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FTC Cracks Down on CBD Companies for Health Claims

On December 17, the Federal Trade Commission (FTC) announced the first law enforcement crackdown on deceptive claims in the CBD market. These enforcement acts were directed at six companies 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. Each company received monetary sanctions varying from $20,000 - $85,000.

The following fines were issued:

  • Bionatrol Health and Isle Revive of Pleasant Grove, Utah. $20,000.

  • Epichouse (First Class Herbalist) of West Valley City, Utah. $30,000.

  • CBD Meds Inc. of Winchester, California. The company was ordered to stop making unproven claims.

  • Easybutter and HempmeCBD of Boca Raton, Florida. $36,254.

  • Reef Industries and CannaTera of Costa Mesa, California. $85,000.

  • Steves Distributing of Longmont, Colorado. $75,000.

In addition to the monetary sanctions, each company is required to notify consumers within 45 days of their FTC sanctions. They must then submit a report to the FTC within 90 days summarizing their actions, including the total number of customers identified and notified.

“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,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Otherwise, don’t be surprised if you hear from the FTC.”

As part of their charges, the FTC looked not only at product labeling, but also website advertising, social media marketing, blog posts, and customer reviews. According to their letters, they examined companies that “have represented, directly or indirectly, expressly or by implication” any false or misleading health claims.

These sanctions are the first significant enforcement actions regarding the FDA’s restrictions on CBD labeling, marketing, and advertising. Previously, companies received warning letters notifying them that they were marketing products in violation of the Food, Drug, and Consumer Act (FD&C).

What can and cannot be said when marketing CBD still remains unclear for many retailers within the industry. Judging from the FTC’s actions, retailers that make numerous serious health claims will be primary targets for further settlements.

While the FDA has announced that they are reconsidering their stance on CBD, significant change is unlikely in the immediate future. Further enforcement actions are expected and will likely mirror these monetary sanctions.

As long as the federal stance remains the same, the conclusion is clear: Retailers must not make health claims related to CBD.

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