Last week, the U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) sent out warning letters to six different companies for selling copycat food products that contain Delta-8 THC. In a press release published on July 5, the FDA and FTC said they sent out letters to the following companies:
Delta Munchies
Smoke LLC (also known as Dr. S LLC)
Exclusive Hemp Farms/Oshipt
Nikte’s Wholesale LLC
North Carolina Hemp Exchange LLC
The Haunted Vapor Room
The Haunted Vapor Room, Dope Rope Bites
The products in question look exactly like common name brand foods like chips, candy and other snack foods. The FDA says they are concerned they might be mistaken for traditional foods, accidentally ingested by children or taken in higher doses than intended. “The products we are warning against intentionally mimic well-known snack food brands by using similar brand names, logos, or pictures on packaging, that consumers, especially children, may confuse with traditional snack foods,” says Janet Woodcock, M.D., principal deputy commissioner at the FDA. “The FDA remains committed to taking action against any company illegally selling regulated products that could pose a risk to public health.”
This is the first time since 2019 that the FTC has gotten involved, when they issued similar joint letters to companies making unsubstantiated health claims. “Marketing edible THC products that can be easily mistaken by children for regular foods is reckless and illegal,” says Samuel Levine, director of the Bureau of Consumer Protection at the FTC. “Companies must ensure that their products are marketed safely and responsibly, especially when it comes to protecting the well-being of children.”
By Andrew Solow, David Kerschner, Alessandra Lopez No Comments
In 2022, product liability lawsuits in the cannabis/cannabidiol (CBD) industry continued to focus on levels of THC and the psychoactive ingredient in cannabis, while federal agencies continued issuing warning letters for CBD products (including CBD-infused food and dietary supplements) that made misleading medical claims. Against this backdrop of ongoing litigation and regulatory enforcement, 2022 showed that at the Federal level, there is more recognition that marijuana is becoming increasingly normalized. For example, President Biden pardoned federal offenses of simple marijuana possession and requested a reassessment of marijuana’s classification as a Schedule I drug under federal law. Additionally, Congress passed its first standalone piece of cannabis reform with the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) which, among other things, will ease restrictions on cannabis research and allow for more clinical trials. And even though the Food and Drug Administration (FDA) declined to act on CBD products, the agency announced that it will work with Congress to create a new regulatory framework for CBD products (2023 FDA Announcement).
These events of the past year provide a glimpse into what the future may hold for cannabis and CBD companies when it comes to product liability risks. This article looks at the types of product liability actions that the cannabis and CBD industry faced in 2022 and may encounter in the future, and provides some basic guidance on how to best mitigate, and if necessary, defend these potentially costly litigations.
Focus on Cannabis and CBD Risks
A central part of any product liability lawsuit—regardless of whether brought under a design defect and/or adequate warning theory—is that a product caused or was a substantial contributing factor to a Plaintiff’s injury or illness. Thus, any potential safety concerns over cannabis/CBD could end up as the subject of litigation in the future. In the 2023 FDA Announcement, the FDA recognized that “the use of CBD raises various safety concerns, especially with long-term use,” including potential harm to the liver and negative interactions with certain medications. The agency also noted that questions still exist on how much CBD can be consumed, and for how long, before causing harm. Furthermore, on December 2, 2022, President Biden signed the MMCREA into law, which is intended to advance research on the potential risks and medical benefits of cannabis and cannabis products.1 This additional funding will not only help researchers learn more about possible safety risks that may lead to future product liability claims, but will also allow for better exploration of the benefits of these products to possibly expand product indications and help reach new customers.
Given the FDA’s statements and the increased funding for new research, CBD and cannabis companies should ensure that they are properly monitoring both regulatory communications and new research regarding risks that may be associated with their products. As new information is released, companies should evaluate how their product labels and marketing messages should be altered. Announcements like this one by the FDA can be seen as providing industry participants with knowledge about certain risks, and how companies react could be analyzed, post hoc, in any litigation down the road.
2022 Product Liability Actions
Over the last year, misbranding/mislabeling issues presented some of the most prevalent litigation risks for industry participants.
An example of a warning letter the FDA sent to a CBD products company making health claims
For example, at the Federal level in 2022, the FDA issued thirty-three warning letters to CBD companies, a nearly 400% increase from 2021. These letters generally focused on CBD products that made medical claims. Some of these warning letters addressed misbranding, where the product labels provided inadequate directions for consumer use. In one letter, the FDA noted that because the CBD products were “offered for conditions that are not amendable to self-diagnosis and treatment by individuals who are not medical practitioners,” ranging from cancer to diabetes, labeling compliance was only possible if the product was an FDA-approved prescription drug with FDA-approved labeling. Other companies receivedwarning letters in March of 2022 for making misleading representations that their CBD products were safe and/or effective to prevent or treat COVID-19. Many of these representations were made via companies’ websites and social media platforms. The warning letters—often triggers for product liability actions, as well as consumer protection/fraud actions—serve as a reminder that companies cannot make medical claims on non-FDA approved drug products and must otherwise present accurate information to consumers not only on product packaging, but any form of marketing or advertising, including company websites and social media platforms.
