CBD Marketing Do’s & Don’ts

Columns - Hemp Law

While CBD remains illegal but largely unregulated, companies can mitigate potential FDA blowback and thrive by keeping two key principles in mind.

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When it comes to humans, the U.S. Food and Drug Administration (FDA) regulates five broad categories of products: food, drugs, cosmetics, dietary supplements and medical devices (e.g., inhalers, patches). Cannabidiol (CBD) products exist in each of these categories.

Pills, capsules, tinctures and patches containing CBD seem to be everywhere. Savvy cosmetic brands offer everything from CBD-infused lotions and balms to mascara and cleansers. People waiting in check-out lines at some grocery stores can snag CBD-infused candies, honey sticks and peanut butter cookies. And of course, Epidiolex, a drug used to treat certain epileptic conditions, made history as the first FDA-approved pharmaceutical to be derived from Cannabis sativa L.

But there is a problem with CBD products in four out of the five categories mentioned: except for Epidiolex, they all are illegal.

This comes as a surprise to many companies that come to The Rodman Law Group seeking legal advice. Many people believe that because hemp is now legal in the U.S., all products derived from hemp are legal too. This is simply not the case. While the 2018 Farm Bill did remove hemp and its extracts from Schedule I of the Controlled Substances Act, it did not make CBD products legal.

Ever since GW Pharmaceuticals submitted a New Drug Application for Epidiolex, the statutory language of the Food Drug & Cosmetics Act (FD&C Act) has prohibited CBD’s inclusion in any other product. This is because CBD is the Active Pharmaceutical Ingredient (API) in Epidiolex, and substances that are drugs or APIs are not allowed in the other FDA-regulated categories.

To better understand the significance of this, consider Sildenafil, the API in Viagra. Why don’t we find Sildenafil in sodas, chocolate bars and lotions? Because Sildenafil is permitted in just two products: Viagra and Revatio.

No legitimate company would ever infuse its cookies with Sildenafil. To do so would lead to the FDA imposing heavy fines, shutting down the company and possibly bringing charges against its principals.

But many companies haven’t hesitated to take chances with CBD.

So far, the FDA’s head-in-the-sand approach to the consumer CBD industry (nothing is permitted, everything is illegal) has not led to widespread and dramatic enforcement measures, but that could change at any time. Just because the FDA has not effectively shut down the CBD marketplace does not mean it won’t—a point we are obligated to emphasize with all of our CBD clients.

Frankly, from a strictly legal standpoint, the best advice we can give somebody considering entering the CBD market, at least for supplements, cosmetics, medical devices and foods, is: don’t. (We want to note that despite our obligation to inform our clients of the letter of the law, which we know makes us sound fairly negative, we are huge proponents of the industry and use CBD ourselves.)

Once we establish the fundamental illegality of the sector with clients, we begin using the phrase “optics and defensibility” like a mantra. Given the discrepancy between law and enforcement in the CBD sector, we coined the phrase to describe the principles a CBD company must adhere to in order to survive and, eventually, thrive. “Optics” refers to how a company and its actions are viewed by the public and relevant regulators, and “defensibility” is a measure of how defendable its actions are from a legal standpoint. While this adage applies to our representation of our CBD clients in general, it is most vital when it comes to marketing and labeling.

Labeling CBD Products

To properly address marketing and labeling issues for CBD products, the first step is to determine what rules pertain to the products in question. Our position typically is that a product should be treated as what it most resembles: a food, supplement or cosmetic. A product with CBD cannot legally “be” any of those things, so the general analysis is, “What would the product be classified as if it didn’t contain CBD?” Then, we apply the appropriate rules for marketing and labeling depending on the product.

The competing school of thought on this is some form of: “These products aren’t foods, dietary supplements or cosmetics, so we don’t have to, nor could we, follow their rules.” On a rudimentary level, this makes a little sense.

Take, for instance, the Supplement Facts panel found on the back of all supplements. According to the FD&C Act, only dietary supplements may use the words “Supplement Facts” on their labels. As a result, some have argued that CBD supplements should not contain the “Supplement Facts” panel. We find such reductionist interpretations to be irresponsible, if not downright dangerous, but explaining why requires some background.

