January 24, 2022

What Happens To CBD Companies That Break The Law?

Believe it or not, not everyone likes to play by the rules. And when rules are broken — there are consequences. Societies like the tidiness of law and order!

This applies to kids at home, athletes on the field, and businesses in the marketplace. Including CBD producers, promoters, and peddlers.

Keep reading to see:

  • Who are the rulemakers
  • What the rules are
  • Consequences for defying the laws

In this article, we’re only discussing federally-legal CBD used for non-medical purposes. And we’re only talking about the consumer-facing CBD products and activities (not the supply chain/agricultural aspects of CBD).

Rulemaker, Rulemaker Make Me A Rule

The 2018 Farm Bill legalized hemp-derived CBD (cannabidiol) that contains 0.3% or less THC. After passing this law, oversight for manufacturing and sales of CBD was handed off to the Federal Drug Administration (FDA) and the individual states. Let’s take a mini-tour of the regulatory landscape.

Federal Level: FDA

The FDA is tasked with regulating the manufacture, distribution, and marketing of CBD products according to the provisions of the under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and Public Health Service Act (PHS Act).(1) Its oversight allows it to do stuff like:(2)

  • Create guidelines and rules for CBD product producers and sellers
  • Review and verify or disprove claims made by CBD companies
  • Take action against those who violate the rules

It may seem — based on the broad mandate and powers the FDA has — that the regulations are numerous, specific, all-encompassing, etc. This isn’t really the case, though.

A lot of the FDA rules are still being sorted out.(3) There are lots of gaps, which makes for many murky grey areas. But, hey, it takes time and no one every accused bureaucracy of moving at lightning speeds, right?

When it comes to enforcement, the FDA gets help from the Drug Enforcement Agency (DEA) and the Federal Trade Commission (FTC).(4)

And, of course, the federal laws are evolving. The CBD Product Safety and Standardization Act of 2021 — introed in December — is the newest one on Congress’s docket. This means the scope and/or nature of the FDA’s oversight may change over time.

State/Local Level: Government Agencies

While governments below the federal level need to observe the statues and rules dictated by the FDA, they can establish their own, additional laws and guidelines for within their jurisdiction.

At the state — and sometimes municipal or tribal reservation — level, CBD is overseen by some sort of government agency. Usually, it’s a state’s department of agriculture or food, or whatever their version of a state liquor/cannabis board is. It varies quite a bit.

The Rules For Making, Marketing & Selling CBD

The Farm Bill is often more of a framework of dos and don’ts that FDA and local governments need to figure out how to implement. For example:

  1. The federal law says low-THC hemp-CBD is legal.
  2. The FDA dictates how CBD can be labeled and sold.
  3. Individual states determine age requirements, possession limits, who can sell CBD and where, taxation, etc.

To be sure, the FDA does have plenty of black-and-white rules that CBD producers and sellers must follow. The biggies are that CBD companies:(5)

  • Can’t market CBD as a dietary supplement
  • Can’t add CBD to food products for people or animals
  • Can’t make claims that CBD will treat or cure any specific health conditions
  • Can’t misrepresent the amounts of CBD or THC in products
  • Must properly label their CBD products(6)
  • Should include an FDA disclaimer statement on their websites

States are a crazy quilt of all kinds of rules. You really have to examine each jurisdiction’s books to know what you can and can’t do and in what way. That said, it’s worth knowing that:

  • Some states don’t create their own rules and defer to the federal laws and guidelines.
  • Other jurisdictions enact specific legislation that more explicitly articulates how to implement federal rules and/or further restricts CBD manufacturing and sales.
  • There are states that pass looser laws that give producers, sellers, and consumers more rights than are permitted by federal regulations. For example, California’s AB45 gave the green light to CBD-infused foods and drinks.(7)

It’s a total mixed bag.(8)

When The Rules Are Broken

The FDA has several enforcement options at its disposal, including:

  • Issue a warning letter.(9) These inform the offending company of its breach and ask them to fix the issue ASAP.
  • Issue a Form 483. This notice is presented to a CBD company if an inspector observes violations during his or her evaluation.
  • Recall products. Usually voluntarily, sometimes mandatory, call backs do occur — especially if there’s a public safety risk in the balance.
  • Confiscate any contravening products. Dude, sometimes it’s just the only way to clear the adulterated or misleading products off the market.
  • Get a court order. The FDA can compel the US justice department to issue an injunction requiring the naughty CBD company to quit doing whatever bad thing it’s doing.
  • Inflict civil penalties. The FDA can penalize the company with a fine for its wrongdoing.
  • Pursue criminal prosecution. This can result in hefty fines and/or jail time.

