Cannabidiol (CBD) businesses and ventures are exploding across America. You can find CBD signs in more and more physical shopping centers and retail locations. You can find almost any type of CBD product you want online. Even physicians are now touting the benefits of CBD. The products appear in many forms: creams, oils, lotions, sprays, balms, lollipops, and more. The CBD business currently generates $1 billion in revenue. That number is expected to expand to $16 billion by 2025.
CBD is a chemical compound that is derived from the cannabis plant. Unlike marijuana, whose THC chemical produces a characteristic high, CBD products (which must have a THC level of .3 percent or less) are being promoted as the safer and healthier alternative. CBD production has boomed since the 2018 Farm Bill declassified hemp as a controlled substance.
While the Farm Bill legalized the production of hemp-based products, there is still a great amount of confusion and misunderstanding about what products are legal. Most states have yet to pass laws legalizing the production of CBD. Some states do have laws which legalize the use of marijuana-based products for medical use. California has even passed legislation legalizing the recreational use of marijuana by adults in small amounts if certain conditions are met.
The confusion between the federal Farm Bill law and state laws, and state inaction, have opened the door for numerous CBD companies who are entering the market despite the possible risk of prosecution.
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The FDA’s Role in CBD Production
In addition to open issues about the legality of the CBD products, there is uncertainty about what regulations apply. Much of the production of CBD products at the federal level is regulated by the Food and Drug Administration (FDA). The FDA has the authority to approve CBD products as drugs and treatments. So far, the FDA has not approved any CBD-based treatments for any disease or condition. Only one cannabis-derived drug and only three cannabis-related drugs have been approved.
FDA has determined that one drug, Epidiolex, is safe and effective for the intended use –to treat “seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients 2 years of age and older.” Epidiolex contains a purified form of the drug substance CBD.
“The agency also has approved Marinol and Syndros for therapeutic uses in the United States, including for the treatment of anorexia associated with weight loss in AIDS patients. Marinol and Syndros include the active ingredient dronabinol, a synthetic delta-9- tetrahydrocannabinol (THC) which is considered the psychoactive component of cannabis. Another FDA-approved drug, Cesamet, contains the active ingredient nabilone, which has a chemical structure similar to THC and is synthetically derived.”
FDA has issued warning letters to companies that promote their CBD products as drugs or dietary supplements – often on the basis that FDA rules the products adulterated and misbranded.
The New York Times reported how the following state actions/inactions are adding to the uncertainty:
- Colorado has a law that provides that all hemp plant parts can be legally added to food for sale. This Colorado law appears to conflict with federal law.
- California, Georgia and New York City have, unlike Colorado, banned adding CBD to food. In New York, health inspectors have begun to confiscate CBD-infused cookies.
- Texas, Ohio, Nebraska and other states have arrested people for selling CBD products – even when the CBD products have less than .3 percent THC, the new requirement for legalizing Hemp in the new farm bill.
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The Federal Trade Commission and Marketing of CBD Products
The FTC was established in 1914. The agency works to protect consumers by “preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.” The FTC has recently begun to send warning letters to companies that make false or misleading boasts about the benefits of CBD-based products. The focus of the warning letters is on companies that claim the CBD products can treat or cure diseases such as “Alzheimer’s, multiple sclerosis, epilepsy, heart disease, and stroke.”
The main thrust of the FTC warning letters is that companies that tout the benefits of their CBD products, whether directly or by way of their testimonials, need to be able to support those benefits with reliable scientific evidence.
Companies that cannot support their claims and representations, normally within 15 days of the date of the warning letter, will be subject to additional legal action.
The April 2, 2019 Warning Letters
On this date, the FTC and FDA sent joint warning letters to businesses that advertised and sold CBD products which claimed to treat Alzheimer’s, cancer, and other diseases. The letters were sent to the following companies:
The FTC claimed that the CBD-based products may violate the FTC Act “by making false or unsubstantiated health claims.”
The companies sold products named “Hemp Oil,” “CBD Softgels,” “Liquid Gold Gummies,” and “CBD Oil.” The businesses claimed the products were effective in treating “cancer, Alzheimer’s disease, fibromyalgia, and “neuropsychiatric disorders.”