Turning to state-level regulatory actions, Oregon’s Liquor and Cannabis Commission fined a cannabis company $130,000 and suspended the company’s license for 23 days over an alleged label mix-up between its CBD and THC products. According to the state’s investigative report, a company employee allegedly confused two product buckets with similar identification numbers, one that contained THC and the other CBD, and accidentally switched the labels of the two products. In addition to the fine and license-suspension, the state agency also issued a mandatory recall on the CBD drops based on the alleged undisclosed levels of THC.
This same incident also spurred a string of civil lawsuits, resulting in several settlements by the company in 2022.2 Numerous customers reported experiencing “paranoia,” “mind fog,” and feeling “extremely high,” with at least five people going to the emergency room with serious health issues due to use of the CBD drops. One lawsuit, which was publicly settled for $50,000 in January of 2022, alleged that the company failed to warn the plaintiff that the CBD drops contained THC or that the product may have been contaminated with foreign substances like THC, and that the company failed to exercise quality control standards that would have detected the THC.3 Nine other lawsuits made similar failure to warn allegations based on the same batch of CBD drops and were settled by January of 2022, although those settlements were not disclosed.4 In October of 2022, the company agreed to pay a settlement of $100,000 in a class action suit, which alleged that the company failed to disclose that the CBD product contained substantial amounts of THC.5 The class action focused on unlawful trade practices claims, including that the company falsely represented that the product had the characteristics, uses, and benefits of a CBD product that did not contain THC.6 Also in October 2022, the company settled a wrongful death lawsuit—alleging that the company failed to warn the plaintiff that the drops contained THC and had negligent quality control standards—stemming from the same CBD drops,7 where the plaintiff suffered stroke-like-symptoms, allegedly due to the tainted CBD product, and ultimately died.8
Other recent lawsuits have also focused on mislabeled cannabis products, alleging that companies failed to inform customers that products contained THC. For example, in Kentucky, a man who drove into a bus after using a CBD vape sued both the CBD manufacturer and retailer on December 14, 2022, claiming that he was not warned that the vape contained a substance that would make him intoxicated.9 According to the complaint, the store employees told the man that the vape was “all natural” but made no mention that the product contained THC.10 The man alleged that the vape actually contained Delta-8 THC and brought negligence, failure to warn, and state consumer protection law claims.11
As noted above, in addition to traditional product liability actions, companies are likely to face increased consumer fraud and false advertising actions in the absence of personal injuries. Two class actions brought in December of 2020 against a hemp tea maker alleged that the company’s website and the product’s packaging fraudulently stated that a tea contained zero THC.12 Plaintiffs claimed that they tested positive for THC after drinking the tea and that product testing similarly revealed that the tea contained some THC.13
Potency inflation marketing communications from a laboratory
Last year also saw a rise in cases focused on potency inflation, alleging that cannabis companies knowingly overstated the amount of THC in their products to charge higher prices.14 Again, while these actions focused on consumer fraud allegations rather than product liability claims, these cases underscore the importance of accurate labeling. Due to potency inflation concerns, states have started investigatinglicensedcannabis testing labs within their respective jurisdictions, resulting in product recalls and fines. Some states have also updated their regulations, requiring cannabis companies to test their products through two separate labs.
Finally, contamination and the existence of impurities and other byproducts has been a recent focus of several product liability lawsuits across the life sciences space, and this trend is something that cannabis and CBD companies should be aware of and take steps to mitigate.
For example, a Canadian cannabis producer reached a $2.31 million settlement over a class action brought in March of 2017 regarding pesticide-contaminated medical marijuana. The marijuana was recalled due to the presence of myclobutanil and bifenazate pesticides, neither of which were authorized for use on cannabis plants in Canada. The lead plaintiff experienced nausea and vomiting, allegedly from consuming the medical cannabis, and brought numerous claims on behalf of the class, including negligent design, development, testing, manufacturing, distribution, marketing, and sales.15 In the United States, California’s Department of Cannabis Control issued a mandatory recall on January 26, 2022 for a batch of cannabis flower that was contaminated with mold. On March 25, 2022, the New Mexico Cannabis Control Division recalled cannabis products sold by a local medical cannabis company because the product contained impermissibly high levels of mold. New Mexico’s Cannabis Control Division also required the company to immediately cease and desist operations at its production and manufacturing site.
A Look at the Future and What Companies Can do to Mitigate Product Liability Risks
The FDA’s 2023 announcement means that the industry will have to wait for Congressional action for the development of a regulatory scheme that can help standardize requirements and provide industry players additional defenses when facing product liability actions. Many of the proposed risk management tools in the FDA Announcement could help companies mitigate future litigation risks if implemented. These risk management tools may include “clear labels, prevention of contaminants, CBD content limits, and measures, such as minimum purchase age, to mitigate the risk of ingestion by children.” Although the FDA has had regulatory oversight over CBD and other hemp-derived products for nearly four years, the agency has not developed a regulatory framework for these products aside from issuing warning letters, leaving manufacturers and distributors without much guidance. The FDA has also left the states to fill the void, resulting in a patchwork of differing—and sometimes conflicting—state laws. Additional guidance and regulation on labeling at the federal level for cannabis and cannabis-derived products will make compliance a more straightforward proposition and may provide avenues for industry participants to explore preemption defenses in the face of future mislabeling claims.
