Federal Regulatory Agencies Crackdown On CBD Marketing Claims

On December 17th, the U.S. Federal Trade Commission (FTC) announced that it was imposing monetary sanctions against six companies producing cannabidiol or CBD products. This marks the first time the federal government has taken punitive enforcement action against CBD manufacturers who made unlawful medical claims about their products. These claims included representations that consuming CBD would eliminate pain, produce feelings of youth, and numerous testimonials about how individuals had stopped using prescription drugs for pain medications and replaced them with CBD.

It’s common knowledge that CBD manufacturers cannot make medical claims, especially those not supported by medical scientific studies. And we have seen letters from the Food and Drug Administration (FDA) slapping CBD manufacturers on the wrist. This principle is axiomatic, but not always followed by manufacturers and producers of CBD products in this nascent industry. The December 17th announcement was promptly followed up, seven days later, with FDA notifications to five CBD product manufacturers, telling them to cease making medical claims.

The latest round of these targeted CBD products are concerning from a public health perspective, due to the path the administration is taking to regulate this compound. The targets include eye drops and inhalers. The manufacturers were not fined or issued punitive sanctions, but given time to address the alleged violations. The pattern of notification to CBD manufacturers has been somewhat inconsistent over the years.

Around five years ago, we began to see notifications from the FDA without punitive action, but admonitions that CBD products cannot be sold as dietary supplements and manufacturers cannot make such claims. In 2019, similar letters went out again.

It’s important to understand the relationship between the Federal Trade Commission and the Food and Drug Administration. While they’re separate entities, they work together. The FDA is responsible for protecting public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices, along with ensuring the safety of the American food supply, as well as cosmetics. The FDA has oversight over pharmaceutical drugs, foods, food additives, animal food, supplements, personal care products, and tobacco. It also oversees ingredients in alcohol beverages, which are generally governed by the FTC. The Federal Trade Commission is an independent organization working to promote competition to protect and educate consumers. These agencies’ purview overlaps, particularly as it relates to cannabidiol (CBD) or in non-intoxicating hemp-derived cannabidiol products.

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In 1971, the FTC and FDA created a memorandum of understanding — with the common purpose of preventing injury and deception of U.S. consumers. They had joint planning for coordinated programs that exchanged information and evidence. This has played out with CBD in the issuance of warning letters, enforcement, and oversight of products in the marketplace. This is even more pronounced in products coming from the cannabis plant (i.e. industrial hemp), because many of the early manufacturers were ill-equipped to comply with FDA production requirements. This in turn led many manufacturers to not understand making claims about the efficacy of those products, continuously spurring the federal government’s involvement in monitoring the industry.

The claims component surrounding FDA warning letters has primarily been driven by consumer protection, manufacturing, and consistency issues. Coupled with the FTC’s concerns over claims made to boost sales by these companies, the agencies’ common objective becomes clear.

The FDA has, according to its former interim Director (E, do you have his first name?) Dottlieb, said that the agency intends to create a pathway for CBD and other non- intoxicating cannabinoid products from hemp. Current FDA Commissioner Stephen Hahn has indicated that it would be folly to put the toothpaste back in the tube. As of today, the FDA has merely made a “Request for Proposal” for the collection of safety data across thousands of CBD products so the agency can scientifically analyze whether they’re safe and consistent — or present a concern for the consumer marketplace.

Many people in the industry will argue that safety data already exists. The World Health Organization relied on reams of that data in making its recommendation to the United Nations to remove non-intoxicating CBD and other cannabinoid products made from the industrial hemp plant from the UN Single Convention on Narcotic Drugs. The FDA is essentially doing this on its own. It wants an accurate real-time sampling of the products in the marketplace to determine what its permanent policies will be moving forward.

In July 2020, the FDA produced a CBD enforcement guidance memo, entitled “Draft Guidance for Cannabidiol; Draft Guidance for Industry; Availability.” That document was sent to the White House, but not advanced by the Trump Administration. The industry still awaits this very important guidance, as do American consumers.

Last month’s enforcement actions appear to send three messages to anyone participating in this industry. The first is to stop making claims. You cannot make medical claims about these products without going through a very rigorous, time-consuming, and expensive process by the FDA. This has not yet occurred for a wide array of products with the exception of the approved drug, Epidiolex. That’s for a very specific condition involving seizures known as Dravet Syndrome. “Structure-function claims” are permitted for supplement products, but to date “structure-function claims” surrounding CBD or other non-intoxicating cannabinoids have not been approved by the FDA for a variety of reasons. Not the least of which is that industrial hemp was only formally legalized and removed for all purposes from the Controlled Substances Act as recently as December of 2018.

The second message is that cannabinoid manufacturers need to follow all rules concerning consumer safety and production standards, even if the FDA doesn’t specifically say that those standards apply to them. They absolutely apply as a baseline and fundamental production standard, which is requisite for consumers to have confidence in the materials put out in the marketplace.

With the forthcoming Biden Administration likely to replace leadership at the FDA, the last message is that the Trump White House might have held back the July enforcement memo. The agency’s new leadership could move forward with swift policy to show the public that it is watching this industry and making its best effort to coordinate enforcement. Given the rescheduling of cannabis by the United Nations, the European Court of Justice’s guidance on CBD, and the FDA’s recent actions, one thing is clear – there will be pathways for these non-intoxicating cannabinoid products derived from industrial hemp to enter into the consumer marketplace in a variety of ways.

While the specific guidance, rules, and requirements have yet to be issued, please understand that FDA rules do exist and should be followed from day one. From the very beginning, we’ve advised our clients at the Hoban Law Group to voluntarily avail themselves of the standards surrounding consumer protection under the FDA regulations and the state equivalents.

Last March, I sat down with Founder and CEO of iCAN and Organizer of CannaTech, Saul Kaye to explore in depth what can and cannot be claimed by companies selling products in the absence of global and federal regulatory frameworks. During this time period, when we were all feeling the first wave of effects from the pandemic, a handful of CBD companies were opportunistically claiming that their products could treat COVID-19, or at least provide relief from symptoms.

It’s critically important to follow the guidance of the state Departments of Health. Here in Colorado, manufacturers who’ve followed the policies of the Colorado Department of Public Health and Environment and the Hemp Foods Bill legislation have been the most successful. Until FDA guidance is permanently formalized and finalized, which could be years away, the industry needs to continue to police itself and ensure its compliance with these very basic guidelines and requirements.

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