November 5, 2019
Authored by: Jennifer Jackson and Ashlee Difuntorum
Within the last two months, three class action lawsuits have been filed in federal courts against companies that sell ingestible products containing cannabidiol (CBD), a chemical compound found in the cannabis plant, alleging that the products contain significantly less CBD than advertised. Sellers of other food and supplement products facing this type of claim regarding their non-CBD products’ content have successfully argued that such claims are preempted by the federal Food, Drug and Cosmetic Act (FDCA) and its implementing regulations. But the Food and Drug Administration (FDA) has not yet approved CBD as an ingestible ingredient, food or dietary supplement. And while some states have followed the FDA’s lead, other states have legalized sales of ingestible, hemp-derived CBD products. This can leave food, beverage, and supplement companies confused about what rules apply to CBD as an ingredient in ingestible products.
The first of the three class actions was filed on August 16, 2019, in the United States District Court for the Southern District of Florida. Plaintiff alleges that defendants operate “JustCBD,” which advertises and labels ingestible products as containing certain amounts of hemp-derived CBD, when they really contain much less. Plaintiff allegedly tested defendants’ products and found that (1) the “JustCBD honey Liquid Tincture” has only 48.92mg of CBD even though it purports to have 100mg, and (2) the “JustCBD Apple Rings Gummies” contain a non-detectable quantity of CBD even though they purport to contain 250mg of CBD. Plaintiff claims he relied on representations and warranties regarding the quantity of CBD in each product, causing him to pay a “substantial premium price,” and he did not receive the benefit of his bargain, in violation of various state laws.1
Another plaintiff filed suit on September 24, 2019, in the United States District Court for the District of Massachusetts, alleging that defendant Global Widget LLC, d/b/a Hemp Bombs, advertises and labels ingestible products as containing certain amounts of hemp-derived CBD, while testing proves the products contain only 2.6% to 35.8% of the claimed CBD content, in violation of state and federal warranty laws.2
On September 27, 2019, a plaintiff filed a class action suit in the United States District Court for the Southern District of Florida, claiming that the defendants’ product packaging and labeling of ingestible, hemp-derived CBD products leads reasonable consumers to believe that the products contain more CBD than they actually do, in violation of Florida law.3
Many non-CBD food and supplement companies have defended claims of false labeling, similar to those described above, by arguing that state laws, regulations and common law claims are preempted by the FDCA and its implementing regulations. For example, the FDCA expressly preempts any state-law standards for the labeling of dietary supplements that are not identical to federal standards, and the FDA has established mandatory testing protocols that must be followed to establish compliance with those requirements.4 Where plaintiffs have brought state law claims challenging non-CBD supplement labeling without establishing that their scientific test results were obtained using that protocol, courts have held that the claims are preempted.5
The problem for ingestible CBD product sellers is that the FDA has stated CBD cannot be labeled as a dietary supplement,6 and has not approved any standards for CBD in other ingestible products. The 2018 Farm Bill, which provides that CBD derived from hemp is legal if the hemp is produced by a licensed grower in a specified manner, went into effect on January 1, 2019. In response, on October 29, 2019, the United States Department of Agriculture issued its own interim rule regarding the production, testing, disposal, and licensing of hemp.7 Yet the as recently as October 22, 2019, the FDA stated it is still “continu[ing] to explore potential pathways for various types of CBD products to be lawfully marketed.”8 As a result, CBD sellers would face additional challenges trying to assert a federal preemption defense.
To complicate matters, state laws vary on the legality of ingestible CBD. Some states have followed the FDA’s lead in refusing to approve CBD-containing product sales, while other states allow them. Last year, the California Department of Health released its “FAQ – Industrial Hemp and Cannabidiol (CBD) in Food Products,” which noted that California prohibits the use of hemp-based CBD in ingestible products, at least until FDA rules that CBD products can be used as a food or the state makes its own determination that such products are safe for human and animal consumption.9 Similarly, the Massachusetts Department of Agricultural Resources issued a policy statement indicating that while hemp products such as hemp seed oil, clothing, and building material can be sold in Massachusetts, food, dietary supplement or animal feed containing hemp-derived CBD cannot be sold in the state.10 In contrast, on July 1, 2019, Florida Senate Bill 1020 took effect, which legalizes and regulates hemp-derived CBD products, including ingestible products. Likewise, Alabama’s Attorney General issued a Public Notice in November 2018, stating that CBD from hemp can be legally produced, sold, and possessed in the state.11 As of this writing, neither state has set standards for the content of CBD in ingestible products, or addressed how to establish compliance.
For now, it remains unclear what standards will apply to claims regarding CBD-containing food, beverages and supplements, and how such claims – and defenses – will be established.
For questions or more information, contact the authors, Jenny Jackson, at email@example.com or 310-576-2360, or Ashlee C. Difuntorum, at Ashlee.Difuntorum@bclplaw.com or 310-576-2160, or any member of our Food and Beverage or Agribusiness teams.
1. Gaddis v. Just Brands USA, Inc., et al., Case No. 0:19-cv-62067 (S.D. Fla. Aug. 16, 2019).
2. Ahumada v. Global Widget LLC, d/b/a Hemp Bombs, Case No. 1:19-cv-12005 (D. Mass. Sept. 24, 2019).
3. Potter v. Potnetwork Holdings, Inc., et al., Case No. 1:19-cv-24017 (S.D. Fla. Sept. 27, 2019).
4. 21 C.F.R. § 101.9(g)(2).
5. See, e.g., Dougherty v. Source Naturals, Inc., 148 F.Supp.3d 831, 836 (E.D. Mo. 2015); Hi-Tech Pharms., Inc. v. Allmax Nutrition Inc., No. 1:16-cv-1783, 2017 WL 4475957, at *6 (N.D. Ga. July 27, 2017), aff’d in part, rev’d in part, 910 F.3d 1186, 1195-96 (11th Cir. 2018) (finding preemption).