PART OF A CRN ASSOCIATE MEMBER SPOTLIGHT
by Matthew Lippman, HUB International
Retail CBD sales are flying high. Currently valued at about $1 billion, CBD sales are expected to reach $10 billion by 2024.1 Since the 2018 Farm Bill legalized hemp, cannabis and cannabis derivatives with less than .3% THC, cannabidiol (or CBD) is more commonly showing up in in body oils, lotions and even dietary supplements and food. Yet, federal guidelines for retailers recently put out by the U.S. Food and Drug Administration (FDA) stipulate that it is “currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.”2
Further, with the exception of Epidiolex, which is used to treat severe forms of epilepsy and is the only FDA-approved CBD product to date, the FDA says there is a lack of sufficient evidence to support health claims made by CBD products, claims which includes treatment of chronic pain, insomnia, anxiety and inflammation. Because CBD products are not yet FDA-approved, their contents can also not be guaranteed. Product labels that claim CBD products to be THC-free or non-psychoactive can be misleading, and often lack scientific backing required by the FDA to make such claims. In fact, because the THC level will vary based on the plant variety and manufacturing process, CBD products have on occasion resulted in a positive drug test for users.
As a result, lawsuits, including class action cases and significant insurance claims have recently increased, both from CBD product competitors claiming unfair competition and from consumers who claim false advertising.
To confuse the issue further, product labeling requirements vary from state to state. New York, for example, has specific guidelines for CBD food and drug labels which are in violation of the FDA policy. Therefore, authorities in NY require CBD product manufacturers to sign a waiver that they understand manufacturer labeling may go against FDA requirements, although it complies with state law.
So, how can CBD manufacturers protect themselves? For CBD product manufacturers, these inconsistencies exacerbate the real fear of falling prey to lawsuits and claims. To minimize your risk, make sure your business is doing everything right.
- Rethink your claims. Review the FDA’s recently guidelines. Don’t claim your CBD product is THC free (unless you have a substantiating certificate of analysis), even below the 0.3% threshold, CDB may contain some THC. Avoid the term non-psychoactive; manufacturers probably mean to say CBD is non intoxicating, which is accurate. CBD is indeed psychoactive (i.e. does affect the central nervous system). Stay away from claims, like “This CBD oil can provide relief to ease your arthritis pain” unless you have reliable scientific evidence to prove it.3
- Don’t classify your product as a supplement. Even if the state government regulations allow you to label your CBD product as a dietary supplement, the FDA doesn’t, and it’s the FDA guidelines that are generating the lawsuits.
- Be smart about product labels. Like any other product manufacturer that has to comply with FDA regulations, be transparent about the quantity, contents and ingredients on your CBD package label.
- Consider including dosing on labels. While manufacturers are hesitant to put specific dosing on CBD product packaging, consider doing so as a yardstick for consumers who don’t know the potency of your product. Like cannabis, CBD metabolizes differently in each person. Dosage warnings will help consumers when taking multiple CBD products at once, or when taking them alongside prescription drugs. For example, if an individual using a CBD skin cream ingests a cannabis edible, is there a cumulative dosage effect? Unfortunately, there’s not enough scientific evidence to know. Dosage labels may help.
- Have a strong product recall plan. If for some reason your state regulatory arm or the FDA asks you to pull your CBD product off the shelves quickly, you’ll need to have a plan for how to withdraw from the market on short notice. Create and test your product recall plan.
Work with the experts at HUB International to learn how you can protect your business from claims of false advertising and set up your product recall plan today.
Matthew Lippman currently serves as a Vice President and Life Sciences Practice Leader with HUB International Northeast, a leading full-service insurance brokerage. Matthew holds nearly three decades of experience with providing individuals and businesses with customized, comprehensive insurance and risk management solutions, specializing in the Life Sciences industry, specifically pharmaceutical and nutraceutical companies. He can be reached at 516-396-8211 or matthew.lippman@hubinternational.com.