If you read this blog and keep a close eye on the cannabidiol (“CBD”) industry, you know that the Federal Trade Commission (“FTC”) takes issue with advertising tools containing egregious, unfounded claims about the health benefits of CBD products. Yet, you might be surprised to read that the federal agency does not go after every actor that promotes the therapeutic value of these products. This post explains why.
The FTC is empowered under the Federal Trade Commission Act (“FTC Act”) to regulate advertising to protect the public from unfair and deceptive claims made in any medium. Under the FTC Act, companies must support their advertising claims with solid evidence. This is especially true for businesses that market food, dietary supplements, and other health-related products. The objective of the FTC is to ensure that consumers get accurate information about these products so they can make informed decisions.
In reviewing health claims, the FTC gives great deference to the Food and Drug Administration (“FDA”) – the agency tasked with regulating these products. The FTC follows the FDA’s determination of whether there is adequate support for a health claim to be made.
As we have written at length, the FDA treats any CBD products marketed as having therapeutic value as a drug. Drugs are tightly regulated and subject to FDA pre-approval for safety and effectiveness purposes before introduction into interstate commerce. With the exception of Epidiolex, no product containing hemp CBD has been approved as safe and effective for medical use.
Accordingly, to align with this FDA policy, the FTC mandates that any person who makes any health benefit claim about CBD products must possess and rely upon “competent and reliable scientific evidence.” In simple terms, “competent and reliable scientific evidence” means tests, analyses, research, and studies conducted and evaluated by experts in the field that substantiate that the representation is true. Yet, given the limited number of scientific studies on the health benefits of CBD, virtually no advertiser making medical claims about these products could possibly defend its representations under the federal standards.
These standards, however, only apply to people directly involved with the advertising of these products. This means that independent consumer reviews, which are reviews made by individuals who have no connection to the product manufacturer or distributor, are exempt from such regulations. This explains why publications like Forbes and Vogue frequently release articles ranking “best CBD products,” which are filled with all kinds of medical claims.
This, of course, is premised on the assumption that these publications and their journalists are expressing their personal opinion and fondness for a particular CBD product and have no endorsement deal with any of the CBD companies whose products they are reviewing.
If these publications and journalists did have some sort of sponsorship or endorsement deal – let’s say, the journalists receive free CBD products from the company, then these journalists and the CBD companies would be subject to the FTC rules and would need to disclose their relationship. Regulators would view the journalists as part of the CBD company’s marketing program, which is essential in helping consumers evaluate the review and the quality of the product. In addition, the company would need to ensure that the journalists do not make any health claims that would open them up to enforcement actions by the FTC, which are no longer limited to issuing warning letters.
In sum, honest, independent consumer assessments, including online reviews, social media posts and video, fall outside the jurisdiction of the FTC, even if they contain health claims otherwise punishable if made by CBD companies. The primary goal of the FTC is to protect the public from deceiving companies which hold a financial interest in a product, not to silence people’s free speech.