Just some of the many CBD products on the market today
In addition to following the changing regulatory landscape and understanding how regulatory changes can impact litigation defenses, cannabis and CBD companies can continue to take various steps to help mitigate future litigation risks.
Quality Control: Adequate testing procedures and effective quality control procedures can help avoid contamination issues and situations where products are mixed up during the manufacturing process. For example, the company whose license was suspended in Oregon due to the alleged mix up between CBD and THC subsequently implemented new ingredient tracking protocols, adopted a policy to retain samples from each batch of product, and now sends additional samples to an independent lab to ensure product compliance before anything is sold.
Proper documentation of testing and quality control procedures, as well as maintaining records of compliance checks, can also help companies put together a defense to state regulatory actions or lawsuits relating to contamination or manufacturing defects. Indeed, in February of 2022, an Arizona marijuana testing lab was fined $500,000 for various incomplete records and documentation as well as improperly calibrated machines for contamination testing, with an inspector also noting that one of the employees was trained to use a technique that produced inflated potency results.
Ongoing Safety & Regulatory Review: Keeping up to date with regulations and science will play a key role in making sure labels are accurate and defendable. Working directly with regulators and seeking guidance from regulators on labeling can help potential defendants present a clear and compelling labeling defense. Moreover, the 2023 FDA Announcement made clear that the agency will not pursue rulemaking on CBD’s potential use in foods and dietary substances. Thus, industry players should monitor agency announcements and engage with the FDA’s Cannabis Product Committee (CPC) and Congress to better understand the potential structure of this new regulatory pathway.
Stay on Top of the Science: A boost in cannabis research is on the horizon, as the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) will advance research on the potential risks and benefits of cannabis products and promote the development of FDA-approved drugs derived from marijuana and CBD. On the litigation front, causation is an essential element in most causes of action, and plaintiffs will have to prove that the cannabis caused their injury. Thus, industry players should be aware of the current science, including potential side effects.
Litigation Monitoring: Finally, companies will also be well served by following court decisions involving CBD and cannabis products. For example, courts in 2022 were split over the legality of Delta-8 THC, a substance typically manufactured from hemp-derived CBD. The Ninth Circuit held in AK Futures v. Boyd Street Distro that Delta-8 THC found in e-cigarettes and vape products is legal under the 2018 Farm Act, at least in the intellectual property context.16 But in Kansas, a federal judge ruled that the 2018 Farm Act does not make selling hemp-derived products such as Delta-8 THC legal.17 In Texas, litigation initiated in 2021 is ongoing over the legality of Delta-8 THC.18 There, a hemp company sued the Texas Department of State Health Services for its classification of Delta-8 THC as a Schedule I drug, making the sale of this substance a felony offense. A temporary injunction was granted on November 8, 2021—temporarily lifting the ban on sales of Delta-8 THC products—but the plaintiff’s request for a permanent injunction remains pending.19 As these lawsuits show, the legality of different products may vary by jurisdiction, whether by regulation or a judicial decision.
References
Medical Marijuana and Cannabidiol Research Expansion Act, Pub. L. 117–215, 136 Stat. 2257 (2022).
Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, (D. Or. Jan. 5, 2022).
Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, ECF 1, 6 (D. Or.).
See Crawforth v. Curaleaf, Inc., No. 3:21-cv-1432 (D. Or. Sept. 29, 2021); Lopez v. Curaleaf, Inc., No. 3:21-cv-1465 (D. Or. Oct. 6, 2021);
Williamson v. Curaleaf, Inc., No. 3:22-cv-782, ECF 1, 8 (D. Or.).
Williamson v. Curaleaf, Inc., No. 3:22-cv-782 (D. Or. May 30, 2022).
Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001, 19 (D. Or. Oct. 18, 2022).
Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001 1 (D. Or. Jan. 1, 2022).
Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Complaint at ¶ 11, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Complaint at ¶¶ 15-33, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
Complaint at ¶¶ 54-59, Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Complaint at ¶¶ 21-25, Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
See Centeno v. Dreamfields Brands Inc., No. 22STCV33980 (Cal. Superior Ct. L.A. Cnty. Oct. 20, 2022); Shanti Gallard v. Ironworks Collective Inc., No. 22STCV38021 (Cal. Superior Ct. L.A. Cnty. Dec. 6, 2022).
Downton v. Organigram Holdings Inc., Hfx No. 460984 (Sup. Ct. Nova Scotia Mar. 3, 2017).
AK Futures LLC v. Boyd St. Distro, LLC, 35 F.4th 682 (9th Cir. 2022).
Dines v. Kelly, No. 2:22-cv-02248, 2022 WL 16762903 (D. Kan. Nov. 8, 2022).
Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Oct. 20, 2021).
Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Nov. 8, 2021).
By Abraham Finberg, Simon Menkes, Rachel Wright No Comments
On January 27 this year, Matthew Lee, General Counsel for the Department of Cannabis Control, sent a letter to Senior Assistant Attorney General Mollie Lee requesting an opinion on whether “medicinal or adult-use commercial cannabis activity … between out-of-state licensees and California licensees, will result in significant legal risk to the State of California under the federal Controlled Substances Act.”
The eight-page letter, itself a detailed legal opinion in favor of interstate cannabis commerce, states strongly that the legal risk to California of such commerce is insignificant. The DCC hopes the AG will help authorize the state to negotiate agreements with other states, allowing their cannabis companies to do business with each other. Such agreements, the letter says, “would represent an important step to expand and strengthen California’s state-licensed cannabis market.”
Prices for wholesale cannabis in California have plummeted in the last year: a pound of packaged flower is wholesaling in the $1,200 to $1,400 per pound range compared with $1,700-$1,900 a pound at the beginning of 2022, a year-over-year decrease of about 25%-30%. With many growers struggling and many others forced to enter the illicit market to get a sustainable price for their product, the DCC believes opening up interstate opportunities for California growers will provide much-needed support for their large cultivation industry.
Additionally, this request by the DCC should serve as a roadmap for other states to follow in order to move interstate cannabis commerce forward through state legislatures since it appears that federal progress in legalizing cannabis has become mired in inaction.
The DCC cited new state legislation, Senate Bill 1326, which took effect on January 1, 2023, and which allows interstate agreements for both export AND import of cannabis. This is important because other states would not be inclined to enter an agreement with California if they could only receive (import) cannabis into what may be an already glutted market.
In drafting their letter, the DCC chose to side-step some “thorny” issues, including avoiding having the Attorney General delve into any discussion regarding the federal illegality of cannabis.
While many states to the east, including New York, New Jersey and Connecticut, are opening up their states to adult-use cannabis consumption, California is paving the way forward for the future of interstate cannabis commerce. The DCC’s letter is a bold move to support and strengthen California’s cannabis industry and will likely be watched closely by other cannabis states and the nation as a whole.
In an unprecedented move, the U.S. Food & Drug Administration (FDA) has issued warning letters today to companies selling products containing delta-8 THC. In total, the FDA sent out five warning letters to companies for violating the Federal Food, Drug, and Cosmetic Act (FD&C Act).
Image from the FDA’s consumer update on Delta-8 THC
The violations include illegal marketing of unapproved delta-8 THC products as treatment for medical conditions, misbranding and adding delta-8 THC to food products. Back in September of last year, the FDA published a consumer update on their website, seeking to educate the public and offer a public health warning on delta-8 tetrahydrocannabinol, otherwise known as delta-8 THC.
Delta-8 THC is a cannabinoid that can be synthesized from cannabidiol (CBD) derived from hemp. It is an isomer of delta-9 THC, the more commonly known psychoactive cannabinoid found in cannabis. Delta-8 THC does produce psychoactive effects, though not quite as much as its better-known cousin, delta-9 THC. Many regulators and industry stakeholders are increasingly concerned about the rise in popularity of delta-8 products, namely because of the processing involved to produce it. Delta-8 THC is often synthesized using potentially harmful chemicals.
The FDA has a history of sending a lot of warning letters to companies marketing CBD products inaccurately and making drug claims. Earlier this year, they sent a number of letters to companies claiming that CBD can cure or prevent Covid-19.
According to Janet Woodcock, M.D., principal deputy commissioner at the FDA, they are getting more and more concerned about the popularity of delta-8 THC products sold online. “These products often include claims that they treat or alleviate the side effects related to a wide variety of diseases or medical disorders, such as cancer, multiple sclerosis, chronic pain, nausea and anxiety,” says Woodcock. “It is extremely troubling that some of the food products are packaged and labeled in ways that may appeal to children. We will continue to safeguard Americans’ health and safety by monitoring the marketplace and taking action when companies illegally sell products that pose a risk to public health.”
The FDA sent warning letters to the following companies selling delta-8 THC products:
Once again, the U.S. Food and Drug Administration (FDA) has issued a number of warning letters to companies selling hemp-derived cannabidiol (CBD) products. This time around, the FDA sent these warning letters to companies that had statements on their website claiming CBD is an effective treatment or prevention of Covid-19.
In this latest round, the FDA sent a total of seven warning letters to:
Just some of the many hemp-derived CBD products on the market today
Earlier this year, a slew of preliminary research studies went viral for shedding light on promising signs that certain cannabis compounds could help treat or prevent Covid-19. The conclusions from most of that research is: It is still too early to tell if any of these studies will show evidence of cannabis treating Covid-19, let alone if they mean cannabis products can be used as a treatment or preventative for Covid-19. However, the research is significant and we should keep an eye on any developments that come from those studies.
