Federal Trade Commission Puts Companies on Notice: CBD is Not the ‘Wild West’

The Federal Trade Commission (FTC) is sending a message to cannabidiol (CBD) companies that it will not tolerate deceptive marketing practices.

January 4, 2021

The FTC took its first-ever enforcement actions against CBD companies this past December, obtaining settlements against six companies for deceptive marketing. The enforcement was part of Operation CBDeceit, targeting companies that made unproven claims about their products’ ability to treat diseases and medical conditions, such as cancer, diabetes, and Alzheimer’s disease.

In doing so, the agency intended to send a message: a new market is subject to the same laws and enforcement action as an established one.

“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,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a Dec. 17 release announcing the action. “Otherwise, don’t be surprised if you hear from the FTC.”

Leslie Fair, a senior attorney at the bureau, took it a step further in an agency blog published that day.

“‘It’s the Wild West out there!’ How often have you heard that statement made about health claims for products containing CBD? But here’s the thing: It’s not the Wild West,” she wrote. “In fact, health-related representations for CBD products are subject to the same established requirements of scientific substantiation the FTC has applied for decades to any advertised health claim.”

The six companies—Bionatrol Health, LLC, CBD Meds, Inc., Epichouse LLC, HempmeCBD, Reef Industries Inc., and Steves Distributing, LLC—made health claims without necessary scientific evidence. Each company settled with the government and was required to end all misleading advertising and notify consumers of the agreement. Also, five of those companies were assessed fines ranging from $20,000 to $85,000.

According to the agency release, these companies are also prohibited from making any claims of prevention, treatment, or safety in the future unless they have human clinical testing to back this up. The companies are also required to have “competent and reliable scientific evidence” to support any other types of health claims.