MJBizMag February 2021 - 43

to their business and their customers.
This same post would be noncompliant
with a hashtag that promotes its product,
however, such as #BuyMyCBD. If this
same post had zero noncompliant
hashtags but contained a product photo,
this would be considered an implied
depression claim. This is another reason
marketing material should pass through
a regulatory review before getting posted.
Meta tags: SEO companies drive
website traffic with meta tags. This is
considered advertising and must not
be misleading. I have not seen warning
letters based solely on noncompliant
meta tags, but they are an easily
searchable red flag to authorities that
might indicate deeper compliance issues.
Working with a consultant to develop
marketing best practices can help avoid
these potentially unforeseen pitfalls.
FEDERAL RESPONSE
The FDA and FTC have issued numerous
warning letters to CBD companies
for making health and disease claims.
The letters provide specific examples
of what they are enforcing, such as
references to depression, cancer and
inflammation. News releases sometimes
accompany these warning letters and
provide more context to their enforcement
action.
The FTC can take additional action
by issuing an administrative complaint,
which first happened to a CBD
company in April 2020 in relation to
the coronavirus. The agency announced
that Marc Ching, the owner of
Los Angeles-based Whole Leaf Organics,
had settled with federal authorities and
agreed to stop making health claims
about three of his products. Previously,
one of the company's ads touted
the CBD treatment as an " anti-viral
wellness booster. "
In December, the FTC rocked the
CBD world with Operation CBDeceit
by issuing fines and sanctions against
six cannabidiol companies accused of
misleading consumers about the health
benefits of the cannabis extract.
POSSIBLE PENALTIES
The most common FDA and FTC penalties
come in the form of warning letters.
Here are reasons to avoid these letters:
* They require administrative and
legal resources to respond.
* Repeat warning letters can lead to
injunction or seizure. One warning
letter puts you on the FDA/FTC
" radar. "
* They alert class action attorneys who
might use a warning letter as proof
of wrongdoing in their lawsuit.
* Your name and company become
a matter of public record and are
easily found in a web search.
* They scare away executive talent and
investors, which hurts the company's
overall value.
Penalties also come in the form of the
FTC's administrative complaints, which
can have serious ramifications. December's
CBDeceit crackdown included
fines up to $85,000-but this was only
the beginning.
Companies receiving FTC penalties
might be required to inform customers
of the complaint via their social-media
accounts, website or written notifications.
This communication will require business
resources and also might hurt the company's
reputation and scare away customers.
The FTC also can require the company
to monitor its compliance and submit reports
to the agency. Companies involved
in the recent FTC complaints must
report on compliance for 20 years. These
actions not only carry an administrative
burden but can hinder future investment
opportunities. They might also require
refunding customers, and complaints can
lead to class action lawsuits as well.
SOME GO UNPUNISHED
Not every company making claims will
attract trouble. FDA Principal Deputy
Commissioner Amy Abernethy recently
noted, " We will continue to monitor
and take action, as needed, against
companies that unlawfully market their
products-prioritizing those that pose
the greatest risk of harm to the public. "
This clearly shows the agency is taking a
risk-based approach to enforcement, so
knowing which high-risk claims to avoid
is important.
Most warning letters cite claims made
online, although companies are responsible
for all marketing materials, including
mailers, newsletters and information
distributed at trade shows.
Authorities look at the 30,000foot
view of a company's total online
presence, which includes videos, social
media, blogs, FAQs, infographics and
even podcasts. One claim might not
attract enforcement action, but the
combination of a claim in a video, a noncompliant
hashtag in social media and a
testimonial claim can elevate risk.
Authorities piece together claims to
create one big picture of noncompliance.
They make examples of companies
not following the rules-especially in
areas they want to highlight, such as
COVID-19, depression, opiate-reduction
and claims made in testimonials-to
name a few.
Asa Waldstein is a 20-year dietary
supplements executive now focusing on
bridging the compliance, marketing and
regulatory gap between the supplement
and hemp industries. He chairs the
American Herbal Products Association's
Cannabis Committee. Waldstein also
is owner of the consulting company
Supplement Advisory Group, and his
Regulatory Education Series platform
regularly hosts free events for the
community. Learn more and contact him
at AsaWaldstein.com.
February 2021 | mjbizdaily.com 43
http://www.AsaWaldstein.com http://www.mjbizdaily.com

MJBizMag February 2021

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