FDA Warns Cannabis Operator Curaleaf About CBD Marketing Claims

Yesterday, the FDA issued another Warning Letter in connection with the sale of CBD products, this time to well-known cannabis purveyor Curaleaf, Inc. (which operates one of our six medical dispensaries here in New Jersey and operates four dispensaries in New York).  In a contemporaneous news release that announced the Warning Letter, the FDA took the opportunity to reinforce its ongoing position that its primary focus is to protect the health and safety of American consumers while also balancing the interests and demands of the market.

The FDA admonished Curaleaf for claiming that its CBD products, which it offers in various forms such as lotions, patches, and tinctures, could relieve chronic pain, offer relief from anxiety and ADHD, is shown to be effective in treating Parkinson’s disease, has been linked to effective treatment of Alzheimer’s disease, and even has been demonstrated to have properties that counteract the growth of spread of cancer.  The Warning Letter advised that certain Curaleaf products were unapproved new drugs sold in violation of the Food, Drug, and Cosmetic Act (“FD&C Act”), and that a number of products were misbranded.  The Warning Letter further explained that these “drugs” did not have adequate directions for use.  The FDA also informed Curaleaf that it was improper to market its CBD products as dietary supplements because CBD is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act, the exception for substances that were “marketed as” a dietary supplement or as a conventional food before the new drug investigations were authorized did not apply, and because some products, such as the lotions, patches, and vape pens, are not intended for ingestion.  The Warning Letter also took issue with Curaleaf’s CBD products directed to pets, because the FDA deems those products to be unapproved new animal drugs.

Curaleaf now has 15 days to respond to the FDA and explain how it will correct the violations.  The company has publicly stated that it intends to respond by that deadline, and emphasized it will cooperate with the FDA, and that it is committed to compliance:

Curaleaf is committed to the highest standards of quality and compliance, and will work collaboratively with the FDA to resolve all issues addressed in the agency's letter. The Company will respond to the FDA letter within the required 15 working days. Compliance is a top priority for Curaleaf and the Company is fully committed to complying with FDA requirements for all of the products that it markets. We can affirm that nothing in the letter raises any issues concerning the quality and consistency of any Curaleaf product or calls into question the high safety standards of the Company's cultivation and manufacturing processes. Curaleaf CBD products are all derived from hemp and meet the requirements of the Farm Bill.”

This Warning Letter comes just five days after Curaleaf announced its acquisition of GR Companies, Inc., the largest private vertically-integrated multi-state operator, in a cash and stock deal valued at about $875 million.  Curaleaf says that the acquisition will make it the world’s largest cannabis company by revenue and one of the largest operators in the United States.  Curaleaf’s stock closed up 18% the day it announced the acquisition.  Following the release of the Warning Letter, Curaleaf saw its stock price take a hit, closing down 3.23%.

If it were not already clear enough, the issuance of this Warning Letter to one of the country’s leading cannabis companies should eliminate any confusion about claiming unsubstantiated health benefits in the marketing of CBD products – do so at your own risk, and don’t be surprised if you end up in the FDA’s crosshairs.