02/18/2020

CBD Companies Fight Back Against New Consumer Class-Action Lawsuits

There has been a surge of new class-action lawsuits against CBD companies filed on the heels of the FDA’s slew of warning letters issued in November. These lawsuits assert numerous consumer-fraud and warranty-type claims and allege that CBD products were mislabeled and “illegal” based on statements made by FDA in warning letters. Two CBD companies have begun fighting back in motions to dismiss these class actions filed in early February. In these motions, the CBD companies argue that the 2018 Farm Bill placed no restrictions on CBD products that comply with that law (i.e., contain 0.3% or less THC) and that their products are not "illegal" — even though there is regulatory uncertainty for these products until FDA issues appropriate regulations.

The CBD companies also argue that FDA’s warning letters and public statements are not “official actions” of the FDA and do not carry the legal weight (or precedent) of laws passed by Congress or regulatory rules. Thus, these companies argue, the warning letters and press releases do not, in and of themselves, make the CBD products they sold illegal as long as the products use CBD that was produced in accordance with the Farm Bill and USDA Interim Rules on Hemp. In addition, the CBD companies argue that their products are not sold or marketed as drug products as defined by FDA. In doing so, the companies argue that their over-the-counter CBD products are not the same as an FDA-approved drug, Epidiolex, which is an “marijuana-based oral solution that contains a purified formulation of CBD” instead of full-spectrum hemp extract. This distinction between full or broad-spectrum hemp extract and the CBD isolate used in Epidiolex may become more important as FDA grapples with evaluating CBD as either a new dietary ingredient (NDI) or generally recognized as safe (GRAS), which is required for use in nutritional supplements and/or food and beverage products.

Based on typical briefing schedules, the courts could rule on these motions as early as mid-March. After a Florida court stayed a similar case pending FDA regulatory action, these decisions will be closely watched to get a better idea of the likely fate of several similar cases pending against other CBD companies.

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