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CBD Manufacturers and Retailers Face Action from the FDA and Consumer Litigants

Cannabidiol (CBD) is a naturally occurring compound derived from the hemp plant, a member of the cannabis family. Because CBD is also found in the marijuana plant (a cousin of hemp), its use fell into a legal gray area until recently.

In December 2018, however, Congress passed the Farm Bill and legalized hemp and hemp-derived products. CBD products since have skyrocketed in popularity, with analysts projecting that CBD will grow to a $16 billion industry in five years. CBD product manufacturers and retailers across America are working to meet the high demand for their goods.

The new popularity of CBD has brought attention from the U.S. Food and Drug Administration (FDA) and consumer plaintiffs. CBD product manufacturers and distributors are now facing claims that resemble the types of lawsuits that other product manufacturers and retailers face. CBD product manufacturers should stay up-to-date as to how the FDA is regulating CBD and how consumers are using tried-and-true product liability theories to sue CBD product manufacturers and distributors.

The FDA’s Initial Actions

While the FDA has not yet released formal regulations with respect to CBD, it has published consumer updates and an FAQ concerning CBD products. In its consumer update, the FDA cautioned manufacturers that it is currently illegal to market CBD products as a dietary supplement. The FDA also stated that it does not recognize that CBD is safe for use in human or animal food.

Even with these strict guidelines, the FDA has not taken significant disciplinary action against CBD product manufacturers or retailers. Rather, it has issued only warning letters to online CBD product retailers. Specifically, the FDA warned that introduction of CBD products into interstate commerce violates the Federal Food, Drug, and Cosmetic Act. The FDA further advised retailers to stop marketing CBD products as ways to treat diseases or for therapeutic uses for humans and animals. It also reprimanded at least one online retailer to stop marketing CBD products with unsubstantiated health claims or for use as dietary supplements.

New Product, Same Types of Lawsuits

The latest lawsuits against CBD product manufacturers allege that products have been mislabeled. These claims resemble those made against many manufacturers of popular products. The maker of Muscle Milk, for example, was sued in a class action where the plaintiffs argue that the amount of protein in its protein powder was significantly less than the label suggested.[1] And the Hershey Company recently won a suit where the plaintiff alleged that the company engaged in false and misleading labeling because malic acid was present in chocolate products labeled as having “no artificial flavors.”[2]

In the past six months, consumers have brought at least four suits against CBD product manufacturers, none of which has been certified yet as a class. In the Southern District of Florida,[3] a plaintiff claimed that the defendants sold products containing significantly less CBD than the label stated. In the Northern District of Illinois,[4] another plaintiff brought a class action after traces of THC were found in his system. After eating gummy candies labeled “NO THC,” the named plaintiff failed an employment drug test and was subsequently fired from his job. He sued the manufacturer, arguing that the company violated state consumer fraud laws by representing that there was no THC in its products.

Follow Future Litigation Results

CBD product retailers and manufacturers should keep an eye out for changes in the regulatory landscape and the results of pending litigation. Last year, the FDA held a public hearing to obtain data about the safety, manufacturing, product quality, and labeling of products containing CBD. Until the FDA releases further guidelines, titans like Ben & Jerry’s have pressed pause on releasing CBD products.

Retailers and manufacturers should also stay updated on current litigation. While the FDA’s delay in creating a formal regulatory framework has frustrated many manufacturers, at least one manufacturer has tried to use the lack of federal regulations as a temporary shield against liability. In the Southern District of Florida, the CBD product manufacturer argued that the court should stay court proceedings until the FDA has promulgated regulations,[5] allowing the FDA to have the first word on the regulatory scheme. Only time will tell whether this argument will prove effective when applied to suits that involve CBD products.


[1] Class Action Complaint, Clay et al., v Cytosport, Inc., No. 15-cv-00165-L-AGS (S.D. Cal.  Jan. 23, 2015), ECF No. 1.

[2] Judgment, Clark v. Hershey Co., 18-cv-06113 (N.D. Cal. Nov. 15, 2019), ECF No. 132.

[3] Class Action Complaint at 13, Potter v. Potnetwork Holdings, Inc. et al., 19-cv-24017 (S.D. Fla. Sept. 27, 2019), ECF No. 1.

[4] Class Action Complaint at 8–9, Darrow v. Just Brands USA, Inc. et al., 19-cv-07079 (N.D. Ill. Oct. 28, 2019), ECF 1.

[5] Defendant’s Motion to Dismiss or, in the Alternative, to Stay, Potter, No. 19-cv-24017, ECF No. 26.

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About this Author

Jasmine Dela Luna Intellectual Property & Litigation Attorney Schiff Hardin Law Firm
Associate

Jasmine has worked on a variety of matters, gaining experience in the products liability, intellectual property, and general litigation practice areas. She has drafted memoranda, discovery requests, affidavits and briefs for cases in administrative, state, and federal courts. Jasmine is a staunch advocate for her clients and strives to approach every complex legal issue with creativity. She produces detailed and thorough work product with accuracy and efficiency.

312.258.5620
Jeffrey Skinner, Schiff Hardin, Product liability lawyer
Partner

Jeff focuses his practice in product liability and toxic torts, complex litigation, class action defense, and internal investigations. He has represented a diverse group of clients in a variety of industries, including manufacturing, financial services, telecommunications, transportation, technology, and health care. He has practiced in trial and appellate courts throughout the United States, as well as before the Federal Trade Commission and the Department of Housing and Urban Development.

202.778.6427