FTC Sends Warning Letters to CBD Companies
The Federal Trade Commission (FTC) sent three new warning letters on September 10, 2019 to producers of cannabidiol (CBD) products. As of this writing, the letters have not been made public and we do not yet know who received them.
This is the second time that the FTC has sent warning letters to CBD companies. The first time was on March 28, 2019, in three letters sent jointly with the Food and Drug Administration (FDA). Those letters were sent to Nutra Pure LLC; PotNetwork Holdings, Inc.; and Advanced Spine and Pain, LLC (d/b/a Relievus). In them, the FTC contends that the products advertised by these companies may violate the FTC Act by making false or unsubstantiated health claims, including that CBD can “effectively treat diseases, [such as] Alzheimer’s disease, fibromyalgia, and neuropsychiatric disorders.” The second round of letters appear to have been written for similar reasons.
It is important to note that, while the FTC’s concerns are similar to the FDA’s, the underlying laws and basis for sending the letters are different. The FDA regulates human and veterinary drugs, biological products, and medical devices. Its primary mission is to protect the public’s health. The FTC regulates business practices, with a primary mission of preventing unfair competition. The FTC letters to CBD producers are about advertising unsubstantiated health claims. (Note the focus on the term “advertised”, since this goes to the issue of commerce.) The FTC has stated that it is “concerned that one or more of the efficacy claims cited above may not be substantiated by competent and reliable scientific evidence.” Specifically, it contends that
“it is unlawful under the FTC Act, 15 U.S.C. § 41 et seq., to advertise that a product can prevent, treat, or cure human disease unless you possess competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made. More generally, to make or exaggerate such claims, whether directly or indirectly, through the use of a product name, website name, metatags, or other means, without rigorous scientific evidence sufficient to substantiate the claims, violates the FTC Act.”
While it does not appear that the FTC intends to take an overly aggressive stance at the moment, a producer’s failure to comply with a warning letter could result in an injunction and/or cease and desist order preventing it from continuing its business. It could also result in the CBD company being ordered to make monetary payment to consumers. If having the FDA on your back was not sufficient reason to cease making medical claims about CBD (as I recently discussed in an article about the FDA letter to Curaleaf), then having yet another federal agency with its own set of sanctions step in should do the trick.
It is clear is that the FTC has fully entered the CBD regulatory space and we can expect to hear more from it during the coming months.
September 11, 2019
Rod Kight is a cannabis attorney who represents hemp farmers and hemp businesses. He speaks at cannabis conferences across the country, drafts and presents cannabis legislation to foreign governments, is regularly quoted on cannabis matters in the media, and maintains the Kight on Cannabis legal blog, where he discusses legal issues affecting the cannabis industry. You can contact him here.