FTC Issues Additional Three Warning Letters to CBD Companies
On September 10, 2019, the Federal Trade Commission (FTC) sent warning letters to three companies that sold cannabidiol (CBD) products marketed with misleading claims that they could treat serious diseases. The FTC aims to “protect consumers from unfair and deceptive practices in the marketplace,” and accordingly has the responsibility of jointly overseeing marketing and advertising of products that fall under the U.S. Food & Drug Administration’s control. (In 2019, the FDA issued four warning letters, and publicly disclosed the names of the companies in question. We previously discussed these letters in an earlier article.) According to its press release, the FTC warned three companies that it is illegal to market cures or preventative features of a product without supporting “competent and reliable scientific evidence.” The FTC has not publicly identified the recipients of the letters.
The companies in question sold various products containing CBD, including oils, tinctures, capsules, creams, and “gummies.” Each company asserted its CBD product was able to cure or treat serious health concerns. One company claimed that its product could treat pain better than opioids and that CBD was “clinically” proven to treat a host of diseases, including Alzheimer’s, cancer, and multiple sclerosis. That company cited to its participation in research with Harvard researchers. The other two companies likewise made similar claims that their CBD products could treat pain and other conditions (both physical and psychological), such as anxiety, depression, fibromyalgia, heart disease, and autism.
In the letters, the FTC asked that the companies review their marketing claims and back those claims with competent and reliable scientific evidence. The companies have 15 days within receipt of the letter to respond to the FTC’s inquiry.
1. Increasing government interest in the CBD space: There is growing government interest in regulating the CBD space, as evidenced by the FTC and FDA 2019 warning letters. This is further underscored by the FDA’s 2019 Working Group public hearings and public comments. CBD companies should understand and appreciate their potential risk exposure, which is largely governed by the Federal Food, Drug and Cosmetic Act (FD&C Act) and Federal Trade Commission Act (FTC Act). To ensure compliance with these laws, each agency has its own enforcement measures with warning letters only the tip of the iceberg. The FTC, for example, may issue cease and desist orders and issue civil monetary penalties to violators. On the other hand, the FDA may seize products and issue injunctions.
2. Watch what you say: It comes as no surprise that the FTC has highlighted the importance of claim substantiation. As
the FDA Working Group has stated, however, there is insufficient data available surrounding the implications and effects of CBD. Accordingly, companies selling CBD-products should be cautious in avoiding making unsubstantiated claims. To minimize exposure, company marketing teams should ensure that claims are properly substantiated by adequate and acceptable scientific evidence. The FTC has previously explained that “‘competent and reliable scientific evidence’ means tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.” (Decision and Order, Mars Petcare US, Inc., FTC Dkt. No. C-4599 (Dec. 13, 2016).)