By Bradley O. Cebeci and Jennifer Cho

The 2018 Farm Bill legalized hemp production at the federal level. Yet hemp products intended for human or animal consumption remain subject to the Food, Drug, and Cosmetic Act (FDCA) and FDA regulations, as well as the Federal Trade Commission Act (FTCA) and Federal Trade Commission (FTC) regulations. CBD products – including edibles, tinctures, and oils – have been regulatory targets since April 2019, when the FDA and FTC issued warning letters to several CBD marketers for promoting the ability of their products to treat and cure a host of illnesses and diseases.

In the summer of 2020, the FDA submitted a CBD enforcement policy document to the White House Office of Management and Budget (OMB) for review and approval. The policy was expected to settle the FDA’s good manufacturing practices and provide a path around the FDCA, which makes CBD in foods, drinks and dietary supplements illegal.

However, FDA recently withdrew its enforcement policy from OMB following a Biden administration memorandum to all federal agencies directing them to withdraw pending rules. The memorandum explained that the action was part of President Biden’s plan for managing the Federal regulatory process at the outset of his Administration in order to ensure that his appointees have the opportunity to review any pending rules. Thus, while the memo was not targeted at CBD, it caused certain hurdles to the marketing of CBD products to remain in place.

It is unclear when or even if the FDA will ultimately release a CBD enforcement policy or guidance for the industry. Until then, many CBD businesses are operating under an old gamblers’ saying: “Just don’t break the law, while you’re breaking the law.” Practically, the companies that will succeed in a market where they are selling a product that violates FDA regulations and, specifically, the FD&C Act, are those who are able to avoid attracting regulatory attention by making the fewest marketing claims.

This raises the question: how can a business minimize regulatory scrutiny? CBD businesses can infer some guidance from actions that federal regulators have taken to date. For instance, over the past several years, FTC and FDA have issued various warning letters, and FTC has also initiated enforcement actions against a number of CBD advertisers.

These actions provide some key takeaways for marketers of CBD products:

Products Marketed Around COVID-19

In the past year, in light of the global outbreak of respiratory disease caused by a novel coronavirus, the FTC and FDA have paid particular attention to businesses—not just those selling CBD products—advertising products that, without approval or authorization by FDA, claim to mitigate, prevent, treat, diagnose or cure COVID-19 in people. Thus, CBD merchants should avoid making claims regarding the ability of their products to mitigate, prevent, treat, diagnose or cure COVID-19. Health claims regarding the benefits of CBD in connection with COVID-19 or, more generally, viral infections, lung inflammation or strengthening the immune system, are similarly problematic, and just as likely to get you in hot water.

Marketing CBD-Products for Use in Children and Infants

CBD products that are marketed for use in children and infants, no matter how administered, will invite immediate scrutiny. FDA takes the position that the use of untested drugs can have unpredictable and unintended consequences, especially in vulnerable populations such as children who may be at greater risk for adverse reactions associated with certain drug products due to differences in the ability of children to absorb, metabolize, distribute, or excrete such drug products or their metabolites.

“Red-Flag” Application or Ingestion Methods of CBD-Products

Oral Inhalation

CBD products for oral inhalation, such as by “vaping,” will invite immediate scrutiny. FDA explains that the ingredients and potential impurities in oral inhalation products may trigger laryngospasm and bronchospasm and may be toxic to the tissues in the upper or lower airways. Inhalation products that are intended to act locally in the respiratory system also may be absorbed and exert undesirable systemic effects, such as increased heart rate or elevated blood pressure.

Nasal Administration

Nasal administration is a route of administration in which drugs are insufflated through the nose, such as nasal spray drug products. These products are highly concerning to FDA because intranasal drug products may be rapidly absorbed through the highly vascularized nasal mucosa directly into systemic blood circulation, where they may exert undesirable systemic effects such as increased heart rate or elevated blood pressure. If toxic substances are introduced directly into the nose, harmful local effects such as bleeding, ulceration, or nasal septal perforation may occur.

Ophthalmic Use / Injection

CBD products intended for direct application onto the eyes will invite immediate scrutiny. Ophthalmic drug products can pose serious risk of harm to humans and/or animals if toxic substances are introduced directly into the eye because irreversible damage, including vision loss, can result.

Of course, FDA is also extremely concerned about any injectable CBD products because they are delivered directly into the bloodstream and bypass many of the body’s natural defenses against toxic ingredients, toxins, or dangerous organisms that can lead to serious and life-threatening conditions.

