CBD Product Sellers, Beware of FTC’s “Operation CBDeceit”
By: Ed Ergenzinger
Tags: Cbd, Marijuana, Cannabis, Business, Hemp

Cannabis | Cannabinoids | CBD | Legal

CBD Product Sellers, Beware of FTC’s “Operation CBDeceit”

The FTC initiates a crackdown with fines on sellers of CBD products making deceptive medical claims, while the FDA continues to issue warning letters. Ed Ergenzinger Follow Dec 26, 2020 · 3 min read

On December 17, the Federal Trade Commission (FTC) announced it had taken action against six CBD product sellers in a crackdown the agency has dubbed, “Operation CBDeceit.”

The FTC took action against the six companies for allegedly making a “wide range of scientifically unsupported claims” about the ability of their CBD products to “treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others.”

The actions were resolved by consent orders calling for the companies to notify their customers of the FTC’s order and to immediately stop making unsubstantiated health claims about their products. In particular, the orders prohibit the companies from making claims about certain conditions, such as Alzheimer’s, arthritis, chronic pain, Parkinson’s, psoriasis, without substantiation in the form of human clinical testing data. The companies are required to have competent and reliable scientific evidence for all other health-related claims.

In addition, in a first for the FTC against CBD product sellers, five out of the six companies were fined amounts ranging from $20,000 to $85,000. Whether the FTC actually has authority to collect such fines as a form of consumer redress is an issue that is currently before the Supreme Court. Regardless, the FTC has been aggressive in recent years in seeking avenues for stricter penalties.

Meanwhile, on December 22, the Food & Drug Administration (FDA) announced that it issued five warning letters to companies for selling CBD products in ways that violate the Federal Food, Drug, and Cosmetic Act (FD&C Act). The warning letters relate to violations involving the addition of CBD to food as well as the illegal marketing of CBD products as treatments for medical conditions, as dietary supplements, and for pets.

Photo by Honest Paws on Unsplash

To date, the only medical use of CBD approved by the FDA is for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients 2 years of age and older. CBD does not meet the statutory definition of a dietary supplement and has not been approved as a food additive.

Both the FTC and FDA had previously issued warning letters to CBD product sellers making unsubstantiated medical claims. However, Operation CBDeceit represents an escalation on the part of the FTC from warnings to formal legal action.

The FTC’s Business Blog noted, “The big news about Operation CBDeceit is that the sweep shouldn’t come as big news to members of the CBD industry.” Citing the FTC’s history of sending warning letters to businesses making questionable disease-related representations for CBD products, it was noted, “The message to marketers has been consistent: The same substantiation principles the FTC has applied to health claims for close to 50 years apply to similar claims for CBD products.”

Regarding the FTC actions, the Director of the FTC’s Bureau of Consumer Protection, Andrew Smith, stated, “The six settlements … send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science … [o]therwise, don’t be surprised if you hear from the FTC.”