The hemp-derived CBD market has a history of clashes with the FDA over health claims. Since the Farm Bill legalized cannabis with less than 0.3% THC back in 2018, the hemp-derived CBD market has proliferated, with all sorts of companies seizing the opportunity. Jumping on the health and wellness trend, companies incorporated this messaging into their marketing campaigns. Over the past four years, the FDA has issued dozens and dozens of warning letters and threatened enforcement actions to companies making unsubstantiated health claims about CBD.
While CBD definitely does have medical benefits, such as being used as an anti-inflammatory or anticonvulsant, preliminary research alone is not enough to say it does. Products need to be approved by the FDA with a new drug application (NDA) in order to make those claims. Therefore when companies make unsubstantiated health claims about their CBD products, like claiming it can prevent Covid-19, they are violating the FD&C Act by marketing “unapproved new drugs” or “misbranded drugs.”
The bottom line is companies that are marketing CBD products need to ensure that their marketing materials and labeling comply with FDA requirements and avoid making unapproved drug claims.
By Seth Mailhot, Steve Levine, Emily Lyons, Leah Kaiser, Marshall Custer No Comments
The U.S. Food and Drug Administration (FDA) issued warning letters this month to two companies concerning the marketing and sale of over-the-counter (OTC) drug products containing cannabidiol (CBD) as an inactive ingredient. The letters allege violations of the Federal Food, Drug, and Cosmetic (FD&C) Act related to current good manufacturing practice requirements and marketing of new drugs without FDA approval.
At issue: labeling, NDAs and active ingredients
The companies subject to the warning letters market OTC drug products that contain CBD as an inactive ingredient. In the warning letters, the FDA states that it has not approved any OTC drugs containing CBD. According to the FDA, an approved new drug application (NDA) is required to legally market nonprescription or OTC drug products containing CBD, regardless of whether the CBD is an active or inactive ingredient. The FDA notes that CBD has known pharmacological effects and demonstrated risks, and that CBD has not been shown to be safe and suitable for use, even as an inactive ingredient. As a result, the FDA states that CBD cannot be marketed in OTC drug products.
Further, the warning letters noted the marketing of several CBD products that highlighted the benefits of CBD for a range of conditions in such a manner that, according to the FDA, “misleadingly suggests that [their] . . . products are approved or endorsed by FDA in some way when this is not true.” The FDA also took issue with the way products were labeled, which included callouts on the front label regarding the CBD content of the product (a requirement under most state laws that permit CBD as an ingredient). Similarly, the FDA also noted that some of the products advertised CBD as an active ingredient in a topical pain reliever product. According to the FDA, no company may legally market such a product, since there are no OTC monographs or NDAs that allow the use of CBD in an OTC drug.
What this means for you
These warning letters highlight the FDA’s vigilance regarding OTC CBD products. Regardless of whether the CBD is labeled as an active or inactive ingredient, the FDA has taken the position that nonprescription CBD drugs are in violation of the FD&C Act. Companies marketing CBD products should be careful to ensure their marketing practices, as well as their product formulations, do not present a heightened risk of FDA enforcement.
Former NFL player Kyle Turley made headlines this week for some eye-catching remarks. The retired offensive lineman entered the cannabis industry in 2017, when he launched Neuro Armour (now called Neuro XPF), a brand of CBD products.
Turley and his Neuro XPF brand made claims in recent weeks, both on their website and in various social media posts on Facebook and Twitter, saying that their CBD products can cure COVID-19. Two quotes below, one from their website and one from a Facebook post, show how the company touted CBD as an effective medicine for treating COVID-19.
“Crush Corona . . . While scientists around the world are working 24/7 to develop a COVID-19 vaccine, it will take many more months of testing before it’s approved and available. However, there’s something you can do right now to strengthen your immune system. Take CBD . . . CBD can help keep your immune system at the stop of its game. . . . We want everyone to take CBD and take advantage of its potential to help prepare your body to fight a coronavirus infection. So, we’re making all of our products more affordable.”
“Crush Corona! Your best defense against the COVID-19 blitz starts with a strong immune system. It’s what protects your body from the everyday attacks of bacteria, viruses, parasites and a host of other nasties. Learn more here: https://neuroxpf.com/crush-corona/”
The U.S. Food & Drug Administration (FDA) got wind of these marketing tactics and sent Turley and his brand a warning letter. “FDA is taking urgent measures to protect consumers from certain products that, without approval or authorization by FDA, claim to mitigate, prevent, treat, diagnose, or cure COVID-19 in people,” reads the warning letter. “As described below, you sell products that are intended to mitigate, prevent, treat, diagnose, or cure COVID-19 in people. We request that you take immediate action to cease the sale of such unapproved and unauthorized products for the mitigation, prevention, treatment, diagnosis, or cure of COVID-19.”
Before entering the cannabis space, Turley was diagnosed with chronic traumatic encephalopathy (CTE) and then early onset Alzheimer’s as a result of sustaining head injuries while playing in the NFL. Turley has a reputation for being an outspoken cannabis activist, crediting cannabis with improving his quality of life and eliminating the need for prescription opiates.