FDA Crackdown On CBD Marketing Claims

Dietary Supplement Labeling

FDA has concluded that CBD products are excluded from the “dietary supplement” definition provided in the FD&C Act. The FD&C Act defines “dietary supplement” as “a product (other than tobacco) intended to supplement the diet that contains one or more of the following dietary ingredients: a vitamin; a mineral; an herb or other botanical; an amino acid; a dietary substance for use by man to supplement the diet by increasing the total dietary intake; or a concentrate, metabolite, constituent, or extract. 21 U.S.C. 321(ff).

Under the FD&C Act, if an article (such as CBD) is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act, or has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and made public, then products containing that substance are outside the definition of dietary supplement. CBD is an active ingredient in an FDA-approved drug product Epidiolex. Furthermore, the existence of substantial clinical investigations regarding CBD has been made public.

Although there is an exception of the substance was “marketed as “a dietary supplement or as a conventional good before the new drug investigations were authorized, FDA has concluded that this is not the case for CBD. Thus, CBD-merchants should avoid marketing their products as dietary supplements.

Unapproved New Drugs / Misbranded Drugs

The FD&C Act defines “drugs” as substances intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease and/or intended to affect the structure or any function of the body. Topical creams, oils and ointments may also fall under the definition of “drugs.” “New drugs” are those that are not generally recognized as safe and effective for their referenced uses. “New drugs” may not be marketed or sold without prior approval from FDA based on scientific data and information demonstrating that the drug is safe and effective.

To date, there are no FDA-approved drug products that contain CBD, except one cannabis-derived and three cannabis-related drug products, which are only available with a prescription from a licensed healthcare provider.

FDA does not recognize any exception for homeopathic drugs with active ingredients measured in homeopathic strengths. Under the FD&C Act, the term “drug” includes articles recognized in the official Homeopathic Pharmacopeia of the United States (HPUS), or any supplement to it. Homeopathic drugs are subject to the same regulatory requirement as other drugs.

Furthermore, the FD&C Act requires that labeling on drug products bear adequate directions for use. “Adequate directions for use” means directions under which a layperson can use a drug safely and for the purposes for which it is intended. See 21 CFR 201.5. Where a CBD-product is marketed as treatment for a condition that is not amenable to self-diagnosis and treatment without the supervision of a licensed practitioner, it is impossible for the product to contain “adequate directions for use.”

A drug is also “misbranded” under the FD&C Act if its labeling is false or misleading, such as where they suggest that a new drug application has been filed with FDA.

Thus, CBD merchants should avoid marketing their products as drugs or in connection with specific health conditions or diseases, particularly where that health condition or disease is not amenable to self-diagnosis and treatment without the supervision of a licensed practitioner. Examples of such conditions include epilepsy, multiple sclerosis, inflammation, dementia, depression and cancer. Such claims are likely to attract the attention of the FDA and the FTC alike (see further discussion below). Note, also, that the product itself need not be advertised as a drug in order to attract the ire of FDA—it is sufficient that a CBD-product is sold alongside claims (i.e. on a blog on the same website) that indicate the intended use of the products as drugs.

Adulterated Human Foods and Food Additives

Under the FD&C Act, it is illegal to sell an “adulterated human food,” which is defined as any food to which has been added a drug approved under section 505 of the FD&C Act or for which clinical investigations have been instituted and made public. FDA has concluded that the prohibition applies to CBD.

Furthermore, as defined in section 201(s) of the FD&C Act, the term “food additive” refers to any substance the intended use of which results in its becoming a component of any food, unless the substance is generally recognized as safe (GRAS) among qualified experts under the conditions of its intended use, or unless the substance meets a listed exception.

Food additives require premarket approval based on data demonstrating safety. Any food additive that has not been approved for its intended use in food is deemed to be unsafe under the FD&C Act, 21 U.S.C. § 348(a), and causes the food to be “adulterated,” as defined above.

There is no food additive regulation which authorizes the use of CBD nor has FDA found an adequate basis to conclude that the use of CBD in food meets the criteria for GRAS status.

Thus, CBD-merchants should be wary of marketing food products (e.g. honey), which contain CBD as an additive.

Unapproved New Animal Drugs

“Animal drugs” are substances intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animals and/or intended to affect the structure or any function of the body of an animal. 21 U.S.C. 321(g)(1). Further, as discussed below, this product is an unapproved new animal drug and marketing it violates the FD&C Act. A “new animal drug” is one that has not been generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of animal drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling. 21 U.S.C. 321(v).

