Agency Activity Signals Regulatory Agenda, Enforcement Priorities, and Litigation Risk for CBD Products
Products containing cannabidiol (CBD), ranging from gummies to lotions and oils, continue to grow both in popularity and presence in the marketplace. Recent regulatory action by the US Food & Drug Administration (FDA) and Federal Trade Commission (FTC), however, is an important reminder that the presence of a product is not necessarily a reflection of the government's position on its legality.
Last week, FDA issued its report to the US House Committee on Appropriations and the US Senate Committee on Appropriations entitled "Cannabidiol (CBD) Report in Response to Further Consolidated Appropriations Act, 2020 U.S. Food and Drug Administration," (CBD Report) and provided additional updates on its evaluation of the risks and benefits of CBD products. In pertinent part, these FDA announcements acknowledged that the agency is exploring pathways for various types of CBD products (including food and dietary supplements) to be lawfully marketed in the eyes of FDA, and discussed the agency's forthcoming activity, including opening a docket for interested parties to submit additional data on the safety and risks of CBD and issuing a "risk-based" enforcement policy for CBD products.
FDA's announcement comes on the heels of an active 2019, during which both FDA and the FTC issued warning letters to marketers of CBD products1 and the plaintiffs' bar began to actively file class-action lawsuits against marketers of CBD products under state law.
This advisory provides an overview of key regulatory activity and priorities that should be on the radar of any company engaged in the development or sale of products that contain CBD. The advisory begins with a review of recent FDA action relating to CBD, provides an overview of FDA's CBD Report and its relationship with prior FDA and FTC enforcement, and then closes with key litigation and enforcement trends, including the potential for FDA and/or FTC enforcement action, as well as private actions challenging various health-related CBD product claims.
Background: FDA Action Amid Push for Regulatory Certainty
Despite the popularity of CBD products, FDA currently takes the position that CBD may not be used in food or dietary supplements. Nonetheless, these products are widely available. In the absence of federal action, states have developed their own regulatory schemes. The patchwork of state laws and regulations is a concern for the CBD industry, as well as patient groups. They expressed this concern at a public meeting held by FDA in May 2019, explaining that conflicting regulatory requirements create uncertainty that is stifling medical research and hindering consumer access to CBD products.2 At the conclusion of the meeting, FDA stated that it would form an internal working group to study data gaps relating to CBD. As indicated by FDA's recent announcement, the collection of data about the risks and benefits of CBD remains a priority for the agency.
FDA is also under pressure from Congress to address the regulatory status of hemp-derived CBD as a potential food additive or new dietary ingredient. In the FY 2020 appropriations for FDA, passed in December 2019, Congress imposed specific mandates upon FDA with respect to the evaluation of CBD. The FY 2020 appropriations include $2 million for "research, policy evaluation, market surveillance, issuance of an enforcement discretion policy, and appropriate regulatory activities with respect to products under the jurisdiction of FDA which contain CBD and meet the definition of hemp."3 The appropriations bill required FDA to submit to Congress a report within 60 days of the enactment of the appropriations bill regarding FDA's progress in collecting and analyzing hemp-derived CBD data. This analysis is intended to inform FDA's development of an enforcement discretion policy and evaluation of hemp-derived CBD in food and dietary supplements. FDA submitted this report last week, as is discussed below. The appropriations bill further requires FDA to sample CBD products in the marketplace to determine "the extent to which products are mislabeled or adulterated," and report back to Congress on the results of this study within 6 months after the passage of the appropriations bill.
FDA's CBD Report Hints at Progress on Evaluation of CBD
In accordance with the requirements of the FY 2020 appropriations bill, FDA released last week its report to Congress regarding CBD. The CBD Report discusses FDA initiatives already underway (e.g., FDA safety assessments of CBD and evaluation of pathways to facilitate the legal marketing of CBD-containing dietary supplements), as well as additional steps that FDA intends to take.
In particular, the report emphasizes that FDA continues to be concerned about potential safety risks (i.e., liver injury, drowsiness, potential for drug interactions, and male reproductive toxicity) from CBD and CBD-containing products, including risks unrelated to CBD itself ( such as the possibility that products are contaminated with pesticides and heavy metals). FDA also outlined "key" safety questions it is considering about CBD, specifically: (1) the impact of sustained CBD usage; (2) the amount of CBD intake that triggers health risks; (3) how different methods of intake (i.e. oral, topical) impact exposure; (4) the effects of CBD on children (including unborn children and babies); (5) the interaction of CBD with herbs and botanicals; (6) whether CBD causes male reproductive toxicity in humans, (7) differing safety risks for different animal species, and (8) whether CBD residues form in edible tissues of food-producing animals. FDA also expressed concern about the safety risks posed by the use of CBD in food and called upon interested parties to submit data on this topic.