In a tongue-and-cheek response to the FDA, Turley posted the following on twitter: “OK OK, YOURE ALL RIGHT, ILL ADMIT IT! CHEAP CBD BRAND PRODUCTS WILL NOT PREVENT OR CURE COVID19!” Turley, making light of the situation, inserted the term “cheap” in there, almost challenging the FDA and disregarding their warning letter.
OK OK, YOURE ALL RIGHT, ILL ADMIT IT! CHEAP CBD BRAND PRODUCTS WILL NOT PREVENT OR CURE COVID19! @MarijuanaMoment
However, the FDA is not joking when they send these warning letters. According to the letter, Turley and his company have 48 hours to remediate the situation or face a federal court injunction.
By Jonathan C. Sandler, Alissa Gardenswartz No Comments
By now, cannabis companies have heard that the Food and Drug Administration (FDA) has issued a slew of warning letters to sellers of CBD products for selling unapproved and mislabeled drugs and illegally adulterated food, as prohibited by the Federal Food, Drug and Cosmetic Act. However, companies marketing CBD products should know that making any health-related claims about their products also exposes them to liability under state and federal consumer protection laws. These laws additionally prevent CBD sellers from misrepresenting how much CBD is contained in their products, and even govern how companies communicate with their customers via text message. As the former head of consumer protection enforcement in Colorado and a lawyer routinely defending consumer protection class actions in California, we have seen firsthand how not considering these laws when developing a sales and marketing strategy can result in protracted and expensive litigation.
Consumer Protection Laws – Federal and State
Section 5 of the Federal Trade Commission (FTC) Act provides that “unfair or deceptive acts or practices in or affecting commerce . . . are declared unlawful.”1 The FTC enforces this law, and has clarified that “deceptive” practices involve a material representation, omission or practice that is likely to mislead a reasonable consumer under the circumstances.2 In other words, a claim is deceptive if an average consumer would believe and rely on the misleading claim to buy something. With the rise of social media marketing, the FTC has also issued disclosure guidelines for companies and influencers promoting products online.3 Every state has some form of consumer protection statute that similarly prevents deceptive marketing, and is typically enforced by the state’s attorney general. Many state laws also allow for consumers to bring actions themselves.
Both the FTC and state attorneys general have used these laws for decades against companies making scientifically unsupported health claims about their products. Just this month, the FTC and the Maine attorney general filed a lawsuit against two dietary supplement companies who were claiming that their products were a “miraculous natural solution” for life-threatening diseases. According to the lawsuit, the companies violated a 2018 settlement that required them to not make any health claims about their products without first conducting at least one randomized, double-blind, placebo-controlled trial to support the claims.4 While much of the enforcement around dietary supplements has focused on unsubstantiated health claims, other actions have been brought for improper “expert” endorsements as well as misrepresenting the amount of active ingredient contained in the supplement.5 In other words, these laws are used to police all manner of labelling and marketing of products, including those containing CBD. The FTC has already issued warning letters to CBD companies several times this year, and has stated that CBD sellers could be subject to enforcement for making unsubstantiated health claims.6
While consumer protection laws are largely focused on the content of advertisements, there are also laws that address how sellers can communicate with consumers. The Telephone Consumer Protection Act (TCPA) restricts telemarketing and the use of automated systems to contact consumers, and applies to both voice calls and text messaging. Both the FTC and state attorneys general can enforce the TCPA, and consumers can bring private TCPA actions as well. Because the TCPA allows for courts to award $500 per violation—that is, per illegal call or text—companies can face judgments into the millions of dollars.
Recent Consumer Protection Lawsuits in the Cannabis Industry
Cannabis is proving to be an attractive target for consumer protection litigation.All companies need to navigate consumer protection laws when they market their products, but class action lawyers may be pursuing cannabis companies in particular because of the products’ legal uncertainty, and because they provide opportunities for unique claims of deception. For example, a nationwide class of consumers recently filed a lawsuit in California against a CBD company that had received a warning letter from the FDA in November of this year, alleging that they would not have purchased the company’s CBD products if they knew selling the items was illegal.7 The consumers claimed violations of a variety of California and Arizona consumer protection laws, including those related to breach of warranty and unfair competition. Other lawsuits have been brought because products did not contain the amount of CBD as represented on the label, or because the product claimed to not contain THC when it did.8
Cannabis companies have been subject to TCPA class actions as well. Florida’s largest medical marijuana company has been accused of spamming customers with unwanted texts in violation of the TCPA.9 A dispensary with multiple locations in Colorado was also the subject of a TCPA class action complaint in Florida alleging that it did not obtain prior consent from consumers prior to texting them.10
Cannabis is proving to be an attractive target for consumer protection litigation. However, companies can head off lawsuits by thoroughly vetting their marketing strategies with experienced consumer protection lawyers before going to market.
References
15 U.S.C. Sec. 45(a)(1).
See FTC Policy Statement on Deception, October 14, 1983.