The “nutraceutical” or dietary supplement industry exists because of a carve-out to the FD&C Act created by the Dietary Supplement Health and Education Act of 1994 (DSHEA). This legislation created a hybrid category of products that exists somewhere between the traditional FDA regulatory verticals of food and drugs. As far as traditional FDA regulatory purview goes, the nutraceutical industry is the Wild West. Supplement companies often tend to push the envelope on what they can sell and what they can say about their products.

It is actually scary how little oversight the FDA has over nutraceuticals. Virtually all of its enforcement power is retroactive. In other words, when it comes to dietary supplements, most of the time, the FDA is required by law to wait until a product is on the market before it can conduct tests or bring enforcement actions against a company.

A supplement company’s actions need to be fairly egregious to get the FDA’s attention. That said, in the “regular” dietary supplement world, failure to include a “Supplement Facts” panel will draw the FDA’s ire quickly. Accordingly, our view is that since CBD companies’ entire business model is the manufacture and distribution of an illegal product, the best course of action is total compliance with all other relevant regulations. Even if the rest of the nutraceutical industry is the Wild West, CBD companies should play the role of upright, law-abiding citizens who won’t even jaywalk.

Ultimately, there is nothing anyone can do to preclude the FDA from going after a CBD company since their products are illegal, but there is no need to give FDA extra ammunition if it does so.

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This brings us to optics, an area where many companies tend to struggle. Strict guidelines exist concerning what companies can say about food, dietary supplements and cosmetics. In short, only products defined as drugs may make “disease claims.”

The FDA defines disease as “damage to an organ, part, structure, or system of the body such that it does not function properly, or a state of health leading to such dysfunctioning; except that diseases resulting from essential nutrient deficiencies (e.g., scurvy, pellagra) are not included in this definition.” For purposes of clarity, we have split our analysis into two sections: one for dietary supplements and food, and the other for cosmetics.

Broadly speaking, a company can make claims about dietary supplements and food that span three different categories:

  • Structure/Function Claims (SFCs),
  • Qualified Health Claims (QHCs) and
  • Authorized Health Claims (AHCs).

SFCs describe the role of a nutrient or dietary ingredient intended to affect or maintain the normal structure or function of the human body. These are claims that describe general well-being from consumption of a nutrient or dietary ingredient, such as “calcium builds strong bones.” These claims are not pre-approved by the FDA, but the company making them must have proof that the claim is truthful and not misleading.

If the product is a dietary supplement, the company must submit the claim to the FDA no later than 30 days after marketing the supplement. If a dietary supplement label includes an SFC, it must state in a disclaimer on the product that the FDA has not evaluated the claim. The disclaimer must also state that the dietary supplement is not intended to “diagnose, treat, cure or prevent any disease,” because only a drug can legally make such a claim.

SFCs for dietary supplements may focus on nutritive effects, such as “high in fiber,” as well as non-nutritive effects, such as “promotes a sense of wellbeing,” while SFCs for conventional foods focus on effects derived from nutritive value. As such, the FDA does not require food manufacturers to notify the FDA about their SFCs, nor does it require food products that have SFCs on their labels to have disclaimers.

QHCs must be supported by scientific evidence, and in order to be made, they require a pre-market review by the FDA.

AHCs, as the FDA explains on its website, are “claims that have been reviewed by FDA and are allowed on food products or dietary supplements to show that a food or food component may reduce the risk of a disease or a health-related condition.” These claims must be supported by scientific evidence. Since 1990, the FDA has permitted only 12 AHCs, which are listed on its website.

So what does this mean for CBD? AHCs are not relevant to CBD, and CBD companies cannot make QHCs because:

  1. Not enough viable medical studies have been conducted on the effects of CBD in food and supplements to satisfy the scientific evidence requirement for QHCs.
  2. Even if such studies did exist, the FDA’s stance that consumer CBD products are illegal precludes it from even considering such claims.

Therefore, no CBD company may make AHCs or QHCs, which leaves SFCs as the only claim type a CBD company could theoretically make. We say theoretically because a company would have to weigh disclosing the claim to the FDA to be in full compliance with SFC guidelines against the fact that doing so draws the FDA’s attention.

That being said, we see companies blowing right past AHCs, QHCs and SFCs and making outright disease claims on their products—something that no food or dietary supplement company can do, CBD or not.

Determining whether a claim is a disease claim can be relatively straightforward. Stating that a product cures cancer or alleviates insomnia are obviously disease claims. But other disease claims are not as clear. For example, many companies claim their products “reduce muscle soreness.” While this might not seem like a disease claim, it is.