The CBD Report is careful to acknowledge the products for which the agency does and does not claim to have jurisdiction, noting, among other things, that the agency claims authority to regulate CBD-containing human drugs, animal drugs, dietary supplements, food (for humans, pets and other animals), cosmetics, and vape products. FDA also reiterates that while it remains FDA's position that CBD cannot currently be legally added to dietary supplements or conventional foods, "certain hemp-derived ingredients containing only de minimis amounts of CBD (i.e., dehulled hemp seeds, hemp seed protein, and hemp seed oil) can be lawfully be added to human food."
The report also explains that, while FDA is actively exploring pathways to allow certain CBD products to be marketed as dietary supplements, the agency has some reservations about this approach for two key reasons. First, FDA is encouraged by the therapeutic potential of CBD and expressed concern that the widespread availability of CBD-containing consumer products could discourage clinical research on the use of CBD, thus inhibiting knowledge about potential medical uses. According to the report "the Agency is . . . focused on encouraging further CBD-drug development and ensuring that there remains adequate incentives for clinical research" (emphasis added). Additionally, FDA is concerned about its lack of oversight over dietary supplements as compared to drugs, noting in the Report that "[a]lthough the existing regulatory framework for dietary supplements includes certain controls over product safety and quality and labeling standards, there are certain challenges in overseeing CBD in the dietary supplement marketplace" including "lack [of] clear authority to require individual participants in the dietary supplement industry to tell FDA what products they are making and selling consumers,"; limited FDA bandwidth to handle "a large number of new products" in the context of "existing work"; and "limited authorities to identify and address violative products that put the public at risk."
According to the CBD Report, FDA is "actively monitoring" the market for CBD products that violate FDA regulations (e.g., products making unapproved drug claims). It is also developing a plan to sample CBD products on the market to identify mislabeled and adulterated products, as required under the FY 2020 appropriations bill. At the same time, FDA is considering issuance of a risk-based enforcement policy for cannabis products, including CBD products meeting the definition of hemp to "provide greater transparency and clarity regarding factors FDA intends to take into account in prioritizing enforcement decisions." In the interim, FDA intends to continue to address regulatory violations that put the public at risk.
FDA noted several times throughout the report that it needs more data in order to evaluate and make regulatory decisions about CBD. To that end, FDA announced that it is reopening the public docket originally opened around the agency's May 2019 public meeting on CBD to collect additional information about the potential risks and benefits of CBD. The docket will be open indefinitely, allowing stakeholders to comment and share data with FDA on an ongoing basis. The docket will also provide a means for submitting confidential data to FDA. FDA hopes that the reopening of this docket will encourage stakeholders to provide additional data that will inform the agency's regulatory actions.
FDA & FTC Enforcement, Private Challenges Remain Risks for CBD Product Industry
Regulatory enforcement and litigation activity related to CBD products will continue while FDA continues its collection information.
Although FDA has not yet formally issued an enforcement discretion policy for hemp-derived CBD products, an FDA press release from last week provides insight into the agency's current enforcement priorities. The press release states that FDA is focusing its enforcement efforts on CBD products that it believes to present the "greatest risk" of public harm. This includes products that claim to have therapeutic benefits for serious diseases like cancer or Alzheimer's disease (and therefore could deter consumers from seeking safe, proven medical therapy), products that could be contaminated with heavy metals, THC or other potentially harmful substances, products marketed to vulnerable populations (such as children), and products marketed with incorrect ingredient or CBD content information.
Recent FDA and FTC enforcement actions underline this focus on health-related claims for CBD products. In 2019, FDA issued warning letters to 22 companies relating to CBD products, with the most recent warning letters issued in November 2019.4 Four of these warning letters were issued jointly with FTC—all targeting health claims in marketing for CBD products.5 For example, in March 2019, FDA and the FTC jointly issued warning letters to three marketers of CBD-containing products relating to claims that these products could help to treat Alzheimer's disease, anxiety, chronic pain, and psoriasis.6 FDA alleged that these claims rendered the products unapproved new drugs, and FTC alleged that these claims were unsubstantiated. The FTC also independently issued three warning letters in 2019 relating to health claims made in marketing for CBD products.7
Regulatory enforcement action is not the only concern for marketers of CBD-containing products—there is also risk of private challenges to CBD product claims. The National Advertising Division (NAD), as part of an initiative with the Council for Responsible Nutrition, recently referred to the FTC claims made by a marketer of CBD oil including that the product could reduce blood sugar levels and alleviate diabetes and vascular diseases.8 NAD referred these claims to the FTC after the marketer failed to respond with any support for these claims.
