United States: Recent FTC And FDA Warning Letters May Hold Lessons For Cannabis Advertisers

Last Updated: July 22 2019
Article by Neil Austin

Last month the Federal Trade Commission (FTC) and the U.S. Food and Drug Administration (FDA) sent joint warning letters to four companies that manufacture and advertise flavored liquids used in vaping ("e-liquids"). While the letters focus on the nicotine content of the products, they should nevertheless be of interest to cannabis advertisers because they demonstrate a continued regulatory focus on vaping and suggest a framework that may soon apply more broadly to the promotion of retail cannabis products.

The Gist of the Warning Letters

Each of the four letters alleges that the recipient markets an e-liquid product containing nicotine and does not warn consumers in its social media advertising of the addictive nature of nicotine. As you can see from the sample ad below, the focus is not so much on what the ads say, but rather what they don't say.

The FDA charges that the e-liquids are misbranded because they fail to include the federally mandated nicotine warning statement:

See 21 C.F.R. § 1143.3.

And the FTC argues that "failure to disclose the presence of and risks associated with nicotine raises concerns that the social media posting could be unfair or likely to mislead consumers." (The FTC also includes a reminder that any material connection between the brands and their social media endorsers must be disclosed.)

In a narrow sense, the warning letters stand for the proposition that if you advertise e-liquids containing nicotine on social media, you must disclose that the product contains nicotine and include warnings about the accompanying risks.

Implications for Cannabis Advertisers

In a broader sense, though, these warning letters raise questions that have significant implications for cannabis advertising.

Data show that vaping cannabis is becoming increasingly popular in states with adult-use laws on the books. In fact, sales of cannabis concentrates used in vaping now account for approximately 27% of all legal cannabis sales—second only to smokeable flower—and are projected to keep rising in the coming years.

Part of that growth is no doubt due to promotion of cannabis-based vaping products on social media. In states where retail cannabis sales are legal, advertising by licensed cannabis companies is commonplace on social media, including ads depicting cannabis concentrates, extracts, cartridges, e-liquids, and all manner of vaping products. These products don't contain nicotine, but they do contain THC.

While some contend that THC, the principal psychoactive component of cannabis, is not addictive, there is growing consensus that cannabis use does come with some risk of addiction. The Center for Disease Control reports that about 1 in 10 adult marijuana users will become addicted. That figure is consistent with research cited by the National Institute on Drug Abuse showing that about 9 percent of marijuana users become addicted. Does that level of risk require advertisers of cannabis e-liquids (or other cannabis products, for that matter) to include an addiction warning on its social media advertising?

Putting aside the risk of addiction, what about the other mandatory cannabis warnings that are required to be included on product packaging? In Massachusetts, cannabis packaging must include warning labels noting, among other things, that information about the side effects of using cannabis is limited and that there "may be associated health risks." The packaging must also contain a warning that "marijuana use during pregnancy and breast-feeding may pose potential harms."

Does the fact that Massachusetts and other adult-use states require these and other warnings mean that failure to include them in social media ads for cannabis e-liquids, vape pens, cartridges, and other vaping devices renders the ads unfair or deceptive? While there is no clear answer, it is certainly not difficult to imagine a regulator taking that position.

The Current Landscape and the Path Ahead

So far, local regulators have not taken a particularly active stance when it comes to cannabis advertising, and none has publicly staked out a position like that in the warning letters. The Cannabis Control Commission recently imposed a $75,000 fine on a cannabis manufacturer that allegedly failed to include certain other required warnings on some of its product labels ("CONTAINS THC" and "NOT SAFE FOR KIDS")—but there is so far no indication that the Commission will focus on advertising claims, let alone social media advertising. Nor is there any public indication that the Attorney General is particularly focused on cannabis advertising.

As discussed in a previous post, federal regulators have so far taken a hands-off approach when it comes to cannabis advertising. However, as more states continue to usher in retail cannabis regimes, it will become increasingly difficult for the FTC and FDA to stay silent. When federal regulators do begin to focus on this area, we expect that cannabis advertising will come under intense scrutiny and that the position staked out in the warning letters will likely carry over to cannabis products of all types.

If you are interested in learning more about this topic, please sign up for Foley Hoag's upcoming webinar: IP and Advertising Basics for Cannabis Companies.

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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