To be legally marketed, a new animal drug must have an approved new animal drug application, conditionally approved new animal drug application, or index listing under sections 512, 571, and 572 of the FD&C Act, 21 U.S.C. 360b, 360ccc, and 360ccc-l.

Thus, unless the merchant is aware of an FDA-approved new animal drug application, it should avoid marketing CBD-containing products as animal drugs.

Adulterated Animal Foods and Food Additives

The FD&C Act prohibits the sale of any animal food to which has been added a drug approved under section 505 of the FD&C Act or for which substantial clinical investigations have been instituted and made public. FDA has concluded that this prohibition applies to CBD.

Furthermore, as is the case with human food additives, additives in animal foods require premarket approval based on data demonstrating safety. Any food additive that has not been approved for its intended use in food is deemed to be unsafe under the FD&C Act, 21 U.S.C. § 348(a), and causes the food to be “adulterated,” as defined above.

There is no food additive regulation that authorizes the use of CBD nor has FDA found an adequate basis to conclude that the use of CBD in animal food meets the criteria for GRAS status.

Thus, CBD-merchants should be wary of marketing animal food products that contain CBD as an additive.

FTC is also Cracking Down on the Deceptive Marketing of CBD Products

The FDA is not the only game in town.

CBD products that are advertised, promoted, offered for sale, sold, and distributed as intended for human use also constitute “food” and/or “drugs” within the meaning of Sections 12 and 15 of the FTC Act. Thus, marketing claims regarding these products fall under the FTC’s oversight, and the FTC is aggressively pursuing marketers who make “health” and “disease” claims about CBD products. Such marketers may find themselves on the wrong end of an FTC enforcement action for (1) false and unsubstantiated “efficacy claims,” (2) false “establishment” claims, and (3) in appropriate cases, deceptive pricing practices to boot.

An “efficacy” claim suggests that a product successfully performs the advertised function or yields the advertised benefit, but includes no suggestion of scientific proof of the product’s effectiveness. Generally speaking, if an ad conveys an efficacy claim, the advertiser needs a reasonable basis to support it. Whether a reasonable basis for the claim exists must be analyzed under the “Pfizer” factors, considering the type of product, the type of claim, the benefit of a truthful claim, the ease of developing substantiation for the claim, the consequences of a false claim, and the amount of substantiation experts in the field would consider reasonable.

An “establishment” claim, by contrast, suggests that a product’s effectiveness or superiority has been scientifically established.” Once advertisers claim to have a certain level of proof, they’ve upped the ante and “must possess the specific substantiation claimed.” If an ad conveys a non-specific establishment claim – for example, by saying that a product has been “medically proven” to work or by using visuals that suggest it’s “based upon a foundation of scientific evidence” – the advertiser “must possess evidence sufficient to satisfy the relevant scientific community of the claim’s truth.”

However, once an advertiser makes “health” or “disease” claims about a product, the distinction between “efficacy” and “establishment” claims largely loses its significance because both types of claims will require essentially the same high level of substantiation.

That is because when it comes to claims about the health benefits, safety, performance, or efficacy of a product (“health claims”), or a product’s ability to treat, cure or prevent disease or serious health conditions (“disease claims”), the last of the Pfizer factors (i.e. the amount of substantiation experts in the field would consider reasonable) requires that such claims must be supported by “competent and reliable scientific evidence,” which means tests, analyses, research, studies, or other evidence based upon the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted to yield accurate and reliable results.

To substantiate “health” and “disease” claims, the FTC generally requires at least two adequate and well-controlled human clinical studies of the covered product, or of an essentially equivalent product, conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, support the truth of the representation.

Accordingly, efficacy and establishment claims regarding CBD products generally require the same high level of substantiation.

CONCLUSION

There are plenty of landmines to step on when it comes to marketing CBD products. Do not claim that your product can diagnose, mitigate, treat, or prevent a disease; or make any outrageous claims that would draw scrutiny to your business. Stick to claims for which you have appropriate scientific support upon which qualified experts would agree. Finally, do not trust your own judgment as to whether you are making an impermissible claim. To avoid a campaign that may blow up in your face, have a trusted lawyer review your labeling and marketing claims at the outset. You will be glad you did.

Bradley O. Cebeci is a Partner, and Jennifer Cho is an Associate Attorney, with Rome & Associates, APC. Brad and Jennifer focus on Payments and Digital Marketing Law.