Warning letters are the action of choice, being the most frequently leveraged weapon in the FDA & Team’s armory. Mandatory recalls and confiscations of products are less common. And going through the legal system for injunctions and civil or criminal punishments is also a less traveled path.

According to a December 2021 review, nearly all warning letters issued by the FDA were for violations made on a CBD company’s website and/or social media accounts. Of these infringements, most were related to marketing the CBD-including product as a new (as-yet-unapproved) drug and falsely making claims about CBD’s therapeutic abilities.(10) Other companies run afoul by not having their actual product contents (like amount of THC or CBD) match what’s indicated on the label.

CBD companies that stray from the straight and narrow also run the risk of being sued by consumers, competitors, and other entities.

How To Avoid The Bad Actors Of The CBD Scene

Simply put, only deal with reputable retailers. You’ll be able to tell if you’re engaging with a reputable CBD company if:

  • They know their stuff.
  • They only sell verified legal, high-quality CBD products.
  • They adhere to the letter and spirit of any applicable laws.
  • They are responsive and responsible.
  • They have a solid presence in the market and proven track record with customers.

Needless to say, Pure Craft is all these things. We take being an industry leader — and hopefully a role model, too — very seriously. More importantly, we want you to have the best possible CBD products and feel confident using them.

Rulebreakers Get Their Due From The CBD Overlords

Several regulating bodies craft and administer the laws and guidelines for CBD manufacturing and sales. At the federal level, the FDA is the main overseer. At the state and more local levels, it’ll be a governmental agency.

Most CBD companies that break the rules do so by making inappropriate health or product claims or failing to label their products correctly and accurately. Violators face a number of possible punitive actions, the most common of which is a warning letter from the FDA.

Pure Craft meets or exceeds all applicable laws and best practices. The proof’s in our products, certificates of analysis, reviews, etc. So you know you’re getting superior products from a reliable CBD producer and retailer.

GET YOURSELF SOME LEGIT CBD RIGHT HERE

References

  1. (2021). FDA Regulation of Cannabis and Cannabis-Derived Products: Q&A. U.S. Food and Drug Administration. https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd
  2. Lindan Mayl, S et al. (2019). FDA Role in Regulation of Cannabis Products. Office of Foods and Veterinary Medicine, U.S. Food and Drug Administration. https://www.fda.gov/media/128156/download
  3. (2020). What to Know About Products Containing Cannabis and CBD. U.S. Food and Drug Administration. https://www.fda.gov/consumers/consumer-updates/what-you-need-know-and-what-were-working-find-out-about-products-containing-cannabis-or-cannabis
  4. Hatcher, H. (2021). Seed to Sale: The Buzz on Understanding the FDA Regulatory Landscape for Cannabis. The National Law Review. https://www.natlawreview.com/article/seed-to-sale-buzz-understanding-fda-regulatory-landscape-cannabis
  5. (n.d.) FDA Regulation of Cannabis and Cannabis-Derived Products: Questions and Answers. U.S. Food and Drug Administration. https://www.fda.gov/media/131878/download
  6. McReynolds Vardanyan LLP. (2021). What are the CBD Label Requirements for the FDA? McReynolds Vardanyan LLP blog. https://www.mcreynoldsllp.com/cbd-label-requirements-for-fda
  7. Keller and Heckman LLP. (2021). California Passes Hemp Bill into Law. The National Law Review. https://www.natlawreview.com/article/california-passes-hemp-bill-law
  8. Annapolen Goldberg, C, et al. (2021). Cannabidiol (CBD) Regulatory Landscape and Enforcement Risks. The Practical Guidance Journal. https://www.lexisnexis.com/authorcenter/the-journal/b/pa/posts/cannabidiol-cbd-regulator-landscape-and-enforcement-risks
  9. (2021). Warning Letters and Test Results for Cannabidiol-Related Products. U.S. Food and Drug Administration. https://www.fda.gov/news-events/public-health-focus/warning-letters-and-test-results-cannabidiol-related-products
  10. Wagoner, K. (2021). Health Claims About Cannabidiol Products: A Retrospective Analysis of U.S. Food and Drug Administration Warning Letters from 2015 to 2019. Cannabis and Cannabinoid Research. https://www.liebertpub.com/doi/full/10.1089/can.2020.0166


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