FTC

As the cannabis industry continues to navigate choppy economic and legal waters into 2024, some cannabis companies are pivoting to the smokable herbs market. And I do not mean to those hemp-derived intoxicating cannabinoids (HDIC) either (which are part of a legally precarious loophole anyway depending on who you ask). The smokable herbs to which cannabis companies and entrepreneurs are turning to are things like wormwood, valerian, tarragon, and mugwort (among others). Of course, these smokable herbs face a different set of legal and compliance issues altogether than hemp and/or cannabis do.

The Federal Trade Commission (“FTC”) has joined the U.S. Food and Drug Administration (“the “FDA”) in enforcing laws related to marketing CBD products. The FDA has historically issued warning letters and pursued companies that illegally market CBD products with claims the products may treat medical conditions.  The FTC has joined the FDA is this pursuit and announced settlements with six different CBD companies involves fines ranging between $20,000-$85,000 in addition to notifications provided to consumers.  Pursuant to these settlement agreements the respondent companies are also prohibited from similar marketing efforts in the future, any health claims must have scientific evidence to support them.

Industry actors making any health or therapeutic claims are vulnerable to action by agencies such as the FDA and FTC, however, they may also be subject to civil suits based on enforcement by those agencies. In April of 2020 Charlotte’s Web Holdings, Inc. (“CWB”) was served with yet another (its second) class action lawsuit due to how their products are labeled. Benson v. Charlotte’s Web Holdings, Inc., No. 1:20-cv-00418 (N.D. Ill.)  The suit based a significant portion of the allegations on FDA guidance:

 “Based on available evidence, FDA has concluded that THC and CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B) of the FD&C Act [21 U.S.C. § 321(ff)(3)(B)]. Under that provision, if a substance (such as THC or CBD) is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act [21 U.S.C. § 355], or has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, then products containing that substance are excluded from the definition of a dietary supplement”

Companies facing enforcement actions by the FTC may similarly be subject to civil allegations.

WHAT DOES THIS MEAN FOR YOUR BUSINESS

The U.S. Food and Drug Administration (FDA) issued a press release on the evening of Monday, November 25 concerning its recent enforcement actions and a regulatory decision concerning products that contain cannabidiol (CBD).  The Warning Letters follow FDA’s trend of focusing its CBD product enforcement on unapproved drug claims.  The regulatory decision stated in the press release concerns FDA’s decision that CBD is not generally recognized as safe (GRAS) for use as a food additive.

The fifteen (15) Warning Letters, each dated November 22, 2019, were issued to companies for marketing various CBD products. The products identified in the Warning Letters spanned conventional foods, dietary supplements and animal products.  FDA made specific mention in several Warning Letters about statements regarding the use of CBD products in infants and children.

The Federal Trade Commission (FTC) sent Warning Letters to three companies that sell products containing cannabidiol (CBD) and advertise that the products prevent, treat, or cure disease without substantiation of the purported health benefits. In a post on Husch Blackwell’s Food & Ag Insights blog, Emily Lyons explains the FTC’s actions and the effect they have on the advertising of CBD products.