December 9, 2019

Don’t allow profit potential to detract from legal compliance

The snake-oil salesmen of the California Gold Rush were more likely to be stoned than sued or prosecuted for their questionable claims. CBD product purveyors looking to capitalize on the current Green Rush, however, must navigate an assortment of evolving federal regulations or risk receiving ominous warning letters from the Food and Drug Administration (FDA) or Federal Trade Commission (FTC), not to mention lawsuits for personal injury and deceptive trade practices.

From A-list celebrities hawking their favorite products on social media to the local drugstore, the surging popularity of CBD in all manner of consumer products cannot be denied. Health and beauty products touting the virtues of CBD abound. A recent search for “CBD and cosmetics” on Amazon yielded nearly 2,000 products; “CBD and beauty products” resulted in more than 7,000 products; and “CBD and anxiety” came in with over 4,000 hits. While a thorough review of all the advertising for these products was not undertaken, a brief review did reveal some questionable marketing claims that likely violate applicable regulations. For example, various CBD products were accompanied by claims that they treat psoriasis or hemorrhoids, relieve inflammation, promote better brain function and even cure erectile dysfunction. How such products are labeled and marketed is critical to how they are viewed by the FDA and/or FTC.

Cosmetics are generally defined as articles intended to be rubbed, poured or otherwise introduced into or applied to the human body to cleanse, beautify, promote attractiveness or alter its appearance. Even if not marketed as a drug, if products are marketed to “treat medical conditions” or “promote health benefits,” they may be considered “drugs” by the FDA. Any claim that a product may have a role in the treatment or diagnosis of disease or is intended to affect the structure or function of the human — or animal — body is a health claim subject to FDA regulation unless it falls within the narrow exceptions of the Dietary Supplement and Health Act. The FDA has determined that CBD does not fall within these exceptions.

If a CBD product is marketed to affect the structure or function of the body or to diagnose, cure, mitigate, treat or prevent a disease, it may be considered both a cosmetic and a drug and therefore must comply with the prescriptions of both the FDA and the Food, Drug and Cosmetic Act (FDCA). The FDA casts a wide net, and it’s easy to see how CBD product claims might raise a regulatory red flag.

While the FDA does not require agency approval for cosmetics, it does have regulatory authority over ingredients. The FDA requires that product labeling be truthful and not misleading, while the Food, Drug and Cosmetic Ave prohibits marketing cosmetics that are adulterated or misbranded. A product is considered “adulterated” if it contains a “harmful ingredient.” Although CBD is not considered a “harmful” ingredient, if a CBD cosmetic is labeled in a false or misleading manner or does not prominently display the statutorily proscribed information, it is considered “misbranded.”

The FTC also requires substantiation of all objective claims made in product advertising. Statements that a product can “prevent, treat or cure” a disease or “affect” bodily function require a foundation of competent and reliable scientific evidence. Such evidence is defined as tests, studies and other evidence that have been conducted and evaluated in an objective manner by qualified persons using generally accepted procedures in order to yield accurate and reliable results. A CBD product manufacturer need not conduct such studies itself, but it must ensure that any studies it relies upon meet the foregoing criteria.

Given the high volume of Green Rush entrepreneurs bringing CBD health/beauty products to market, the FDA and FTC cannot practically police all products to ensure regulatory compliance. The agencies are forced to pick and choose, with a stated focus on unsubstantiated claims about products treating serious or life-threatening diseases and might therefore prevent consumers from obtaining otherwise effective and necessary medical care. The FTC recently issued a series of warning letters to companies whose CBD products were marketed to treat chronic pain, anxiety, ADHD, Alzheimer’s, Parkinson’s, cancer, opioid withdrawal and more. Absent competent and reliable scientific substantiation of the claims made, the FTC warned these companies may be violating applicable federal law.

While it is clear that government authorities remain focused on claims that are far beyond the pale of scientific validation, unfounded marketing claims can form the basis of state law claims for personal injuries and/or deceptive trade practices as well.

Companies should not allow the huge amounts of potential profit and the relative ease of internet marketing/sales to detract from planning a carefully crafted and legally compliant marketing campaign.


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Stephanie Spardone, Foley & Mansfield