As CBD Sales Grow, FTC Cautions Against Misrepresentations

Haley Burridge

Associate Editor

Loyola University Chicago School of Law, JD 2021

On September 10, 2019 the Federal Trade Commission (FTC) sent warning letters to three companies that sell oils, tinctures, capsules, “gummies,” and creams containing cannabidiol (CBD) regarding the companies’ false advertising practices. Cannabis is a plant of the Cannabaceae family and contains more than eighty biologically active chemical compounds. The most commonly known compounds are delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD). CBD does not cause intoxication like THC.

Legalization of cannabidiol (CBD)

The 1970 Controlled Substances Act outlawed the growing and selling of hemp and marijuana, and hemp remained illegal to grow in the United States until the passage of the 2014 Agricultural Act. The 2014 Agricultural Act made a legal distinction between hemp and marijuana for the first time. It defined “industrial hemp” as “Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9-THC content of no more than 0.3% on dry weight basis.” Since the passage of the 2014 Agricultural Act, the total U.S. CBD consumer sales have grown from $108.1 million to $512.7 million in 2018. It is expected that U.S. consumer sales of CBD will reach around $1.8 billion by 2022.

On December 20, 2018, President Trump signed the Agriculture Improvement Act of 2018, also known as the 2018 Farm Bill, into law which legalized the cultivation and sale of hemp at the federal level. Unlike marijuana, hemp contains minimal concentrations of tetrahydrocannabinol (THC), the chemical that produces psychoactive effects. Under the 2018 Farm Bill, hemp products containing less than 0.3% of THC, are not mandated to undergo clinical evaluations before going to market.  It is illegal to sell or consume CBD and hemp oils in Idaho, South Dakota, and Nebraska. However, in all of the other states, CBD and hemp oils are legal as long as the THC content is below the 0.3% threshold.

FDA approval of cannabis-derived and cannabis-related drug products

As of October 2019, the FDA has approved one-cannabis derived and three cannabis-related products, which are available to individuals with a prescription from a licensed healthcare provider.

In June 2018, the first CBD-based drug, Epidiolex, was approved by the U.S. Food and Drug Administration (FDA) for treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients two years of age and older. Epidiolex is the first FDA-approved drug that contains a purified drug substance derived from marijuana, and it is the first FDA-approved drug for the treatment of patients with Dravet syndrome. Epidiolex remains the only FDA-approved drug product that contains CBD.

The FDA also has approved Marinol and Syndros for therapeutic uses in the United States, including for the treatment of anorexia associated with weight loss in AIDS patients. They include the active ingredient dronabinol, a synthetic delta-9- tetrahydrocannabinol (THC) which is considered the psychoactive component of cannabis. Another FDA-approved drug, Cesamet, contains the active ingredient nabilone, which has a chemical structure similar to THC and is synthetically derived.

FTC’s warning letters

The FTC’s warning letters stated that it is illegal to advertise that CBD can prevent, treat, or cure human disease without reliable scientific evidence to support such claims. The FTC is not publicly identifying the three companies. The first company claimed on its website that CBD relieves chronic pain better than prescription opioid painkillers. It also stated that CBD has been “clinically proven” to treat various diseases such as cancer, Alzheimer’s disease, multiple sclerosis, fibromyalgia, cigarette addiction, and colitis, and that is has participated in “thousands of hours of research” with Harvard researchers.

The second company stated on its website that CBD products are proven to treat autism, anorexia, bipolar disorder, post-traumatic stress disorder, schizophrenia, anxiety, depression, Alzheimer’s disease, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, traumatic brain injuries, diabetes, Crohn’s disease, psoriasis, MS, fibromyalgia, cancer, and AIDS.

Finally, the third company’s website promotes CBD gummies as highly effective at treating “the root cause of most major degenerative diseases, including arthritis, heart disease, fibromyalgia, cancer, asthma, and a wide spectrum of autoimmune disorders.” It also claims its CBD cream relieves arthritis pain and that its CBD oil may effectively treat depression, PTSD, epilepsy, heart disease, arthritis, fibromyalgia, and asthma.

Potential for future legal action

The FTC urges the companies to review all claims made for their products, including consumer testimonials, to ensure they are supported by competent and reliable scientific evidence. The letters also warn that selling CBD products without such substantiation could violate the FTC Act and may result in legal action that could result in an injunction and an order to return money to consumers. The companies are instructed to notify the FTC within 15 days of the specific actions they have taken to address the agency’s concerns.