The FTC Warns CBD Marketers a Second Time About False Health Claims

In December, it will be a year since Congress, as part of the “Farm Bill,” legalized hemp-derived CBD containing less than 0.3% THC (the psychoactive compound that distinguishes hemp from its cannabis cousin, marijuana, which remains on the ban list).  With this green light, and the new surge of momentum it was bound to give to the “CBD Rush,” I predicted that the Federal Trade Commission, which had been on the sidelines as long as CBD was a banned substance under the jurisdiction of the Drug Enforcement Administration, would get in the game. 

Last March, the FTC, acting jointly with the Food and Drug Administration, sent out its first set of warning letters to companies making false and unsubstantiated “disease treatment” claims for CBD products. The letters, which went to Nutra Pure LLC, Pot Network Holdings, Inc., and Advanced Spine and Pain, LLC (d/b/a Relievus), addressed advertising for a range of CBD supplements, such as “Hemp Oil,” “CBD Softgels,” “Liquid Gold Gummies,” and “CBD Oil.” Ads for these products claimed they could effectively treat diseases, including cancer, Alzheimer’s, fibromyalgia, and “neuropsychiatric disorders.” In addition, ads for Nutra Pure claimed that, “Science also shows that CBD has anti-emetic, anti-convulsive, anti-inflammatory and analgesic properties,” and that, “CBD is a viable option for minimizing these effects within the brain.”  The joint FTC-FDA letters warned the companies about the potential legal consequences of making unsupported health claims, and instructed them to notify the FTC of the specific action taken to address the agencies’ concerns.

The FTC has now launched a second round of warnings to three more companies that were also making unsubstantiated health claims for CBD products. Acting on its own this time, the FTC sent warning letters last month to 4Bush Holdings, LLC, NuLife CBD Oils, LLC, and Ocanna Co. that targeted claims for a variety of CBD-infused products, including oils, tinctures, capsules, “gummies,” and creams.

Each company advertises that its CBD products treat or cure serious diseases and health conditions. 4Bush Holding’s website claims CBD “works like magic” to relieve “even the most agonizing pain” better than prescription opioid painkillers. To bolster its claims that CBD has been “clinically proven” to treat cancer, Alzheimer’s disease, multiple sclerosis (MS), fibromyalgia, cigarette addiction, and colitis, the company states it has participated in “thousands of hours of research” with Harvard researchers.

NuLife CBD Oils’ website claims that its CBD products are proven to treat autism, anorexia, bipolar disorder, post-traumatic stress disorder, schizophrenia, anxiety, depression, Alzheimer’s disease, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, traumatic brain injuries, diabetes, Crohn’s disease, psoriasis, MS, fibromyalgia, cancer, and AIDS. The company also advertises CBD as a “miracle pain remedy” for both acute and chronic pain, including pain from cancer treatment and arthritis.

Ocanna’s website promotes CBD gummies as effective at treating “the root cause of most major degenerative diseases, including arthritis, heart disease, fibromyalgia, cancer, asthma, and a wide spectrum of autoimmune disorders.” The company also claims its CBD cream relieves arthritis pain and that its CBD oil may effectively treat depression, PTSD, epilepsy, heart disease, arthritis, fibromyalgia, and asthma.

In other words, CBD cures disease, period! 

The FTC letters warn that making health claims for CBD products – especially disease claims – without such substantiation violates the FTC Act and could have serious legal consequences, including an action for an injunction and consumer redress. The letters instructed the companies to notify the FTC within 15 days of the specific actions they have taken to address its concerns.

Unlike the FDA, which routinely sends warning letters to companies making unsubstantiated health claims or unapproved drug claims and gives them a chance to voluntarily comply, the FTC usually will open an investigation in the first instance and take enforcement action  unless it determines that no violation occurred.  Occasionally, however, and especially in the case of an emerging (or newly legal) product category or marketing method, it will initially use the softer “warning letter” approach. That almost certainly was the reasoning behind its decision to only “warn” these six companies; in a sense, it is using 2019 as a one-year grace period following CBD decriminalization for CBD marketers to become educated about, and begin to honor, their FTC compliance obligations.  They should consider themselves lucky, though, because make no mistake:  the FTC’s forbearance is limited and the warnings are clearly a shot across the bow. The next move the FTC makes against a CBD marketer – and there will be many more than one – will likely be a full-blown law enforcement action leading to a permanent federal court injunction, restitution, and, in the most egregious circumstances, an asset freeze against the company and its principals.

Current and would-be “cowboy” CBD marketers, consider yourselves amply warned:  the FTC is on the CBD beat, and with its immense (and scary) enforcement powers, is looking for its first scalps.  If you are, or are thinking about, selling a CBD product, good legal counsel can help you avoid being one of them.

Talking about Direct Response, FTC, Online Marketing

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