SeeFTC v. Nobetes Corp., Case No. 2:18-cv-10068 (C. D. Cal) (complaint against supplement company for using deceptive endorsements); “New York Attorney General Targets Mislabeled Herbal Supplements,”https://www.npr.org/2015/02/03/383578263/new-york-attorney-general-targets-mislabeled-herbal-supplements. (detailing the New York attorney general’s investigation of herbal supplements, and finding that they did not contain the ingredients as advertised).
Fausett et al. v. KOI CBD, LLC., Case No. 2:19-cv-10318 (C. D. Cal).
Potter et al v. PotNetwork Holdings, Inc., Diamond CBD, Inc., and First Capital Venture Co., Case No. 19-cv-24017, (S. D. FL); Horn v. Medical Marijuana, Inc., Case No. 15-cv-701-FPG, (W.D.N.Y.).
Jaslow v. Trulieve, Inc., Case No. 4:19-cv-RH-CAS (N.D. Fla.).
Stinnett v. Hobby Farms, LLC d/b/a A Cut Above, Case No. 9:18-cv-81449-RLR (S.D. Fla.)
On November 25th, the U.S. Food and Drug Administration (FDA) sent out warning letters to 15 different companies for “illegally selling products containing cannabidiol (CBD) in ways that violate the Federal Food, Drug, and Cosmetic Act (FD&C Act).” They also published a “Consumer Update” where they express concern regarding the general safety of CBD products. The press release also states that at this time the FDA cannot say that the CBD is generally recognized as safe (GRAS). To see the list of companies that received warning letters, check out the press release here.
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
While the FDA is still trying to figure out how to regulate hemp and hemp-derived CBD products, they published these releases to let the public know they are working on it, according to FDA Principal Deputy Commissioner Amy Abernethy, M.D., Ph.D.:
“As we work quickly to further clarify our regulatory approach for products containing cannabis and cannabis-derived compounds like CBD, we’ll continue to monitor the marketplace and take action as needed against companies that violate the law in ways that raise a variety of public health concerns. In line with our mission to protect the public, foster innovation, and promote consumer confidence, this overarching approach regarding CBD is the same as the FDA would take for any other substance that we regulate. We remain concerned that some people wrongly think that the myriad of CBD products on the market, many of which are illegal, have been evaluated by the FDA and determined to be safe, or that trying CBD ‘can’t hurt.’ Aside from one prescription drug approved to treat two pediatric epilepsy disorders, these products have not been approved by the FDA and we want to be clear that a number of questions remain regarding CBD’s safety – including reports of products containing contaminants, such as pesticides and heavy metals – and there are real risks that need to be considered. We recognize the significant public interest in CBD and we must work together with stakeholders and industry to fill in the knowledge gaps about the science, safety and quality of many of these products.”
The Warning Letters
The warning letters sent to those 15 companies all mention a few types of violations to the FD&C Act. Those include marketing unapproved human and animal drugs, selling CBD products as dietary supplements and adding CBD as an ingredient to human and animal foods. All 15 companies are using websites, online retailers and social media in interstate commerce to market CBD products unlawfully, according to the press release.
This is not the first time the FDA has sent out warning letters to CBD companies. Previously, most of the warning letters were sent out regarding companies making unsubstantiated drug and health claims. This new round of 15 warning letters reaches beyond just unsubstantiated claims and identifies a few new areas of regulatory oversight that CBD companies should be wary of.
Of the 15 warning letters sent out, some were sent to companies that are marketing CBD products to children and infants, some were sent to companies using CBD as an ingredient in food products, some were marketed as dietary supplements and one company marketed their products for use in food-producing animals, such as chickens and cows. With this press release, the FDA is saying loud and clear that the above list of marketing strategies are currently unlawful, that is, until they finish their work in devising a regulatory framework for hemp-derived CBD products.
Updated Safety Concerns
Regarding the FDA saying they cannot deem CBD as generally recognized as safe (GRAS), they published a fact sheet titled “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD.” The key words there should be noted in the parentheses: And What We’re Working to Find Out. The FDA’s research is by no means over with and, if anything, has only just begun. Refer to the fact sheet to see why the FDA couldn’t say that CBD is GRAS.
In the FDA’s research, they have found a few potential health problems associated with taking CBD. During the marketing application for Epidiolex as a new drug, the only approved CBD drug on the market, the FDA identified a couple of safety risks. The first one is liver injury, which they identified in blood tests, but mentioned that it could be managed easily with medical supervision. Without medical supervision, potential liver injury due to CBD consumption could go undetected, according to the FDA.
The second health concern is drug interaction. During the new drug approval process for Epidiolex, they found that other medicines could impact the dose of CBD and vice versa. The other major health concern they have is male reproductive toxicity. The FDA says that studies in lab animals showed male reproductive toxicity, including things like decrease in testicular size, inhibition of sperm growth and development and decreased circulating testosterone. They do mention, however, that “it is not yet clear what these findings mean for human patients and the impact it could have on men (or the male children of pregnant women) who take CBD.” The fact sheet also some side effects that CBD use could produce including sleepiness, gastrointestinal distress and changes in mood.
What Now?
