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Cannabis firms should watch the health benefits claims, else face sanction, analysts say

Cannabis advertising principles

The operation’s advertising and marketing activities, including websites and social media, must be current, accurate and support truth-in-advertising principles (not deceptive, false or misleading).

The operation must not make unsubstantiated medical claims and must provide an accurate representation of the level of medical expertise available.

Advertising must comply with all applicable federal, state and local advertising regulations for cannabis products and services including compliance with specific regulations for television, radio, billboards, websites, print, mailings, social media, signage and other forms of advertising.

Source: Focus Foundation of Cannabis Unified Standards

Without scientific study as a backup and with a hostile federal government, experts and attorneys warn the long arm of the law could continue to breathe down producers’ necks if they’re overzealous in promoting supposed health benefits of cannabidiol.

On May 6, CannaCraft, a Santa Rosa company, settled charges it made misleading advertising health claims about its CBD-infused Care by Design products. It agreed to pay $300,000 in civil fines while not admitting to the allegations. The case was launched by district attorneys’ offices under three different Business and Professions codes. These violations relate to the practice of advertising and labeling promotional material with false claims.

Still, health claims for CBD abound, and many are listening.

According to a CBD Insider consumer research study, 68 million Americans reveal they’ve used CBD products. According to Statista.com, it is expected that U.S. consumer sales of cannabidiol will reach about $1.8 billion by 2022, which represents a significant increase from around $500 million in 2018.

In 2014, Focus founder Lezli Engelking began a consulting business in Phoenix helping cannabis companies navigate around the federal government. Despite being deemed “essential” in the pandemic and paying taxes, U.S. policy continues to classify cannabis as an illegal Schedule 1 drug.

The consultant has noticed the cannabis industry is taking a tip from big pharma, which the public has seen blanketing the airwaves with ads lauding better lives through chemistry.

Engelking said when they advertise the health benefits from CBD, she’s not surprised by hearing companies have been slapped down. That’s why many companies have called her for recommendations and guidelines.

She is convinced CBD helps alleviate inflammation as the “most important and profound part of the compound’s perceived health benefits.

“I believe there’s a place for both (cannabis and big pharma). Cannabis can’t deliver a vaccine, but I truly believe in this product as a healthier option,” she said, referring to other pharmaceutical instance.

The key to acceptance of CBD is having the FDA conduct clinical trials and take a stance on the health benefits, if any, of the substance.

“The FDA is just taking too long making a decision about this,” Engelking said.

In 2019, the U.S. Food & Drug Administration cautioned 15 companies for illegally selling various products containing cannabidiol, then wrongfully marketing them as dietary supplements or as additives in human and animal foods.

Lauren Mendelsohn, a senior associate attorney with Omar Figueroa in Sebastopol, specializes in cannabis law licensing and permitting. She said her law offices phones have been ringing, with cannabis companies seeking advice on the what’s safe to say on marketing materials.

“Companies in general — cannabis or otherwise — shouldn’t be making any health-related statements about CBD,” Mendelsohn said, adding “marketing any unapproved drugs or dietary supplements violates the Food, Drug & Cosmetic Act.”

Mendelsohn added: “The FDA has taken a clear and firm stance on this, regularly sending out warning letters to violators for having health-related claims on their packaging, websites or promotional materials.”

FDA Commissioner of Food and Drugs Stephen M. Hahn, a doctor, wrote in the agency’s policy statement that he recognizes the public’s increased interest in cannabidiol products.

“However, we still have a limited understanding of the safety profile of CBD and many other cannabis-derived compounds, including the potential safety risks for people and animals,” he stated.

Proving benefits proves difficult

According to analysts, one big problem with the ability to say what exactly CBD can do lies with the mere fact no clinical trials are sanctioned by the U.S. government on the effectiveness of the drug for treatment of ailments because it’s illegal.

Yet, in a report published in 2018, the U.S. National Library of Medicine found that “almost 62% of CBD users reported using CBD to treat a medical condition. The top three medical conditions were pain, anxiety and depression.”

Further, the arm of the National Institutes of Health reported no instances of “either abuse nor dependence has been demonstrated.”

Tamar Maritz, who works as an independent consultant and industry analyst, contends the absence of formal trials makes life harder for cannabis businesses.

Once conducted and proven with scientific evidence, she insists: “That will give the green light for the money to flood in.”

But Maritz isn’t holding her breath.

Cannabis advertising principles

The operation’s advertising and marketing activities, including websites and social media, must be current, accurate and support truth-in-advertising principles (not deceptive, false or misleading).

The operation must not make unsubstantiated medical claims and must provide an accurate representation of the level of medical expertise available.

Advertising must comply with all applicable federal, state and local advertising regulations for cannabis products and services including compliance with specific regulations for television, radio, billboards, websites, print, mailings, social media, signage and other forms of advertising.

Source: Focus Foundation of Cannabis Unified Standards

“We’re not necessarily operating under the assumption we’ll get to the point where we can say ‘this is for sleep’ (in respect to cannabis). To do that, you have to go through clinical trials. When it’s legalized, there will be a place for that — but through a pharmaceutical channel,” she said.

In the meantime, cannabis businesses need to assess their “risk tolerance” in promoting their product lines, Maritz insisted.

“Anybody now wants to make an example of (cannabis businesses), and they can become an easy target,” she said.

“For adult use, if they want to play it safer without the headaches, they need to ask if it is worth branding through sales or other metrics.”

The state government has even dipped its toe into the issue by mandating companies follow the guidelines of the Medicinal and Adult-Use Cannabis Regulation and Safety Act, which sets packaging and labeling requirements.

The California Department of Public Health states that: “Cannabis products must not have any health-related statements that are untrue or misleading.”

Testimonial advertising is viewed with skepticism from the state.

Further, the public health department says: “Any health-related statement that is made must be supported by publicly available scientific evidence (including evidence from well-designed studies conducted in a manner which is consistent with generally recognized scientific procedures and principles).”

From a medicinal standpoint, Santa Rosa’s Pearl Pharma President Michael Perlman stands by the notion CBD presents health benefits.

“I’m a strong supporter of that, absolutely. But with health benefits, everybody’s body is different,” he said.

Still, he knows declaring them as such presents a tricky proposition in advertising print materials.

“I think labeling is a difficult thing. If clinical trials can’t do it, then it seems you have to run a long disclaimer,” Perlman told the Business Journal in relation to the Monterey County-originated class action legal problems of neighboring CannaCraft. “Just when you keep thinking we’ve made progress, you find out no. You just can’t please everybody.”

Susan Wood covers law, cannabis, production, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com

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