The ads for Nutra Pure, LLC also 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 letters were sent by FDA and co-signed by the FTC.
The FDA’s warning to Nutra Pure, LLC included the following statements about claims on the company website:
The website claims show “that the products are drugs under section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (FD&C Act), 21 U.S.C. 321(g)(1), because the products are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease and/or because the products are intended to affect the structure or any function of the body. “…
The FDA warning stating that “Introducing or delivering these products for introduction into interstate commerce for such uses violates the FD&C Act.”
The FDA warning letter further added that “FDA is not aware of any evidence that would call into question its current conclusion that CBD products are excluded from the dietary supplement definition” under the FD&C Act.
“New drugs may not be legally introduced or delivered for introduction into interstate commerce without prior approval from FDA, as described in sections 301(d) and 505(a) of the FD&C Act, 21 U.S.C. 331(d) and 355(a).”
“FDA approves a new drug on the basis of scientific data and information demonstrating that the drug is safe and effective. A drug is misbranded under section 502(f)(1) of the FD&C Act, 21 U.S.C. 352(f)(1), if the drug fails to bear adequate directions for its intended use(s). “Adequate directions for use” means directions under which a layperson can use a drug safely and for the purposes for which the drug is intended, 21 CFR 201.5.” Prescription drugs, as defined in the FT&C Law, must be used and under the control of a licensed doctor.
The FDA warning letter continued by noting that that specific CBD products “are intended for treatment of one or more diseases that are not amenable to self-diagnosis or treatment without the supervision of a licensed practitioner.” Since a licensed doctor must prescribe the CBD products, the user cannot write adequate directions to safely use the products.
The September 10, 2019 Warning Letters
The FTC sent warning letters to companies that promoted their “CBD-Infused Products as treatments for serious diseases, Including cancer, Alzheimer’s, and Multiple Sclerosis.” The warning letters were sent to companies that sold capsules, tinctures, creams, oils, and “gummies” that contained CBD the cannabis plant chemical compound.
The companies were warned that “it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.” The FTC did not name the companies that received the warning letters.
The FTC letters stated that each of the companies had made claims that its CBD products could cure or treat serious diseases and health conditions. These false claims are dangerous to consumers because false claims lead consumers to believe that the products will help instead of focusing on other possible cures or on managing their diseases through medical advice.
- The first company was warned that its businesses stated on its website that the product “works like magic” to relieve “even the most agonizing pain” better than prescription opioid painkillers. The FTC warning letter then added that CBD has been “clinically proven” to treat cancer, Alzheimer’s disease, multiple sclerosis (MS), fibromyalgia, cigarette addiction, and colitis.” The business further stated, to support its claims of the wonders of CBD products that the business engaged in “thousands of hours of research” with researchers at Harvard.
- A second company claimed on its website (all the warning letters were based on website advertisements) that its 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.”
- The warning letter to the third company was sent because that company claimed that its CBD gummies are “highly 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 then added that its CBD cream product could relieve the pain of arthritis and that its CBD products could also treat “depression, PTSD, epilepsy, heart disease, arthritis, fibromyalgia, and asthma.”
The FTC informed the companies that:
- The companies should each review all their current claims, including consumer testimonials, to verify there is support by reliable scientific evidence.
- If the businesses continued to sell the products without the reliable scientific evidence – that the companies could be in violation of the FTC Act. This violation could result in an injunction being requested and the demand that the companies return any money the companies received through the ads back to the consumers.
- The companies had 15 days to show that the necessary steps to meet the concerns of the FTC have been taken.
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The federal and state laws regarding CBD production as still unclear as to what is legal and what is not legal. What is clear is that both the FDA (which regulates products as drugs, dietary supplements, medical devices, and cosmetics) and the FTC (which works to ensure that marketing is truthful) will send warning letters to CBD companies that promise medical benefits without scientific support for these promises.
Contact Cohen Healthcare Law Group, PC for legal counsel on healthcare transactions, regulatory compliance, and FDA and FTC law. Our experienced healthcare & FDA attorneys advise healthcare companies and healthcare providers ranging from medical centers, to integrative and functional medicine practices, cosmetics and supplement companies, and medical device manufacturers.
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