It’s no secret that the Federal Trade Commission (FTC) is cracking down on deceptive claims made in the marketing of CBD products. Their 2020 operation, Operation CBDeceit, resulted in enforcement actions being commenced against six CBD retailers. Meanwhile, the Federal Drug Agency (FDA) has already sent four warning letters to CBD retailers in 2021. These warnings relate to inaccurate claims from the four companies about CBD curing diseases like COVID-19, multiple sclerosis, Parkinson’s, and dementia, as well as improper labelling of CBD products as dietary supplements, and more.
So, what are CBD companies to do in this environment of enforcement?
These 5 tips for CBD marketing compliance can help reduce your risk of FTC or FDA warnings and enforcement actions:
Tip 1: Be aware of the FTC and FDA implications of making medicinal claims about CBD.
The FTC and FDA have taken slightly different approaches to CBD compliance, however, you do risk enforcement action from either or both agencies by making health claims about CBD.
In terms of FTC enforcement, it is important that you don’t make unsubstantiated claims about the medicinal value of CBD in your advertising. Unless (and until) you have peer-reviewed scientific evidence about the medicinal value of CBD, it is best to avoid phrasing like ‘treat’, ‘cure’, ‘prevent’, ‘health benefits’ and the like.
The FTC’s stance is clear:
“The same substantiation principles the FTC has applied to health claims for close to 50 years apply to similar claims for CBD products. Companies that represent expressly or by implication that what they sell can prevent, treat, or cure serious medical conditions will be held to the highest substantiation standards and marketers can expect careful scrutiny of those promises.”
The FTC has also outlined that it will focus its enforcement actions on companies make unproven claims about CBD’s ability to treat serious diseases.
Note: Simply providing links to non-scientific blogs or poor-quality scientific journal articles is not considered ‘substantiation’.
The standard under FDA is even stricter. Under FDA law, manufacturers of CBD products should not make any medical claims (whether substantiated or not). Making health claims about a product renders the product an unapproved drug in the eyes of the FDA.
Tip 2: Do not claim that a CBD-containing product is a dietary supplement.
The rationale for this tip is short and sweet: The FDA does not allow CBD-containing products to be advertised as a dietary supplement. Marketing yours as such may result in a warning letter and/or enforcement action from the FDA.
There are two different reasons for this:
- The FDA has taken the position that ingestible products containing CBD (whether foods or dietary supplements) are illegal due to the exclusion rule under section 201(ff)(3)(B) of the Food, Drugs &Cosmetics Act. This is because CBD is an active ingredient in an approved drug, Epidiolex.
- Many businesses are marketing CBD products as dietary supplements that don’t meet the definition of a dietary supplement because they are not ingestible. We see this with nasal sprays and the like.
There are bills pending that are attempting to change the laws here, but they have not yet passed (and may not pass).
Tip 3: Confirm the laws in each state you market your products.
Some states have enacted laws that operate in addition to federal requirements, and you will need to comply with them if you intend to market or sell your CBD products there. Florida, Louisiana, and Missouri, for instance, have tighter advertising restrictions than many states. Oregon, Rhode Island, Texas, and New Hampshire are expected to announce increased labelling restrictions too.
Tip 4: Test your product to ensure it contains the advertised amount of CBD.
You should be routinely engaging in product quality testing to ensure each CBD product you sell contained the advertised amount of CBD. Moreover, your testing procedures should be in line with scientific best practices and you should be sure to maintain adequate documentation and control records.
We’ve already seen one warning letter this year from the FDA related to inadequate quality control testing. Maintaining quality procedures and records can help your company avoid enforcement action from the FDA, while also improving your brand reputation and increasing customer trust.
Tip 5: Consider liability insurance.
5 of the 6 enforcement actions that arose during Operation CBDeceit resulted in a financial penalty. The settlement amounts ranged from $20,000 to $85,000. These amounts will be paid to the regulator in addition to the legal expenses associated with reaching the settlements.
Given that the CBD enforcement action is really only in its infancy, liability insurance can help mitigate against the financial risk of potential FTC or FDA action. You should consider whether liability insurance is right for you.
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