The CBD industry has been booming, unregulated, for years. High consumer demand paired with slow regulatory oversight has left the market ripe for abuse by bad actors who peddle claims that the cannabis-derived compound can treat just about anything, including COVID-19.
As the US Food and Drug Administration works toward crafting the first rules for products derived from cannabis, so long as they contain .3% THC or less, the Administration, and others, like the Federal Trade Commission, have started to tackle the unregulated market with enforcement, with a focus on those making false claims.
Now, we have a rare glimpse into how the enforcement conversation has taken shape inside the FTC, as two commissioners for the first time published statements on the topic last month. The common theme in the statements is caution. In one, it’s caution against pulling resources away from the opioid crisis, and in the other, it’s caution against a possible chilling effect when it comes to responsible CBD companies. (One of those commissioners, Rohit Chopra, was nominated by President Joe Biden to serve as director of the Consumer Financial Protection Bureau; the other, Christine S. Wilson, remains on the commission.)
Some context: the 2018 Farm Bill legalized hemp, defined as cannabis plants with .3% THC or less, and the FDA was tasked with crafting regulations for hemp-derived products—like foods, supplements, and cosmetics. Considering these regulations will set the foundation for cannabis-derived products in the country, the process is taking some time, and unregulated products have flooded the market.
The related enforcement purviews of the FDA and the FTC differ: the FTC focuses on false advertising, broadly, while the FDA focuses on false claims specifically related to its area of regulatory oversight (food, drugs, cosmetics, etc.), such as health claims. While the FDA has issued dozens of CBD-related warning letters in recent years, and was joined by the FTC in that effort in 2019, the FTC’s first enforcement action came in the summer of 2020.
The action in July 2020 against Marc Ching, who marketed a product called Thrive, not only marked the first FTC case related to CBD, but also “against a marketer of a supposed COVID-19-related health product,” according to the agency’s announcement at the time.
“There’s no proof that this product will prevent or treat COVID-19, and no proof that any CBD product will treat cancer,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.
This was followed by a December crackdown, which the FTC called Operation CBDeceit, against six CBD sellers. This was the first CBD-focused sweep conducted by the agency, and also the first that involved “monetary judgments.”
In response to settlements with these six entities, for which public comment periods concluded this week, two commissioners decided, for the first time, to publish public statements on CBD enforcement, offering a rare glimpse into how they see the agency’s role in relation to this unregulated marketplace.
Commissioner Rohit Chopra’s statement focused on the opioid crisis. “I support these actions and congratulate those who made them a reality,” Chopra wrote regarding the CBD enforcement. “Going forward, however, the FTC will need to refocus its efforts on health claims by targeting abuses in the substance use disorder treatment industry, shifting attention toward large businesses, and making more effective use of the FTC’s Penalty Offense Authority.”
Chopra continued: “Unfortunately, the Commission has brought zero cases under this new authority … I am concerned that we have largely ignored Congressional concerns about unlawful opioid treatment practices. I urge my fellow Commissioners to change course on our enforcement priorities, especially given our limited resources.”
Commissioner Christine S. Wilson’s statement focused on urging caution when it comes to enforcement so that it doesn’t send a “chill” through the budding industry. “I agree with my predecessors who have stated that the Commission should be careful to avoid imposing an unduly high standard of substantiation that risks denying consumers truthful, useful information, may diminish incentives to conduct research, and could chill manufacturer incentives to introduce new products to the market,” Wilson wrote.
Wilson continued, “Although I support these cases, I hope that the Commission’s actions here, which challenge wholly unsubstantiated disease claims, do not discourage research into the potential legitimate benefits of CBD and a wide array of other products.”