COVID-19 pandemic diverted some FTC resources from CBD enforcement

U.S. marketers of CBD products without adequate support for their advertising claims may have dodged a bullet in 2020.

Heading into 2020, the Federal Trade Commission planned to bring enforcement actions against companies “making disease claims for CBD products,” said Richard Cleland, assistant director of FTC’s Division of Advertising Practices, during a recent event hosted by the Natural Products Association (NPA).

Then, COVID-19 emerged. The pandemic diverted some resources that the agency would have used for CBD enforcement, Cleland explained. FTC has issued more than 330 warning letters related to the pandemic, more than 90 of which were joint letters with FDA, he said.

Despite getting “sidetracked with COVID,” FTC intends to bring enforcement actions against CBD firms, Cleland suggested Dec. 1 during The Big Natural, a two-day annual event hosted by NPA.

In 2019, FTC—on its own and in collaboration with FDA—sent a number of warning letters to companies marketing CBD products. And in at least one case in 2020, a firm marketing CBD products, Whole Leaf Organics, was sued in federal court by Cleland’s employer.

“I think you can expect to see more enforcement against companies that are making disease claims for CBD or CBG or derivative-type products in 2021,” Cleland said.

Such enforcement actions could result in injunctive relief, consumer redress and disgorgement of profits, among other remedies.

Cleland’s remarks didn’t surprise Bob Durkin, a former FDA official who also made remarks prior to and after Cleland’s presentation at The Big Natural.

“Rich [Cleland] made clear, prior to the current situation with COVID, that FTC was done with what he called their ‘warning letter phase,’” said Durkin, of counsel with the law firm Arnall Golden Gregory LLP (AGG), in an email. “FTC’s message on products making claims for CBD has been consistent all along, and they’ve given regulated industry enough time to get on board and comply.

“From this point forward, it shouldn’t be a surprise when FTC issues civil investigatory demands for company’s substantiation for the outlandish claims some are making,” added Durkin, who previously worked as deputy director of FDA’s Office of Dietary Supplement Programs (ODSP). “From there, it is only a matter of time until we see civil litigation.”

FTC’s longer-term strategy regarding CBD advertising claims remains to be seen.

Cleland said firms promoting CBD products for COVID-19 are relatively small compared to businesses FTC is accustomed to dealing with. He explained his agency needs to consider whether a “comprehensive enforcement program” should include using more warning letters as an initial strike or whether FTC should devote additional resources to enforcement.

“We are always evaluating our compliance tools to make sure we are using our resources efficiency and effectively,” Cleland added in a follow-up email through a spokesman. “Going forward, we will [bring] enforcement cases when such actions are warranted. We may also consider using warning letters, particularly when it appears that a firm may be small and the violations do not appear to be intentional.”

While FDA and FTC have teamed up on CBD warning letters, they often have distinct concerns. “FTC isn’t as much worried about the legality [of the ingredient]," said Dan Fabricant, Ph.D., president and CEO of NPA, in an interview. " They’re worried about, ‘Can you substantiate the claims?’ And I think that’s where they’re going to dig in."

Fabricant underscored the importance of clinical trials or other science to evaluate whether a CBD-containing supplement works as advertised.

“If you’re saying ‘helps with memory,’ have you done … memory tests on people who use it and don’t use it?" he asked. 

COVID-19 response

CBD marketers were among companies targeted by FTC for making unsubstantiated advertising claims related to COVID-19, and several of those firms have received joint warning letters from FDA and FTC.

“All of those companies are in compliance at this point,” Cleland disclosed during The Big Natural. “They’ve stopped making the violative claims.”

Cleland said his agency has been extremely successful achieving compliance in response to COVID-19-related warning letters. The compliance rate, he explained, is perhaps as high as 98%.

“A lot of these companies are saying, ‘I didn’t mean to violate the law. I didn’t know,’” the FTC official said. “Whether they did or didn’t know, I don’t know. But once they’re tapped on the shoulder, they seem to want to come into compliance very quickly. And as long as that continues … I think we’ll continue using warning letters.”

In situations where companies fail to comply after getting a warning letter, the agency has gone to court. For instance, in a case involving Whole Leaf Organics, FTC proceeded immediately to enforcement action and did not send a warning letter because the firm had failed to comply in response to a previous warning letter from FDA, Cleland explained. In a Nov. 22, 2019 warning letter to Whole Leaf Organics, FDA alleged the company was making claims that rendered its CBD products unapproved new drugs.

FTC in April filed an administrative complaint as well as a lawsuit in the U.S. District Court for the Central District of California to enjoin Marc Ching from marketing a supplement called Thrive to treat COVID-19. Ching, also doing business as Whole Leaf Organics, also was marketing CBD products to treat cancer. He agreed to settle both complaints.

“In cases where the FDA or the FTC does not obtain compliance with those warning letters, both agencies are willing and able to bring enforcement actions, and we intend to do so,” Cleland said.

Immune support claims

During his presentation, Cleland also addressed common claims related to COVID-19 that have captured the attention of federal regulators.

“The most common claim that we’ve seen in this area starts out with the premise that the best defense against COVID is a strong immune system,” he said.

He observed firms are creating the impression that an immune support product will prevent a person “from either getting COVID, or if they get COVID, from having severe adverse reactions to the disease.

“If you’re making this kind of claim and the FTC or FDA takes notice of it, you’re extremely likely to get … at least a warning letter from one or both of the agencies,” Cleland revealed.