Operation CBDeceit Highlights Risks of CBD Health Claims

Cannabis Industry News Alert

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Mahatma Gandhi once said that “[i]t is health that is the real wealth, and not pieces of gold and silver.” For the six sellers of CBD-containing products targeted by the Federal Trade Commission last week, health claims will cost them gold, silver, and more.

The FTC announced that it has taken action against six sellers of CBD-containing products “for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions, including cancer, heart disease, hypertension, Alzheimer’s disease, and others. 

As part of the enforcement action, known within the agency as Operation CBDeceit, the FTC is “requiring each of the companies, and individuals behind them, to stop making such unsupported health claims immediately, and several will pay monetary judgments to the agency.” The respondents are further required to have scientific evidence to support any health claims they make for CBD and other products going forward.

Commenting on the enforcement action, an FTC staffer said: “The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science. Otherwise, don’t be surprised if you hear from the FTC.”

So, what does this mean? And what can we learn from it? As an initial matter, it should not come as a surprise that the FTC is undertaking enforcement actions against CBD companies making health claims about their products. It is not the first time, probably won’t be the last time, and conforms with existing FTC guidance. And the statement from the FTC staffer leaves little room for doubt: If you make health claims unsupported by medical science, you should not be surprised to become the target of an FTC enforcement action. Relatedly, the FTC appears focused on claims that CBD products are “safe.” Without sufficient medical substantiation, claims that a CBD product is “safe” may increase the likelihood of an FTC enforcement action. Finally, these enforcement actions looked to claims made by the operator through the operator’s website, social media, and other non-traditional methods of communicating health claims – for example, the product label. So, before you hire that social media influencer to tout the health benefits of your CBD product, think twice about whether that influencer is making a claim that the FTC would find objectionable if you made it yourself.

Finally, the elephant in the room is that this may be the final large-scale FTC enforcement action under the Trump administration. Will the FTC under the Biden administration chart a different course? If so, will that course veer towards more or less scrutiny of the industry? Only time will tell.

This saga is not over. And while we do not yet know what the next chapter holds, there is increasing evidence that the FTC is taking the issue of unsubstantiated health claims in hemp products seriously. Operators ignore that evidence at the risk of their gold and silver.

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