Some bombshell news just broke in the CBD world. The FTC just announced a new crackdown on CBD companies making deceptive claims about their CBD products.
This announcement is the first time a Law Enforcement Agency has decided to take action against CBD companies that are making false, misleading, or inappropriate claims. The FTC, unlike the FDA, is a law enforcement agency that can bring more harm to unlawful companies, especially surrounding misleading labeling & advertising.
In total, there are 6 companies under the FTC microscope today. These 6 companies are being required to stop making unsubstantiated claims about their products immediately, and several will pay monetary damages to the agency.
The fines mentioned in their press release are as follows:
Bionatrol Health, LLC - $20,000
Epichouse LLC (First Class Herbalist CBD) - $30,000
HempmeCBD - $36,254
Steves Distributing, LLC - $75,000
Reef Industries, Inc. - $85,000
For those of you keeping track at home, that’s almost $250,000 worth of fines!
One company, CBD Meds Inc. managed to escape fines for the time being, but they are still being required to stop making false claims immediately, and they must respond to the commission within 15 days.
In their press release, the FTC Director Andrew Smith said “The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science, otherwise, don’t be surprised if you hear from the FTC”
This is rather strong wording from the director of the FTC, who is clearly sending a strong message to bad actors in the CBD world. This history of CBD companies making false & misleading claims has gone on for far too long, and with today’s action they are putting everyone in the Hemp/CBD world on notice.
Previous FDA Warning Letters to CBD Companies
While this is the first time a Law Enforcement agency has stepped in on false claims from CBD companies, it isn’t the first time a government agency has said something.
While the FDA hasn’t set any formal regulation for CBD companies to follow, they have sent warning letters to CBD companies in the past. On two different occasions, once in November of 2019, and again in April of 2020, the FDA sent warning letters to CBD companies about their false claims & misleading labeling.
In the November crackdown, the FDA sent warning letters to 15 different CBD companies, and you can find that list here. This news sent shockwaves around the industry, as these letters targeted some of the biggest companies in CBD, like Koi and Sunflora (YourCBD Store).
These shockwaves clearly weren’t heard loud enough, because only 5 short months later the FDA was sending out more warning letters to CBD companies for the same false & misleading claims problem.
Also, previously in April of 2019, the FDA & FTC combined together to send out 3 warning letters to CBD companies for advertisements that claim CBD could “effectively treat diseases, including cancer, Alzheimer’s disease, fibromyalgia, and ‘neuropsychiatric disorders’”.
All of these previous attempts by the FDA & FTC to warn CBD companies about their claims have put a lot of stakeholders in Hemp on notice, but clearly not enough of them.
In our recent Cultivating Entrepreneurship blog, Amber Littlejohn of the Minority Cannabis Business Association probably said it best. Her quote was something along the lines of “Claims, claims, claims, claims, claims…. Watch your claims”.
This advice was passed along only a few days before this FTC crackdown news broke. But, given the history of warning letters that have been sent out, this isn’t all too surprising that some people in our industry continue to harm everyone involved.
As the old adage goes, a few bad apples can spoil the bunch.
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