Cannabis Businesses Selling CBD and Hemp Products: A Target for FDA and FTC

As one might expect from the title “Federal Food, Drug, and Cosmetic Act,” the Food and Drug Administration (“FDA”) has broad authority.

Introduction

Since the approval of the drug EPIDIOLEX® CV, which has cannabidiol (“CBD”) as an active ingredient, the FDA has taken the position that some products containing CBD are unapproved drugs or unapproved dietary supplements. Rooted Apothecary LLC (“Rooted”) has just drawn the ire of the FDA and the Federal Trade Commission (“FTC”) for its CBD‑containing products.

The FDA’s Letter

Rooted offers “Rebelliously Wholesome Remedies” and “Full Spectrum CBD Products.” While being “rebellious” is not a great start in avoiding the regulators, Rooted asserts that “[r]esearch from around the world has proven CBD to be safe, powerful, and effective for helping your body manage emotional, mental, and physical stress.”

In a letter dated October 10, 2019, the FDA disagreed, stating that “[t]here are many unanswered questions about the science, safety, effectiveness, and quality of unapproved products containing CBD.” Regarding Rooted’s CBD‑containing hemp capsules and hemp oil, the FDA took the position that Rooted was offering the products as dietary supplements contrary to law. The fact that the FDA has approved CBD in the form of EPIDIOLEX® CV is critical for this determination.

Similarly, the FDA took the position that Rooted’s hemp oil and some other products are unapproved new drugs. The fact that Rooted described medical benefits with which CBD “may be” associated rather than “are” associated, was insufficient to shield Rooted from FDA scrutiny.

The FDA also alleged that Rooted’s products are misbranded because “their labeling fails to bear adequate directions for use.” As the kicker, Rooted had allegedly made unsubstantiated advertising claims contrary to the FTC Act. Specifically, “[t]he FTC is concerned that one or more of the efficacy claims cited above may not be substantiated by competent and reliable scientific evidence.”

The FDA gave Rooted 15 days to correct the violations, a very short time frame in which to reorganize an entire business. Interestingly, Rooted asserts that products described on its Internet site “contain a value of 0.3% or less [tetrahydrocannabinol (“THC”)] . . . .” If true, the distribution of Rooted’s products is legal under the 2018 Farm Bill’s amendments to the Controlled Substance Act. However, it is the specific uses of the products that concern the FDA.

Take‑Home Messages

It is likely that its health‑related claims made Rooted an FDA target.  In particular, Rooted’s statements as to the safety of CBD for children may have been the tipping point. It is clear that if you are going to make a claim, you’d better have reports to back up the claim.  And using the word “may” is not enough to make a claim legitimate. Making unsubstantiated claims may also give rise to civil lawsuits. Even though the trend for CBD‑containing products is rampant and the market seems a free‑for‑all, it is clear that the FDA and the FTC are monitoring activity. In short, it seems that making unsubstantiated health‑related claims is an easy way to put a cannabis company at risk.