medications like OxyContin, and prevents and treats age-related cognitive decline and chronic pain.”
  2. Epichouse LLC (First Class Herbalist CBD), also based out of Utah, sold a variety of CBD products on its website. Epichouse “promoted CBD as safe for all users, able to treat pain better than prescription medications such as OxyContin, and able to prevent a wide range of serious conditions, including cancer, diabetes, and heart disease.”
  3. CBD Meds, Inc., based out of Winchester, California, advertised CBD oil on their website and on YouTube. Winchester “made a number of false or unsubstantiated claims, including that CBD effectively treats, prevents, or mitigates serious diseases and conditions like artery blockage, cancer, glaucoma, autism, and schizophrenia, among many others.”
  4. HempmeCBD (EasyButter, LLC), sold a variety of CBD products and “claimed its CBD products could treat or cure serious ailments like cancer-related symptoms, substance abuse, and AIDS.”
  5. Reef Industries, Inc., based out of California, sold CBD products via its website and Twitter, and made unsubstantiated claims that “CBD can prevent, cure, mitigate, or treat diseases and serious health conditions, including Alzheimer’s disease, arthritis, autoimmune disease, and irritable bowel syndrome.
  6. Steve’s Distributing, LLC (Steve’s Goods) sold a variety of CBD and CBG goods through its website and social media, and claimed that the products “are effective alternatives to prescription medications and treat a wide range of diseases and serious health conditions, including Alzheimer’s disease, cancer, and diabetes.

We expect enforcement of this nature from both the FTC and FDA to be a major theme in the coming year, and urge all companies selling these types of products to consult with an attorney to ensure that your advertising and labeling comply with all applicable laws.

If you have questions about what you can or cannot say with respect to a cannabis product, whether on a label, on social media or on any other platform, or if you have questions about how, where or to whom these products can be bought or sold, contact our team of regulatory and hemp CBD attorneys.

The post FTC Cracking Down and Issuing Fines for Deceptive Claims by CBD Companies appeared first on Harris Bricken.

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