The Federal Trade Commission (FTC) has announced the first law enforcement crackdown on companies deceptively marketing products in the growing cannabidiol (CBD) market in the United States.
Following the passage of the 2018 Farm Bill, which paved the way for a legal nationwide CBD market, the FTC has repeatedly warned producers against making false health claims about their products.
The FTC is now taking action against six CBD sellers for allegedly making a wide range of scientifically-unsupported claims about the ability of their products to treat conditions such as Alzheimer’s disease, cancer, and heart disease.
The six sellers are Bionatrol Health, LLC, Epichouse LLC, CBD Meds, Inc., HempmeCBD, ReefIndustries, Inc., and Steve’s Distributing, LLC.
The FTC has dubbed the crackdown Operation CBDeceit, which the Commission says is part of its continuing efforts to shield consumers from companies that make deceptive and misleading health claims in advertisements, on websites, and through social media companies such as Facebook, Instagram, or Twitter.
“The six settlements today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science,” says FTC Bureau of Consumer Protection Director Andrew Smith. “Otherwise, don’t be surprised if you hear from the FTC.”
According to the FTC, the Commission will issue an administrative complaint when it appears that the law has been violated and a proceeding would be in the public interest.
Consent orders by the FTC carry the force of law regarding future actions, and each violation of such an order is punishable by a civil penalty of up to $43,280.
The FTC complaint against Utah-based Bionatrol Health, LLC/Isle Revive, LLC, and two former managers and owners alleges that since 2019, the respondents sold CBD oil on two websites, claiming that the product is safe for all users, treats pain better than prescription medication, and treats age-related cognitive decline and chronic pain.
According to the FTC complaint, the respondents also claimed, without scientific evidence, that CBD oil is medically proven to improve various conditions.
The complaint also alleges that the respondents deceived customers who had ordered one bottle by changing the order to five bottles without obtaining consent.
The proposed administrative order prohibits the respondents from making certain claims about dietary supplements, food, and drugs without proper scientific evidence.
The order also requires corporate respondents and one individual respondent, Marcello Torre, to pay $20,000 to the FTC and notify consumers of the Commission’s order.
According to the FTC complaint against Utah-based Epichouse, the company has operated under several names, including First Class Herbalist, and sold CBD products on its website since at least September 2019.
The FTC alleges that Epichouse and owner John Le promoted CBD as more effective than prescription medication, safe for everyone, and able to treat a wide range of conditions such as cancer, diabetes, chronic pain, and hypertension.
The FTC’s proposed administrative order prohibits the respondents from making unsubstantiated health claims about CBD products and requires them to pay $30,000 to the Commission.
The complaint against CBD Meds/G2 Hemp, Inc. alleges that the California-based companies and corporate officer Lawrence Moses claimed in YouTube and website advertisements that their CBD oil could treat, mitigate, or prevent serious diseases such as artery blockage, glaucoma, autism, and schizophrenia.
The FTC also alleges that the respondents falsely represented efficacy claims, stating that they were scientifically proven or that the United States government had confirmed CBD’s health benefits.
The FTC’s proposed administrative order prohibits the respondents from making certain health claims about supplements, food, and drugs unless they have competent and reliable clinical results to support them.
The order does not impose any fines against the respondents, but it does require them to notify consumers of the FTC’s order.
According to the FTC, EasyButter, HempmeCBD, and owner Michael Solomon have sold a variety of CBD products online since at least January 2018, including gummies, topicals, lozenges, honey sticks, vape pens, and oils.
The FTC complaint alleges that HempmeCBD made scientifically unsubstantiated health claims about its CBD products, stating that they could treat or cure serious ailments such as AIDS, autism, and cancer.
The FTC’s proposed administrative order prohibits the respondents from making unproven health claims, requires them to pay $36,254 to the FTC, and directs them to notify consumers of the order.
The FTC complaint against California-based Reef Industries, Inc., Cannaterra, Inc., AndHemp, Ltd., and the three companies’ principals alleges that they have sold CBD products to consumers online since at least January 2019 and misrepresented CBD’s health benefits.
The FTC’s proposed administrative order requires the respondents pay $85,000 to the FTC and notify consumers.
The FTC’s complaint against Steve’s Distributing, LLC/Steve’s Goods and the company’s CEO Steven Schultheis alleges that the respondents have sold CBD and cannabigerol (CBG) products since 2018, and promoted the products to be effective alternatives to prescription medications without providing adequate substantiation.
According to the FTC, the respondents claimed that the products could treat diseases and health conditions such as Alzheimer’s disease, cancer, and diabetes.
The complaint also alleges that the respondents falsely claimed CBD and CBG have antibacterial properties and can reduce the risk of heart attacks and strokes.
The FTC’s proposed administrative order prohibits the respondents from making certain health claims about their products without competent and reliable scientific evidence, requires them to pay $75,000 to the FTC, and instructs them to notify consumers of the order.
The Commission voted 5-0 to approve each of the six administrative orders.
The FTC will soon publish a description of the agreement package in the Federal Register, where it will be subject to public comment for 30 days.
Instructions for filing comments will appear in the published notice and processed comments will be posted on the regulations.gov website.
Following the 30-day comment period, the FTC will decide whether to make the proposed consent order final.