A Legal Opinion of what you can and cannot say
Last panel of the weekend was concerning what can be said legal wise regarding your products, what your product does and marketing claims. On the panel was moderator Jessica Arent, Liz Geisleman from 710Spirits®, Ronie Schmelz Class Action Defense Lawyer at Tucker Ellis LLP, and Blair Curless Pharm. D, Ph.D. clinical pharmacist at Phoebe Putney Health System.
Essentially the overarching lesson from all the panelists was that you cannot say anything that your product remedies without being able to substantiate it. (Unless you have applied for a new drug through the FDA (Food and Drug Administration) and it has been approved!) Making claims that “cure” ailments will get you or your company into hot water. Allegations such as anti-aging, skin clearing, etc. are not going to fly. Everything should be stated as a treatment but not as a cure.
Ronie Schmelz discussed that the larger the company, the more money they have backing a claim, ergo the more likely the risk tolerance. Some companies have risk tolerance even added into their marketing budget. Under the circumstances it is up to you and your business what you are willing to risk.
In this day and age it is not difficult to appear as a well-established business with vetted practices and quality sourced products. Especially with technology and freelance website builders; it can cost a grand to appear like a million dollar organization. Consequently it is our responsibility as those creating the foundation for this industry to self-enforce. Ensuring we are providing safe products to all of our customers.
The Do’s and Don’ts
This being said always remember that you are responsible for your marketing real estate! Meaning anything put on your labels, website, advertisements, or social media will be scrutinized by the FTC (Federal Trade Commission) especially, for false claims.
Notably if you are using social media influencers. Make sure to get a solid contract signed and verify all posts before having them go live. Even though it is not an employee making statements about your product they are representing your brand. Their statements are your company’s statements.
This extends to customer reviews as well. Reviews have become gold in the digital age but make sure none of the reviews you are putting on your site are making claims you cannot back up. For example, if a review states “Amazing product! My acne is gone, and I no longer deal with sleep issues.” Putting this review on your site, even stated by a third party, is your company backing the claim that your product cures and therefore is a drug.
Moreover be aware of using research connecting to your product. For instance if your product contains Vitamin C and you then link a research paper illustrating the positive effects of Vitamin C this can make you liable as well. Linking research to a component of your product means making sure that the numbers match up. Conditions such as:
- having the same demographics in study as your target audience
- same dosage in study as in your product
- other ingredients that might counteract the claim in the study
- bonus points if you were a part of the study
Remember that the FDA cares about safe products and consumers are being led to something that won’t harm them.
The FTC is concerned about false advertising and extravagant claims.
It is always about the spectrum of your company’s risk tolerance but if your risk tolerance is high and you do get hit with a FTC letter here is what to expect. Since Ronie is a lawyer in California she had the best insight into Cali. states laws; so that will be the frame of reference in this post. If you want more information concerning your particular state make sure to visit your states …. for more information.
If your company is hit with false advertising you will receive a consumer demand letter with a 30 day notice. Then you will be sued for monetary relief. The FDA might also send a letter for drug claims. Your company will be put on the FDA site and you are at risk for being cut off from banking and black listed as well.
The statue of limitations is four years in California therefore the state will calculate out how much retail value in the last four years you have procured, and you will be sued for that amount. Keep in mind they can also sue for multiple states or nationwide (Especially, if you have sold through ecommerce.)
It is your job to always review annually what your local and state laws are. It is your burden to know!
The FTC has a list on their site of what letters they are giving out on what claims. While the FDA also has a list of warning letters issued. Both are a great resource to reference for what both organizations and consumer lawyers are focused on. This article goes through a warning letter itself and address many claims made. It is a great source of information and a good read as well. Compliance Lessons: In-Depth Warning Letter Discussion
We’re still figuring it out
There is still a huge gray area with the industry being so new. For example using the term “natural” is allowed but natural has not been defined by the FDA or FTC so is it allowed on a label or website for now???
Adapt and pivot to continue your business forward in the most ethical way with the best practices you can. Establish yourself as a strong business and brand moving forward.
To answer questions and concerns, it is always recommended to have a lawyer or a consultant’s opinion. If you are looking for a consultant, check out founding member Allay Cannabis Consulting for any questions you might have!
Commissioner, Office of the. “FDA Regulation of Cannabis and Cannabis-Derived Products: Q&A.” U.S. Food and Drug Administration, FDA, www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd.
Federal Trade Commission, 14 Apr. 2021, www.ftc.gov/.