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Federal Trade Commission Joins in Warning Companies About Unsupported CBD Health Claims

Much of the regulatory "attention" regarding cannabidiol ("CBD") has been, understandably, focused on the U.S. Food and Drug Administration ("FDA"). 

Indeed, the FDA was the first federal regulatory agency to publicly comment on the decriminalization of hemp and CBD in the 2018 Farm Bill.  But the FDA is not alone in this universe.  The Federal Trade Commission ("FTC") also has a role to play in the monitoring of health-related advertising claims made in connection with CBD products.

One of the chief goals of the FTC is to "protect consumers from unfair and deceptive practices in the marketplace."  In keeping with that goal, the FTC sent warning letters to three companies that sell "oils, tinctures, capsules, “gummies,” and creams" containing CBD.  Although the FTC, in its announcement, did not publicly disclose the companies at issue, its press release does indicate that each of the companies advertised that its CBD products treat or cure serious diseases and health conditions – like cancer, Alzheimer's disease, autism, anorexia, and more.  The FTC's letters warn the companies (and by publicly publishing this information, others) 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."

This should not surprise the industry, as the FTC recently joined with the FDA in warning companies about similar representations in April of 2019.  This action does, however, represent a slight deviation from that approach in that the FTC moved forward on its own in this instance.  CBD market participants should only expect more regulatory scrutiny, review, and action over time, especially as regulations continue to develop.

Regardless of which regulatory agency acts to enforce applicable laws and regulations, the takeaway is the same: CBD product manufacturers, advertisers, and sellers must be thoughtful and careful about the claims they make in connection with their products.  Making unsubstantiated claims about the treatment, prevention, or curing of a human disease will expose a company and its products to regulatory scrutiny and, in some case, regulatory action.  Regulators are watching what companies say about their products (including statements on websites and social media accounts).

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About this Author

Tyler Russell, Bankruptcy Attorney, Creditors Rights, Raleigh, North Carolina, Ward and Smith Law Firm
Business and Creditor's Rights Attorney

Tyler's creditors' rights practice encompasses bankruptcy, collections, and lender liability issues.  He concentrates his practice on the representation of creditors in bankruptcy cases and state court litigation, including workouts, reorganizations, Uniform Commercial Code security agreement enforcement, collections cases, and other contested matters.  Tyler has represented national and community lenders, trade creditors, equipment manufacturers, agricultural companies, community associations, contractors, and leasing companies in various reorganization and litigation proceedings. His...

Allen N. Trask III, Litigation Attorney, Ward Smith, Wilmington, North Carolina, business, civil, commercial litigation
Litigation Attorney

Allen focuses his practice on assisting those who own, manage, and invest in real estate and common interest communities.  He regularly works with real estate developers and the residential and commercial community associations that they create to handle all manner of issues, including the preparation, amendment, interpretation, and enforcement of restrictive covenants and governing corporate documents, declarant control transition and disputes, community management, insurance claims and disputes, and collections.  He also frequently represents Real Estate Investment Trusts (REITs) and other commercial landlords in the management of commercial investment properties, including lease negotiation and enforcement, summary ejectment, and collections. 

Allen has been a member of the firm's Litigation Practice Section since he joined the firm.  He has experience in all aspects of civil litigation, including depositions, hearings, mediations, arbitrations, trials, and appeals.  His litigation experience allows him to offer unique insight into risk and liability assessment, insurance coverage, and cost-benefit analyses, and he enjoys working with clients to proactively address these issues to reduce risk and cost.  Allen also is a member of the firm's Land Use and Zoning Practice Group, where he helps clients pursue and challenge special use permits, ordinance changes, and condemnation actions.

As an eastern North Carolina native with family farming roots, Allen has a passion for representing those who work the land.  He is the leader of the firm's Agribusiness Practice Group, where he coordinates the firm's resources to address the specialized issues facing clients in the agribusiness community, such as industrial hemp operations, farmland leases, corporate organization, restructuring, dissolution, and succession planning, equipment financing and leasing, workouts and debt restructuring, environmental regulatory compliance and permitting, and negotiations and interactions with local, state, and federal government.