The Meals and Drug Administration’s (FDA) current enforcement action against cannabis and CBD producer Curaleaf exemplifies the have to have for awareness and understanding of the federal and state laws applicable to marketing these heavily regulated items.
The hemp-derived CBD industry has been booming following passage of the 2018 Farm Bill which removed hemp-derived CBD (containing significantly less than .three% THC) from the Controlled Substances Act. Nonetheless, uncertainty persists about how items containing CBD can be labeled, marketed, and advertised. At the forefront in this region is the FDA, which has expedited its consideration of regulations of items containing CBD.
Similarly, in states that have authorized cannabis for adult-use like California, regulators, legislators, and advertisers alike have struggled to locate the acceptable balance in between customer protection and freedom to promote in a flourishing cannabis industry.
This advisory identifies regulatory and legal trends affecting CBD and cannabis-associated marketing and presents takeaways for advertisers and marketers to assist mitigate danger in a swiftly altering regulatory and legal landscape.
FDA Enforcement & Warning Letters
On July 23, 2019, the FDA issued a warning letter to Curaleaf, a single of the biggest medicinal cannabis and CBD corporations in North America, for Curaleaf’s ads associated to numerous CBD items, like discomfort-relief patches, tinctures and vape pens.
The warning letter stated that these CBD items constituted unapproved new drugs (21 U.S.C. 355(a) 331(d)), misbranded drugs (21 U.S.C. 352(f)(1)), improper dietary supplement labeling (21 U.S.C. 321(ff)(three)(B), 321(ff)(two)(A)(i)) and unapproved new animal drugs (21 U.S.C. 321(g)(1)(B)).
As for the unapproved new drugs and misbranded drugs warning, the FDA especially highlighted marketing statements in blogs, articles, and posts on Curaleaf’s internet site and social media that CBD items have been intended for use in the diagnosis, mitigation, remedy and/or prevention of ailments, like chronic discomfort, ADHD, anxiousness, Parkinson’s, Alzheimer’s, heart illness, higher cholesterol. The FDA created related findings with regard to particular pet items.
As for the dietary supplement warning, the FDA took problem with the characterization of CBD as a dietary supplement on the label for CBD Tinctures, CBD Discomfort-Relief Patch, CBD Lotion and CBD Vape Pen. The FDA has taken the position that CBD items can’t constitute “dietary supplements” mainly because the FDA’s definition of “dietary supplement” excludes articles that have been authorized as an active ingredient in an authorized drug item, or have been authorized for investigation as a new drug for which substantial clinical trials have been instituted.
Right here, mainly because Epidiolex, an FDA-authorized epilepsy medication, includes CBD, the FDA has determined that CBD is not a dietary supplement. Interestingly, the FDA signaled doable flexibility on the dietary supplement problem, inviting Curaleaf to present the FDA with proof that may well bear on the problem notwithstanding their warning on the matter.
The Curaleaf warning letter comes on the heels of a flurry of related warning letters in late spring 2019 to other CBD item retailers. These letters contained analogous charges of violation of the FDA’s new drug and misbranding restrictions, as nicely as violations of the unapproved new animal drug restrictions and unsubstantiated ads.
As the FDA undertakes new regulations for CBD (public comment period closed July 16 following an initial May possibly 31 hearing), we anticipate considerably additional scrutiny of CBD-associated products—particularly these marketed as dietary supplements linked to the remedy and/or prevention of health-related ailments.
State and Neighborhood Prohibitions on CBD-Infused Meals Solutions
In light of the FDA guidance, state and neighborhood governments have begun cracking down on the sale of CBD-infused items. For instance, in New York City, the Division of Overall health and Mental Hygiene “embargoed” the sale of CBD-infused meals items, citing the FDA’s ruling in December 2018 that it is “unlawful to add CBD to meals or drink.”
Similarly in Massachusetts, the Division of Agricultural Sources issued a policy statement expressly stating that meals items containing CBD, items containing hemp-derived CBD with therapeutic or medicinal claims, items containing hemp-derived CBD as a dietary supplement, and animal feed containing hemp-derived CBD are not authorized for sale in light of FDA guidance.
Unfair Competitors & Customer Protection Disputes
Outdoors of the regulatory enforcement context, CBD corporations are also increasingly possessing to defend against unfair competitors and false marketing claims. Buyers have filed unfair competitors and false marketing situations in each New York and California arising out of consumption of CBD items top to the failure of drug tests.
See Horn v. Med. Marijuana, Inc., (W.D.N.Y. 2019) (pending appeal) Thurston v. Koi CBD, LLC. In truth, in the Horn case, the plaintiff even attempted to assert RICO claims arising out of the CBD items at problem.
In addition, CBD corporations are now starting to see an uptick in trademark infringement disputes associated to CBD-associated marks—a previously untested region of federal law. This enhance follows from guidance by the USPTO that hemp-derived CBD marks filed on or just after December 20, 2018 (passage date of the Farm Bill of 2018) may well qualify for federal trademark protection, assuming these CBD-associated marks also comply with “lawful use” needs by the FDCA.
To that finish, the USPTO emphasized “Use of a mark in commerce will have to be lawful beneath federal law to be the basis for federal registration beneath the U.S. Trademark Act.” As a result, considerably of the federal protectability of CBD-associated marks by the USPTO will hinge on the FDA’s position on CBD (like its existing position excluding CBD as a lawful dietary supplement).
State Level Marketing Laws & Regulations
Lastly, a lot of adult-use cannabis legal states have enhanced customer protection and public security campaigns associated to the sale of cannabis goods by unlicensed retailers. At present, California is poised to pass AB1417, which would need advertisers to make particular disclosures and to post the licensing data in connection with the advertisement of cannabis goods.
If AB1417 passes, not only will cannabis retailers (and potentially makers and cultivators) face possible enforcement danger arising out of non-compliant ads, but violation of the proposed provisions of the Company & Professions Code could also give rise to unfair competitors claims beneath the “unlawful” prong of California’s unfair competitors law.
Mitigating Danger in Regulatory Uncertainty
It really should be clear that the legal and regulatory landscape for cannabis and CBD advertising and marketing and marketing is complicated. Publishers and brands are topic to civil and criminal enforcement actions at the state and federal level, private civil suits, and reputational harm if they are not conscious of and act inside the network of applicable laws and regulations.
Organizations engaged in the sale of cannabis goods and hemp-derived CBD items really should be specifically sensitive to the FDA’s heightened interest to drug claims and aggressive advertising and marketing of CBD items as dietary supplements. On the THC and cannabis goods side, advertisers will have to be conscious of rising state and neighborhood scrutiny surrounding customer protection, specifically in California, with regards to licensure status and the have to have to present buyers with truthful and substantiated ads from licensed retailers of cannabis goods.
Each the CBD and cannabis goods markets continue to knowledge considerably accelerated growth—and substantial margins—and therefore will have to balance appetite for danger with marketing practices that help sustainable business enterprise models.