On September 10, 2019, the Federal Trade Commission (FTC) issued a press release announcing it sent letters to three companies that sell oils, tinctures, capsules, “gummies” and creams containing CBD, warning “it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.”

The FTC noted that each of the companies advertised their CBD products would “treat or cure serious diseases of health conditions,” and included statements that CBD would treat a wide range of ailments from anorexia to cancer to bipolar disorder to PTSD. The FTC noted that one company’s website claimed that its product “works like magic” to relieve “even the most agonizing pain” better than prescription opioid painkillers.

Another company promotes its CBD gummies as highly effective at treating “the root cause of most major degenerative diseases, including arthritis, heart disease, fibromyalgia, cancer, asthma, and a wide range of autoimmune disorders,” claims the FTC.

Citing its authority under the FTC Act to protect consumers from unfair and deceptive advertising, the agency warned the companies to review all health claims, including consumer testimonials, to ensure they were supported by reliable scientific evidence. The FTC further warned that selling CBD products without substantiation may result in legal action that could result in an injunction and order to return money to consumers.

The FTC requested the companies respond with specific actions they would take to address the agency’s concerns within 15 days of receipt of the letter.

FTC Letters Follow Similar Joint FTC/FDA Warnings

These letters follow a series of joint warning letters issued by the FTC and the Food and Drug Administration earlier this year to Nutra Pure LLC; PotNetwork Holdings, Inc.; Advanced Spine and Pain, LLC (d/b/a Relievus); and Curaleaf, Inc., regarding similar CBD health claims.

Citing consumer protection concerns, these regulators as well as various state and municipal health departments are signaling increased frustration and concern with companies making health-related claims pertaining to CBD, which remains unapproved – and unsafe – as a new ingredient, food additive, or dietary supplement.

FTC warning letters of this kind are not unusual. It is a common practice for Commission staff to proactively warn companies or even whole industries of practices they view as unfair or deceptive in violation of the FTC Act, prior to initiating a sweep of enforcement actions against such practices. Such FTC warning letters can be used in later enforcement actions to defeat arguments that the FTC standard for unfair or deceptive activity was unclear, or that the alleged violators were unaware that their conduct was in violation of the FTC Act.

The FTC warning letters come on the heels of a stalled California state law intended to clear a path for the inclusion of hemp-derived CBD in food in California (AB228). That bill died in the California Senate Appropriations Committee on August 30, 2019, further fueling regulatory uncertainty regarding the status of hemp-derived CBD in food, especially in California.

FDA Initiates Hearings on Hemp-Derived CBD

But all is not doom and gloom for companies in the CBD category. While regulators have shown increased scrutiny of companies making health and/or unsubstantiated research-related claims regarding hemp-derived CBD, at the same time, the FDA has initiated a hearing process regarding its regulation of hemp-derived CBD.

Former FDA Commissioner Scott Gottlieb previously advised that the primary concerns of regulators pertain to the marketing of CBD or other cannabis-derived compounds with a claim of therapeutic benefit and potential risks to consumers. Since leaving the FDA, he has further opined that given the multiyear process for FDA regulation of foods and dietary supplements, a faster path might include “put[ting] the onus on manufacturers to bring forward petitions to demonstrate that CBD can be safely added to products such as food,” through the form of new dietary ingredient notifications or food additive petitions.

Moving Forward

The FTC’s current salvo coupled with the joint letters issued with the FDA earlier this year signal these regulators’ intention to protect the marketplace from companies making unsubstantiated health claims for products containing CBD.

Until the FDA concludes its review and rulemaking process for CBD as a standalone product and as a food and drink additive, or until a company obtains approval for new ingredient or food additive clearance, companies interested in entering or working in the CBD space should avoid making any express or implied health or therapeutic benefit claims about their product in order to avoid scrutiny by – and hearing from – federal and state regulators.

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