Additionally, CBD-containing products have recently been the target of consumer class action lawsuits—sometimes prompted by the issuance of FDA warning letters. For example, FDA issued a warning letter to Infinite Product Company LLLP (d/b/a Infinite CBD) on November 22, 2019 alleging that Infinite CBD was marketing its CBD-containing products as unapproved new drugs and that Infinite CBD's CBD-containing foods were improperly being promoted as conventional human foods. Five days later, a class action complaint was filed against Infinite CBD in the Central District of California alleging that the company's marketing of CBD-containing products is illegal and, therefore, the sale of these products violates California's Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act, and constitutes a breach of express warranty and implied warranty of merchantability.9 A similar lawsuit was filed against Koi LLC just days after the company received a warning letter from FDA.10
Several consumer class actions have also been filed alleging that CBD products do not contain the advertised amount of CBD.11 One of the lawsuits relating to the amount of CBD contained in a company's products was stayed in January based on the doctrine of primary jurisdiction, with the court noting that FDA has an "active" rulemaking process with respect to CBD,12 however other class actions are still active.
CBD is an area of significant interest to FDA, the FTC, industry, and the plaintiffs' bar, with agency action often triggering competitor and consumer challenges. For this reason, it is prudent for companies to move forward in this area with a three-pronged approach.
Engage FDA. Companies involved in the development, marketing, and sale of CBD products should both closely monitor FDA activity related to the study of CBD and take advantage of the opportunity to share information about the safety and benefits of CBD with FDA through the docket. Stakeholders with data or other information could help to guide FDA's decision-making regarding the regulation of CBD. Further, those interested in CBD drug development are encouraged to contact the relevant Center for Drug Evaluation and Research (CDER) division and CDER's Botanical Review Team (BRT) to answer questions related to their specific drug development program. Notably, to facilitate more stakeholder engagement by dietary supplement manufacturers, the agency is also working to establish a clear process by which proprietary information regarding specific products can be submitted to the Agency, with appropriate protection against disclosure of trade secret or confidential commercial information.
Monitor product claims and safety. The risk of FDA enforcement for CBD products continues to be directly related to product claims, with heightened scrutiny being given to products marketed with "serious" health-related claims or claims targeted at vulnerable populations (e.g., infants and children). Like FDA, the FTC also is particularly concerned with health-related claims made by marketers of CBD products, and such claims could be the target of FDA, FTC, or joint FDA-FTC enforcement action. FDA's CBD Report makes clear that it has growing concern about the safety of CBD products. Companies engaged in the sale of consumer products, including cosmetics, should closely monitor both studies on CBD and adverse events to anticipate whether FDA may take the position that certain forms, levels, or sources of CBD are unfit for inclusion in consumer products (i.e., are adulterated)
Anticipate challenges from third parties. Finally, it is important to not limit risk assessments to the risk of regulatory enforcement. Private parties, including competitors and consumers, have been closely watching FDA regulatory and enforcement action, and using it as a basis to file NAD challenges and civil demands. Thus, when considering whether to engage with FDA as it evaluates CBD, marketers of CBD products should keep in mind the potentially wide-ranging impacts of FDA action.
We will continue to monitor developments in this area to assist clients with engaging the agency, monitoring claims and safety, and anticipating challenges.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
For additional information about these FDA warning letters, please see our previous Advisory.
Explanatory Statement, H.R. 1865 (Further Consolidated Appropriations Act, 2020), Division B - Agriculture, Rural Development, Food & Drug Administration, and Related Agencies Appropriations Act, 2020, at 28–29.
Warning Letters and Test Results for Cannabidiol-Related Products, U.S. FDA (Nov. 26, 2019).
Joint FDA & FTC Warning Letter, Nutra Pure LLC, (Mar. 28, 2019); Joint FDA & FTC Warning Letter, PotNetwork Holdings, Inc. (Mar. 28, 2019); Joint FDA & FTC Warning Letter, Advanced Spine and Pain LLC (d/b/a Relievus) (Mar. 28, 2019); Joint FDA & FTC Warning Letter, Rooted Apothecary (Oct. 10, 2019).
Joint FDA & FTC Warning Letter, Nutra Pure LLC, (Mar. 28, 2019); Joint FDA & FTC Warning Letter, PotNetwork Holdings, Inc. (Mar. 28, 2019); Joint FDA & FTC Warning Letter, Advanced Spine and Pain LLC (d/b/a Relievus) (Mar. 28, 2019).
Press Release, FTC, FTC Sends Warning Letters to Companies Advertising Their CBD-Infused Products as Treatments for Serious Diseases, Including Cancer, Alzheimer's, and Multiple Sclerosis (Sept. 10, 2019).
See, e.g., Complaint, Potter v. Potnetwork Holdings, Inc., No. 1:19-cv-24017 (S.D. Fla. Sept. 27, 2019); Complaint, Snyder v. Green Roads of Florida, LLC, No. 0:19-cv-62342 (S.D. Fla. Sept. 19, 2019).