The FDA says they are actively researching and working on learning more about the safety of CBD products. They listed a couple risks that they are looking into right now: Those include, cumulative exposure (What if you use CBD products daily for a week or a month?), special populations (effects of CBD on the elderly, pregnant or nursing women, children, etc.) and CBD in animals (safety of CBD use in pets or food-producing animals and the resulting safety of human food products like milk or eggs).
While the CBD products market could still be classified as a bit of a gray market currently, the FDA says they are working on researching it more to develop an appropriate regulatory framework. What that might look like is anyone’s guess. One thing that remains clear, however, is that the FDA will not tolerate CBD companies marketing products in ways described above. Those include making unsubstantiated health claims, marketing to children, using CBD as an ingredient in foods and marketing it as a dietary supplement.
Cannabidiol, or CBD, is one of over 1000 cannabinoids found in the Cannabis plant. CBD was identified as an isolate from Minnesota Hemp in the 1930s (Gururajan, 2016). Unlike many other cannabinoids and compounds found in cannabis flower, CBD is not adversely psychoactive. CBD, upon its discovery entered the field of vision for US regulators. There are two routes of regulation for the FDA under the 1938 Food, Drug, and Cosmetic Act – as a drug and as a food (Oconnor, 2018). The FDA has jurisdiction over drugs in a broad sense from border to border, intra and interstate. Their jurisdiction over food, however, only extends to food that crosses interstate lines. CBD therefore, because of potential food uses and medicinal uses, darkens what is already a muddy regulatory landscape.
CBD as a drug
Under the FD&C Act, a drug is defined as “any product, including a cannabis product (hemp or otherwise), that is marketed with a claim of therapeutic benefit, or with any other disease claim (Mayol, 2019). In 1995, Cannabidiol was identified as a possible solution to help combat epilepsy. Since 1995, studies have been performed to evaluate the effectiveness of CBD to treat epilepsy and lessen the frequency and severity of seizures. In 2018, the FDA approved the first cannabidiol drug, brand named Epidiolex (White, 2019). Drug approvals under the FDA jurisdiction require specific approval before they can be launched into market. That is, while Epidiolex has a specific approval, this approval does not lead to implicit approval of similar CBD drugs that treat other illnesses.
Bottom line: CBD is a recognized drug for use to treat epilepsy. Future use as a drug needs to be approved by the FDA.
CBD as an ingredient
What is seemingly the easiest route to market for CBD derived products is increasingly complicated. For ingredients, the easiest road to allowance in food is to be identified as Generally Recognized as Safe (GRAS). GRAS status is granted to ingredients that have been studied and deemed safe for human consumption by FDA-recognized experts. CBD, to date, is not GRAS. Without GRAS status, the FDA has similar mandates to CBD as a drug above. Ingredients must gain premarket approval prior to being offered for sale in interstate commerce.
Bottom line: CBD is not a recognized ingredient in food – it is neither premarket approved by the FDA nor accepted as generally safe for human consumption.
FDA Action
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
CBD product offerings continue to rise, ranging from CBD infused pillows to suppositories. While products containing CBD have increased in popularity, the FDA has stood at a distance until recently. The result of this lack of enforced policy has led to a scenario where upwards of 70% of all CBD products available online are mislabeled (Caroon, 2018).
This lack of enforcement and flexing of authority seems to be a thing of the past, however. In late November, the FDA sent a warning letter to 15 facilities that had engaged in interstate commerce with a CBD product. These warnings stemmed largely from non-compliant claims of health benefits, CBD use as a dietary supplement, and CBD used in food products offered for sale across state lines.
Until CBD is either identified as GRAS or a specific product gets preapproval, the current issues with CBD in food will remain. In the meantime, manufacturers must be aware of their ingredients, their claims, and the ramifications these may have on the FDA jurisdiction over their products.
References
Cohen, P., & Sharfstein, J. (2019). The opportunity of CBD — reforming the law. The New England Journal of Medicine, 381(4), 297-299.
Corroon, J., & Kight, R. (2018). Regulatory status of cannabidiol in the united states: A perspective. Cannabis and Cannabinoid Research, 3(1), 190-194. doi:http://dx.doi.org.ezproxy.neu.edu/10.1089/can.2018.0030
Gururajan, A., & Malone, D. (2016). Does cannabidiol have a role in the treatment of schizophrenia? Schizophrenia Research, 176(2-3), 281-290.
O’Connor, S. and Lietzan, E. (2018). The surprising reach of FDA regulation of cannabis, even after descheduling. American University Law Review 68, 823.
Mayal, S. and Throckmorton, D. (2019). FDA Role in Regulation of Cannabis Products. Retrieved from https://www.fda.gov/media/128156/download
White, C. (2019). A Review of Human Studies Assessing Cannabidiol’s (CBD) Therapeutic Actions and Potential. Journal of Clinical Pharmacology, 59(7), 923-934.
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Back in May of last year, the FDA sent out their first warning letters to companies selling Delta-8 THC products, then issued a consumer update and warning about the compound a month later. The FDA and some industry stakeholders are concerned not only about the psychoactive substance itself, but also the way it is produced that could use potentially harmful chemicals.
