CBD lawsuits highlight labeling, advertising risks
While the CBD industry is in theory subject to the federal Food Drug & Cosmetic Act (FDCA) as well as other laws and regulations, CBD products didn't exist when those laws and regulations were crafted.
The majority of these lawsuits allege CBD manufacturers are putting out false and/or misleading information. That includes overstating the amount of CBD in a product as well as advertising products as being free of tetrahydrocannabinol (THC) when they actually are not.
Consumer vs retailer
One recent putative class action lawsuit, Rodriguez v. Just Brands USA Inc., alleges that Just Brands USA consistently overstated the amount of CBD in their products. According to the plaintiff, independent lab testing found that the defendant “underfilled” its CBD products so that they didn't meet label claim. The complaint noted that one product contained no CBD at all.
The plaintiff asserted nationwide and California class claims for unjust enrichment, breach of warranty, and violations of California and Florida consumer protection laws.
Lab vs retailer
Another recent suit came from a Wisconsin lab, which claims a CBD company’s lab reports were falsified or forged. In the case of Accelerated Analytical Inc. v. Lifted Liquids Inc., testing laboratories Accelerated Analytical and Accelerated Cannabis, brought a lawsuit against Lifted Liquids Inc. and its owner and CEO for fraudulent lab results from Accelerated. Lifted, a CBD manufacturer and retailer, is a direct to consumer retailer and also provides a white labeled service. The plaintiff alleges that Lifted sold white-label products to other retailers with falsified certificates of analysis (COA) from Accelerated.
In 2019, the lab tested dozens of Lifted products, which revealed that some products contained THC levels well above the 0.30% limit for legal CBD. According to the complaint, Lifted took those COAs and altered them and in some cases made up their own. Earlier this year, Accelerated said it discovered 24 doctored certificates on a retailer’s website that was selling Lifted products advertised as having THC contents below the 0.30%. The complaint notes that some products that had tested as high as 0.50% THC were lowered to 0.10% on the product labeling and corresponding COA. Accelerated said they also discovered Lifted crafted completely false COAs for products that were never tested, to include fake results and even forged signatures from Accelerated employees. Accelerated petitioned the court for an injunction to remove the phony COAs as well as compensatory and punitive damages.
FDA vs marketer
In addition to lawsuits, the FDA has been cracking down on CBD companies with warning letters. With just one FDA-approved CBD product that can make a medical claim, the agency said it will track down companies that “illegally market CBD products with claims that they can treat medical conditions.”
In April, the FDA issued a warning letter to BIOTA Biosciences for violating the FDCA. "Your “Cannabidiol (CBD) Complex,” “Cannabidiol+Curcumin,” and “Curcumin Complex” products are drugs under section 201(g)(1) of the FD&C Act, 21 U.S.C. 321(g)(1), because they are 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.”
Wait and see approach
Many in the industry assert that the regulations currently in place provide little guidance with respect to labeling requirements. With so much regulatory and legal uncertainty surrounding CBD, a number of lawsuits filed against CBD companies have been delayed while the FDA continues to study CBD and how it should be federally regulated.
As the FDA works on proposed regulations for CBD products, it remains to be seen which regulations the agency may implement when it comes to labeling and advertising CBD products.