The Cannabis industry is often equated with “The Wild West.” The big difference though is that regulators are mostly in the weeds, thus dangerous especially at the Federal level. But they are slowly getting their act together as the industry grows. More and more states have clout from growing legalization, making them the main governmental watchdogs for now.
But whomever wears the crown, cannabis companies must be incredibly careful articulating success in using their products. This might protect companies from an insurer denying coverage because of legislative/governmental regulations about claims depicted on packaging or in advertising.
One of the main selling points with CBD product sales is advertising health benefits or “disease claims” because the FDA uses these nomenclatures. They absolutely forbid such sales promotions on dietary supplements and hemp products, despite hemp being Federally legal since the 2018 Farm Bill. The agency has little leadership or experience in this field. yet is the main bureau that approves new CBS products.
In addition to the FDA, the FTC watches online, blogs, social media, websites and all the other canna company communication outlets for so-called unfounded health claims. In late December they launched Operation CBDeceit, a specific crackdown on CBD companies advertising their products on various platforms by making false claims — sanctioning manufacturers with fines ranging from $20,000 to $85,000. They also have a website where consumers can report CBD products that seem questionable or fake.
Kanna Risk Management (KRM) has it on good authority from many insurers that claims made based on ostensible, even if true, health criteria benefits will be denied. This seems patently unfair because there is science, and KRM has dozens of scientific articles to prove the CBD compound does help with health. But today’s nascent small insurers, who are mostly interested in premiums, need to be instructed about how this not-so-new science works and align their coverages to our new world on endocannabinoids.
There are several principles to be avoided when measuring, and talking about, current cannabis advertising to transmit health benefits in order to sell more product:
- words ending in “itis” for inflammation such as arthritis
- The name of a specific medical illness like depression
- the words “indicated for” such as an anxiety or a depression reducer
- use of words such as “anti” for an anti-inflammatory, and so on.
Please make certain that your carriers are aware of the extensive medical research for non‑THC CBD to be clear and informed, so there will be protection for your clients. To pursue this further, KRM suggests a Google search like “FDA alert letter and insert claim” or “CBD specific laws in (State Name)”. While not a sure-fire defense methodology, this will help when defending the mostly fake claims which will come up as the business expands, the economy stands still and there are plaintiff lawyers lurking.
In addition, it is wise to follow the packaging and labeling guidelines from the Food, Drug and Cosmetics Act. Be certain that your designs do not cater to minors. And make liberal use of warning statements and disclaimers to lessen confusion.
Lastly and for now, many smart but naive investors have poured billions into the cannabis/hemp business and do not understand the nuanced nature of marketing dietary supplements, especially those hemp based. Standard practices are being revised daily in tech for example, and a product description does not explain hemp-based CBD products’ benefits. Our suggestion is to use the available science we discussed earlier when articulating the benefits of CBD to the general public.
We will write more about this in a later issue … see you then … be well and safe.