It’s a confusing segment in the market right now. One day, consumers see an article in the Washington Post written by former FDA commissioner, Scott Gottlieb, where he writes, “But many of [CBD’s] expansive benefits are fanciful, and in fact, the sale of much of the product is illegal under current law. The Food and Drug Administration must act to make sure commercial interests don’t strip away any legitimate value that the compound might have.” The next day, consumers hear NFL great Rob Gronkowski promoting a CBD product line on television on Fox Business. He’s endorsing a company called CBD Medic, citing his own bouts of dealing with pain due to football-related injuries.
Given the amount of network marketing companies selling products that contain CBD, one would expect guidance and leadership from the top trade association in the industry, the Direct Selling Association. They made their position clear when they wrote, “In conclusion, public statements by FDA officials . . . as well as DSA’s panel discussion at the Annual Meeting confirm that the present sale of ingestible CBD products is illegal under federal law and hence violates the DSA Code of Ethics.”
In light of the confusing material in the marketplace, what are CBD sellers out there to do?
Currently, the FDA is focused on sending warning letters to CBD sellers that state or imply their products can be used to treat disease symptoms. This is risk that’s already familiar with the network marketing industry. So far, to my knowledge, no network marketing company has received an FDA warning letter.
The FDA has made a statement (in a press release) that they consider CBD to be an active ingredient in “FDA-approved drugs.” And when an active ingredient is present in an FDA approved drug, it cannot be introduced into the food supply or be marketed as dietary supplements. It’s worth noting that the FDA cannot make law, they can only issue guidance.
Currently, the FDA’s position is being challenged with all signs pointing to a compromise of sorts. Given the need for certain states to increase tax revenues, the political winds are currently in favor of CBD sellers. Scott Gottlieb, former FDA commissioner, made this clear when he wrote, “Given the pressure on the FDA to create a more immediate path for CBD products, this route might simply take too long. But there is a way that the FDA can fulfill its public-health obligations and meet the political demand for these goods: It can approve the sale of some CBD products immediately, while effecting a framework for their safe and proper regulation and a pathway for an enforceable market for these goods.”
While the FDA has their own position, individual states have theirs as well. And for the most part, states are supportive of the sales of CBD products provided certain standards are met.
So what to do in this gray period? First, as they say in football, run with your head up. The rules have been known to change state to state, so be wise and pay close attention. Second, seek qualified counsel that can help navigate the various issues while keeping an eye on official FDA guidance and regulation. And finally, invest resources into compliance training, monitoring and enforcement. With CBD products, people in the field tend to get overzealous and make disease claims. They need to be properly educated to prevent problems.
Kevin Thompson is an MLM lawyer that brings considerable experience to bear to help clients avoid problems before they arise, including counsel regarding MLM compliance, distributor disputes, government investigations, litigation, and corporate/securities work. Click here to schedule a free call.
Thompson is co-founder of Thompson Burton PLLC, a full-service firm comprised of over 20 lawyers focused on providing exceptional value for network marketing companies.
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