Most companies understand they cannot claim their products relieve pain because pain is either the result of damage to the body or the result of a systemic or acute dysfunction of the body. But when a product claims to “relieve muscle soreness,” it is fundamentally claiming to relieve pain. Another common violation of the prohibition on disease claims is the claim that a product “reduces inflammation.”

Cosmetics

The FD&C Act defines cosmetics as “(1) articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and (2) articles intended for use as a component of any such articles; except that such term shall not include soap.”

The FDA does not specifically prohibit cosmetics that contain CBD. But since CBD has no established cleansing or beautification properties, it is obvious that the addition of CBD to cosmetics is intended to have some effect on the human body. This leads us to one of the most widespread misconceptions in the health and wellness industry as a whole and in the CBD industry in particular.

Unlike the nutraceutical category that exists somewhere between food and drugs, there is no “cosmeceutical” category between cosmetics and drugs. Accordingly, if a “cosmetic” product is intended to treat or prevent disease or otherwise affect the structure or functions of the human body, the FDA classifies it as a “topical drug.”

The irony here is that many CBD companies view topical products as less risky from an FDA enforcement standpoint because they are not ingestible. From a legal standpoint, however, even if CBD was allowed in food and dietary supplements, given the definition of cosmetics and topical drugs, every CBD topical on the market would theoretically have to go through the same process that Epidiolex went through (years of clinical testing likely costing more than $2.5 billion, the estimated cost of developing an approved prescription drug, according to a report published by the Tufts Center for the Study of Drug Development) and should only be available through prescription.

The takeaway here is that labeling rules for cosmetic products are even more restrictive than those for dietary supplements and food, as a disease claim on a cosmetic will cause the product to be considered a drug. Our advice to CBD cosmetic companies is to make no claims whatsoever about the CBD in products, follow the FDA’s cosmetic labeling requirements to the letter if possible, and focus instead on the properties of ingredients they can highlight, such as moisturizers.

Moving Beyond the Product

Our stress on optics and defensibility is just as high when it comes to advertisements, website copy, social media posts, newsletters and so on. Everything used to promote a company’s brand and products is subject to scrutiny from not only the FDA but also the Federal Trade Commission (FTC).

Indeed, in September, the FTC announced it had sent warning letters to three companies advertising CBD products as a medical treatment option for a range of various illnesses, stating that “it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.” In its statement, the FTC warned the industry that any claims regarding the use of CBD products that are not currently supported by “competent and reliable scientific evidence” are forbidden. Then, in late April, the FTC took legal action by filing a complaint in federal court against California-based marketer Whole Leaf Organics for making unsubstantiated claims involving its vitamin C, herbal extracts and CBD products.

Most companies are not so foolish or immoral as to state in marketing materials that their CBD tincture will cure diseases. (Although sadly, many are.) But many well-intentioned businesses run afoul of FDA and FTC regulations all the same.

Consumer testimonials, links to third-party “educational” websites and links to published scientific papers that show CBD had some sort of health benefit are all violations. Of even greater concern: the current interpretation of the regulations holds that if a company’s social media account “likes” a post that makes a claim about CBD, not only will the company be seen as endorsing the statements in the original post, but also the FDA and FTC will treat the post as though it were made by the company.

As such, we strongly recommend companies resist the urge to broadcast their beliefs about CBD on anything owned by, or related to, their company. Information concerning CBD is just a Google search away. Instead of needlessly putting the company at risk by repeating what is widely available elsewhere, we advise our clients to champion other ingredients in their products, highlight how they are ethically made/sourced or tell a story about the company.

We preach the policy of optics and defensibility no matter what type of CBD product a company might be selling. Food, drugs, cosmetics, dietary supplements and medical devices each have their own rules about marketing, labeling and what may be said about them. It’s best to stick to them.

Note: Nothing contained in this article creates an attorney-client relationship. The contents of this article do not, and are not intended to, constitute legal advice. The information, content, and opinions are the authors’ own and have been provided for general informational purposes only. Additionally, the CBD industry is ever-changing, so this article may not constitute the most up-to-date information. For questions about this article or about the legality of CBD or any other cannabinoid, contact us or your own attorney.

Dave Rodman is the founder and managing partner, and Nadav Aschner is a partner of The Rodman Law Group, a full-service law firm based in Denver.