The CBD industry is still in its infancy, but it is already having to get used to the warnings issued by federal health agencies regarding the medical claims about cannabidiol. The FTC warning letters sent this week to three CBD companies offer a number of lessons that the entire CBD industry should take note of, or be the recipient of the wrath of these federal agencies.
Lesson #1: The Feds Are Watching
The Federal Trade Commission (FTC) hasn’t been as active in the CBD space as the Food and Drug Administration (FDA) has been.
However, the recent letters show that different federal agencies are watching the CBD industry as it grows, so no one involved in this nascent industry should be tempted to believe that the industry isn’t regulated. It is, and that is why these agencies are taking the steps that they are taking to bring “errant” companies in line.
Lesson #2: The FDA Should Worry You More
Several federal agencies can exert their influence on the CBD industry, but the industry should be more concerned about the FDA because it has direct regulatory authority over the industry and it can easily order a company to take its products off retail shelves.
The other agencies will most likely take their cue from the position taken by the FDA, so it would be wise for CBD companies to tread carefully and abide by any guidelines or rules issued by the FDA.
Lesson #3: Prepare a Compliance Plan
It is possible for a CBD company to land in serious trouble with federal regulators as a result of product user testimonials or posts by influencers on social media.
For example, a company which highlights a testimonial indicating that a user was relieved of their symptoms after using the said product can be found liable for making unfounded medical claims. The same applies if the company pays an influencer to make unsubstantiated medical claims.
It is therefore prudent for companies to have a plan to ensure that all their marketing messages are compliant with the law.
Lesson #4: Only Periodic Surveillance is Necessary
Having a compliance plan doesn’t mean that you should have an employee going through all sites and social media channels on a full-time basis. The feds know that users will generate content about products without any input from the manufacturers, so it is sufficient for you to have the website and social media accounts of the company checked periodically so that any content that could attract the unwanted attention of regulators is removed.
One wouldn’t be surprised to find that CBD industry actors like Hemptown USA and HTC Extraction Systems (TSX.V: HTC) have compliance teams that analyze every development in the regulatory landscape so that the company makes the necessary changes to stay clear of regulatory enforcement action.
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