CBD Claims: Federal Enforcement Actions Are No Longer Limited to Warning Letters

29 Apr CBD Claims: Federal Enforcement Actions Are No Longer Limited to Warning Letters

The online sales of cannabidiol (“CBD”), including hemp-derived CBD products, have ramped up in response to the coronavirus (“COVID-19”) pandemic.

Regrettably, during these uncertain times, a handful of CBD companies have been taking advantage of people’s fear and anxiety over the spread of the virus, making certain claims that CBD can treat and even cure COVID-19.

A few weeks ago, the Food and Drug Administration (“FDA”) and the Federal Trade Commission (“FTC”) issued a round of warning letters to companies making dubious statement pertaining to COVID-19, several of which also sold and marketed CBD products.

Then on April 24, the FTC took the agencies’ symbiotic enforcement actions to the next level by filing a complaint for a temporary restraining order and preliminary injunction against one of these bad actors: Marc Ching, a California-based marketer, doing business as Whole Leaf Organics.

For the past few months, Mr. Ching had been under the radar of the federal agencies.

In November 2019, Mr. Ching received a letter from the FDA, in which the agency warned him, in part, that he was making unapproved new drug claims in violation of the Food, Drug and Cosmetic Act by claiming his CBD products (namely, CBD-EX, CBD-RX and CBD-MAX) were intended for use in the mitigation, treatment or prevention of diseases. The FDA gave Mr. Ching 15 days to take corrective action.

Despite the FDA’s warning, Mr. Ching continued making unsubstantiated medical claims about his CBD products, which were sold and marketed on his website. Some of these false representations included:

“The most effective innovation in cancer and immune related proactive supplement support in the past ten years. CBD-EX combines the best in cancer fighting elements, into one simple capsule.”

“Containing clinically tested ingredients, CBD-EX is a dynamic force in anti inflammation protocols, targeting manipulated cells while working to protect healthy ones. Formulated containing Coriolus Versicolor Mushroom, CBD-EX seeks to inhibit the spread of mutated malignant cells, directly attacking the problem.”

“Our CBD-EX formulation is specifically created to combat cancer and de-manipulate active cells. Infused with Curcumin, our CBD-EX formulation reduces cell inflammation, while at the same time targeting mutated nuclei.”

Then in March, Mr. Ching added fuel to the fire when he started promoting the therapeutic values of Thrive, a dietary supplement consisting primarily of Vitamin C and herbal extracts, as an effective treatment, prevention or reduction of the risk of contracting COVID-19, and falsely claiming that the efficacy of Thrive and of his CBD products were clinically and scientifically proven.

Consequently, the FTC, which is tasked with protecting consumers from false and deceptive advertising practices, issued an administrative complaint while simultaneously seeking a temporary restraining order and preliminary injunction against Mr. Ching last week. Shortly thereafter, the parties entered into a stipulated preliminary injunction order, which bars Mr. Ching from claiming Thrive is effective at treating, preventing or reducing the risk of COVID-19 and that his CBD products are effective cancer treatments, at least until the FTC concludes its full administrative proceeding. The administrative case is not scheduled to begin until January 7, 2021.

Like Mr. Ching, many CBD companies have been making unsubstantiated medical claims about their CBD products based on the assumption that FDA and FTC enforcement actions are strictly limited to issuing warning letters. However, as this FTC complaint reveals, these letters are not without force. An FDA and/or FTC warning letter can and will lead to further and more significant headaches, including litigation and major fines and penalties. Moreover, as we have previously warned, there are other claims that may result from these warning letters, including: state law consumer protection claims based on prohibiting unfair and deceptive trade practices; claims under the Lanham Act for false and misleading advertising; consumer and shareholder actions relating to CBD (think of Curaleaf Inc.) and even personal injury claims.

If CBD companies want to keep the FDA and the FTC off their backs, they should not make any medical claims, expressed or implied, at least until the FDA forges a legal regulatory path for the sale and marketing of CBD products. Until then, CBD companies should (1) consult with an attorney if they are unsure as to whether their marketing materials contain statements that could be construed as medical claims and (2) keep in mind Bureau of Consumer Protection Director Andrew Smith’s words:

“There’s no proof that any product will prevent or treat COVID-19 or that any CBD product will treat cancer…. Let’s be clear: companies making these claims can look forward to an FTC lawsuit like this one.”