United States: A Trap For The Unwary: Cannabis Health Claims Likely To Draw Scrutiny From Advertising Regulators

Last Updated: November 7 2018
Article by Neil Austin

With the opening of the East Coast's first marijuana retailer just days away, consumers in Massachusetts may soon begin seeing advertisements promoting all manner of cannabis products, services, and establishments. The state's Cannabis Control Commission has drafted regulations that place restrictions on marijuana advertising, but even with those restrictions, there is still plenty of opportunity for retailers and product manufacturers to promote cannabis to consumers, particularly online and on mobile apps, where age screens help marketers ensure they are not reaching consumers under 21 years old.

Judging from ads that already exists in states where cannabis is legal, much of that advertising is likely to focus on the characteristics and effects of particular strains of marijuana or cannabis-infused products. For example, several mobile apps currently serving the medical and retails cannabis markets include descriptions of marijuana strains that call to mind a sommelier's tasting notes for a fine wine—earthy aroma, citrus notes, pine undertones—and that tout the strain's effects, both positive ("relaxed," "euphoric") and negative ("dry mouth," "anxious").

But some advertising statements go further, promoting particular strains and products as having positive health effects. Common claims include a product's ability to reduce stress, manage pain, fight depression, or even treat cancer. Given the evolution of legal cannabis—first as medicine, then as a retail consumer good—those sorts of claims may not be surprising, and indeed some medical marijuana patients may swear by cannabis as offering relief to their particular condition. So is it safe for marijuana retailers and manufacturers to make these sorts of claims? Short answer: no.

Regulation of Health Claims by the Federal Trade Commission

From the perspective of government regulators, claims that cannabis has positive health effects are likely to mislead consumers unless those claims are substantiated with scientific research. And since cannabis has been illegal for the better part of the last century, there is not much in the way of scientific research on the health effects of cannabis. So manufacturers and retailers should proceed with caution.

In other contexts, government regulators and industry groups have come down hard on what they contend are unsubstantiated health claims. The Federal Trade Commission is perhaps most active in this space, frequently targeting companies making what it contends are unsubstantiated health claims, including, for example, claims that products could: (i) help kick the symptoms of opiate withdrawal, (ii) reverse skin aging and help prevent cancer, (iii) treat Parkinson's disease, autism, and a host of other serious diseases and conditions, and (iv) alleviate joint and muscle pain.

What the FTC expects to see when marketers make health claims is solid research backing them up. In the case of claims to treat or prevent a medical condition, that can mean double-blind, placebo-controlled testing conducted by qualified researchers to support the specific claims made in the ad. Even for milder or more general health claims, anecdotal evidence won't cut it. An ad focused on the honest experience of a consumer could still be problematic if the endorsement suggests a positive health effect.

But Will Federal Regulators Get Involved in Cannabis Advertising?

Surprisingly, there has so far been little response to cannabis-based health claims. The FTC, the federal government's main watchdog for potentially unfair or deceptive advertising claims, has been conspicuously silent on marijuana advertising, despite the fact that health claims are typically an area of red-hot, laser focus. Other than following up on a single referral by the National Advertising Division (discussed below), there is no indication that it has affirmatively sought to regulate the promotion of state-legal cannabis.

Continued prohibition at the federal level may account for some of that inactivity. It would send mixed signals, to say the least, for federal consumer protection regulators to step in and regulate the advertising of a product when federal law treats the possession, advertising, and sale of that product a as a criminal offense. Whatever the reason, the lack of FTC activity in this space has left something of a vacuum, with no agency yet stepping up to regulate cannabis advertising.

The Food and Drug Administration has been somewhat active, but its activity has been mostly peripheral. The FDA has issued a number of warning letters since at least 2015 directed to companies making health claims about dietary supplements containing cannabidiol, or "CBD," a non-psychoactive component of cannabis. But the FDA has taken no action against products touting the health benefits of marijuana, which unlike CBD is plainly illegal under federal law.

In the absence of federal regulation, the National Advertising Division has stepped into the fray, but as with the FDA, its focus has been not on marijuana but rather on cannabidiol. In early 2018, as part of its routine monitoring program, NAD reached out to a company called That's Natural, LLC requesting substantiation for its claim that its "CBD Hemp" product "makes cancer cells commit 'suicide' without killing other cells." The advertiser ignored NAD's letter, and the matter was ultimately referred to the FTC, which advised in a staff letter that the company had modified its promotional materials and "deleted all references to various diseases and ailments." This included references on the company's Instagram account and in blog postings on its website.

Although NAD is not constrained by the politics of federal prohibition, it does have a pretty significant jurisdictional challenge to taking on marijuana health claims. Specifically, NAD's rule limit its reach to national advertising – i.e., "any paid commercial message ... if it is disseminated nationally or to a substantial portion of the United States." Because retail and medical marijuana are purely creatures of state law, and participating states strive mightily to avoid interstate commerce, it is debatable whether NAD even has authority to regulate marijuana advertising, at least yet.

Regulation Likely Left Up to the States

What this means is that regulation of marijuana health claims is likely to be left up to the states. In Massachusetts, that almost certainly means regulation by the Attorney General. While the specific regulations articulating the bounds of acceptable cannabis advertising are the work of the state's Cannabis Control Commission, it seems unlikely that the Commission will take up the mantle of challenging marijuana health claims. For starters, it has its work cut out for it in keeping up with licensing and inspections. But more importantly, the job of challenging potentially unfair or deceptive advertising at the state level has traditionally fallen to the Attorney General.

To date, there has been no indication that the Attorney General will prioritize cannabis advertising, but that could change once retail operations commence. Since Massachusetts legalized medical marijuana in 2012, the number of residents eligible to purchase marijuana has climbed no higher than about 55,000. However, that number will soon skyrocket to more than five million, meaning that the amount of advertising and potential for consumer harm might well be too much for state regulators to ignore.

We will address the potential for state investigations, and what that might look like, in an upcoming post. Please keep an eye out for that. In the meantime, cannabis advertisers should proceed with caution. Although regulators have been remarkably quiet thus far, don't expect that to last. It is only a matter of time before cannabis-related health claims are put under the microscope, and when that happens the costs to cannabis advertisers – and, indeed, the cannabis industry itself – could be significant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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