The young CBD industry is growing accustomed to federal health authorities warning companies not to make medical claims about the cannabinoid.
But a round of warning letters this week from the U.S. Federal Trade Commission (FTC) – the consumer-protection agency that safeguards against unfair and deceptive advertising – served as a reminder that as CBD goes mainstream, more federal agencies are giving the industry a critical look.
This week’s FTC warnings went to three unidentified CBD companies. Among other complaints, the FTC criticized the businesses for:
- Posting on a website that CBD “works like magic.”
- Advertising CBD as a “miracle pain remedy.”
- Touting a CBD cream’s ability to relieve arthritis pain.
- Using a partnership with Harvard University researchers to bolster claims that CBD has been “clinically proven to treat cancer, Alzheimer’s disease, multiple sclerosis, fibromyalgia, cigarette addiction and colitis.”
The companies were given 15 days to review all claims and product testimonials and ensure they are backed by scientific research.
Like the U.S. Food and Drug Administration (FDA), the FTC can fine companies that make unproven medical claims, though enforcement actions beyond warning letters are rare.
To find out what lessons the broader CBD industry should take from the FTC warnings, Hemp Industry Daily talked with industry insiders and lawyers. Here are their top takeaways:
1. They’re watching: This week’s letters from the FTC were not the agency’s first foray into checking CBD manufacturers for deceptive business practices.
But the FTC has been much less vigorous than the FDA when it comes to cannabinoid products. This week’s letters show the CBD industry is maturing and getting attention from more federal agencies, said Samantha Walsh, a Denver-based hemp lobbyist and CEO of Tetra Public Affairs.
Every federal warning “counters the myth that hemp isn’t regulated,” she said. “It clearly is.”
And the FTC warnings are a sign that more federal authorities acknowledge the growth of the CBD industry, said Rod Kight, a cannabis attorney in Asheville, North Carolina.
“The FTC has fully entered the CBD regulatory space, and we can expect to hear more from it during the coming months,” Kight wrote in an email to Hemp Industry Daily.
2. Worry first about the FDA: The FTC letters underscore broader government interest in the new CBD industry.
But the FDA “is still the 800-pound gorilla in the room,” according to Andrew Subin, an attorney who started Vermont Cannabis Solutions in Burlington, Vermont.
While the FTC can issue fines, he said, the FDA can take products off shelves.
“The FDA regulations will govern what can go into the package and what needs to be included on the outside of the package,” Subin wrote in an email.
“The FTC will, presumably, allow people to advertise the claims that the FDA allows them to make (if any). So what we are really still waiting for is some regulations from the FDA.”
3. Have a compliance plan: User testimonials and influencer posts on Instagram can land a company in hot water if the product manufacturer highlights the content or has contracts for the posts, said Emily Leongini, a Washington DC-based attorney at the Arent Fox law firm who advises cannabis clients.
Because of that, savvy CBD companies should have formal procedures to ensure its social media and marketing plans comply with federal guidelines.
“This needs to be top of mind,” Leongini said. “Your marketing team or your compliance team needs to be familiar with what the FDA and FTC are saying and then implement those guidelines.”
4. Constant surveillance isn’t necessary: Garrett Graff, a Denver attorney who advises CBD manufacturers with the Hoban Law Group, said producers need to be vigilant about monitoring claims being made about their products.
But that doesn’t mean federal agencies expect instant compliance, especially from user-generated content the company itself didn’t write.
“You don’t have to be scrubbing all your sites on a full-time basis,” Graff said.
Instead, have a plan to review medical claims “in a timely manner.”
