Today, the U.S. Federal Trade Commission (FTC) announced a settlement in its most recent law enforcement action in its ongoing efforts to monitor the marketplace regarding misleading cannabidiol (CBD) product claims. The action targets Kushly Industries LLC (Kushly) and the company’s sole officer for allegedly making false or unsupported health benefit claims about Kushly’s CBD product.
The FTC’s proposed resolution will bar Kushly and its officer “from making any representations about the health benefits, efficacy, safety or side effect about any covered product, including CBD products, unless the representations are true at the time they are made, are not misleading, and … rely upon competent and reliable scientific evidence …. It also requires them to secure and preserve any human clinical tests or studies they use to substantiate these health claims.” The targets will also have to pay over $30,000 in consumer redress fines.
According to the FTC’s complaint, Kushly’s advertising and marketing materials made unsupported claims that CBD can treat skin diseases, anxiety and depression, diabetes, insomnia, multiple sclerosis, Alzheimer’s disease, Parkinson’s disease, and some types of cancer. In several instances, these materials referred to supporting consensus from science or medical professionals for the statements, but did not cite to or identify any such evidence. Daniel Kaufman, the Acting Director of the FTC’s Bureau of Consumer Protection, stated that this is the seventh case brought by the FTC “against CBD sellers who should know better than to make unsupported health claims for their products.”
As the industry continues to await guidance from the Food and Drug Administration (FDA) regarding the marketing of CBD products, the action is a significant reminder that government bodies are increasingly scrutinizing unsupported health claims by CBD manufacturers, especially those related to cancer and COVID-19. Last December, the FTC brought six enforcement actions against CBD manufacturers “that represent[ed] expressly or by implication that what they sell can prevent, treat, or cure serious medical conditions” without substantiating the claims. The FTC’s recent activity is particularly notable because the FTC initiated these actions independently, whereas previous FTC actions involving CBD marketing claims were primarily undertaken in concert with the FDA.
The FTC’s action indicates that it is not waiting on the FDA’s forthcoming enforcement policy to take action against unsupported health claims. Rather, the FTC is clearly prepared to take enforcement action against CBD product health claims it finds objectionable. There is good reason for CBD companies to be careful regarding unsupported healthcare claims.