Will the FTC Adopt Less Stringent Substantiation Requirements for CBD Claims?

by Natalie Bougenies, Attorney at Harris Bricken

If you follow our blog, you know we keep a close eye on enforcement actions taken by the Food and Drug Administration (the FDA) and the Federal Trade Commission (the FTC or the Commission) against companies selling and marketing cannabidiol (CBD) products.

Back in December, we discussed the FTC’s decision to adopt new and more stringent enforcement practices on companies making false and deceptive medical claims about their CBD products.

What wasn’t publicly known then was that two FTC Commissioners did not entirely approve of the Commission’s newly adopted enforcement strategy. Ten days following the issuance of this last round of FTC warning letters, Commissioners Rohit Chopra and Christine S. Wilson issued personal statements to the Commission expressing some concerns with the FTC’s CBD enforcement priorities.

Although both Commissioners agreed that the FTC should pursue enforcement actions against companies making deceptive and false claims, they suggested that the Commission shifts its enforcement priorities and refrain from imposing an unduly high standard of substantiation on CBD companies.

In his statement, Commissioner Chopra reminded the FTC of the need to prioritize its authority to crack down on misconduct related to substance use disorder treatments, specifically opioids treatments– particularly given the growing dependence on these substances since the start of COVID-19.

Back in 2018, Congress enacted the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the SUPPORT Act), which empowered the Commission to impose civil penalties, restitution, damages and other relief against actors that engage in misconduct related to substance use disorder treatment and to prosecute deceptive marketing of opioid treatment products.

Chopra opines that using the FTC’s penalty offense authority under the SUPPORT Act would make warning letters more effective. Commissioner Chopra further argues that by imposing a “reasonable basis” for claims, the FTC would likely incentivize voluntary compliance by marketers, and thus, would operate more efficiently. To further increase its level of efficiency, Chopra also suggests the Commission shifts its limited resources from small businesses toward large companies that are better funded, and thus, able to provide financial relief to victims.

For her part, Commissioner Wilson recommends the FTC impose stringent substantiation requirements “sparingly.” In her statement, Commission Wilson expresses concerns with mandating such level of claim support, which she fears may result in denying consumer truthful, useful information, diminishing incentives to conduct research and potentially deterring manufacturers from introducing new CBD products to market. To support her argument that the Commission should refrain from imposing such burdensome standard of substantiation, Wilson points out to the existence of “many research studies […] currently seeking to determine whether they are other scientifically valid and safe uses of [CBD].” This, she said, shows that credible science already exists – or is on its way – to reasonably support that CBD products may indeed treat certain conditions.

Though it is clear the FTC will continue to take enforcement actions against bad actors making wholly false and deceptive medical claims about their CBD products, Commissioners Chopra and Wilson’s statements suggest that the Commission may refine and clarify its enforcement standards for the CBD industry and possibly approve–or at least tolerate–“reasonable” claims backed by reliable scientific data. This, of course, would greatly benefit the industry, which for the past two years has conducted a wide range of studies on CBD’s therapeutic values and has begged federal regulators to establish realistic standards to help ensure compliance; and to provide them with an opportunity to lawfully operate in the marketplace.

Re-published with the permission of Harris Bricken and The Canna Law Blog