Growth of CBD Industry Leads to a Flood of Consumer Litigation

The legal team at SFMS discusses the growth of the CBD industry and the misrepresentations leading to litigation.From vape shops to Sephora, to health and wellness stores like GNC, industries around the country are tapping into the new health and cosmetics trend that is cannabidiol (“CBD”).  CBD-branded products are so popular that sales are expected to exceed $5 billion this year.  But what is CBD, and why has it suddenly become the subject of an “avalanche” of lawsuits?

CBD is a cannabis-derived chemical compound that was recently approved by the Food and Drug Administration (“FDA”) for inclusion in items for consumer purchase.  Although CBD is derived from the cannabis sativa (marijuana) plant, it lacks tetrahydrocannabinol (“THC”), the psychoactive chemical found in the plant.  In December 2018, President Donald Trump signed the Agriculture Improvement Act, which removed CBD from the Controlled Substances Act.  This deregulation has led to an explosion in CBD products for consumer use on the market – from tea to facial oils to gummy bears marketed for anxiety and chronic pain.

However, the rapid emergence of the CBD industry has resulted in lax FDA regulation, and with so many companies seeking to cash in on this trend, many CBD products are not what they seem. Companies market CBD products as remedies for conditions ranging from stress and anxiety to acne to cancer or opioid withdrawal.  Many of these claims are vague and dubious at best, and medical experts caution that there is a lack of evidence to support most of these alleged benefits.

As many legal experts predicted, this industry and its lack of regulation has led to a landslide of lawsuits alleging serious misrepresentations.  Some lawsuits involve serious misrepresentations of CBD levels in such products, while other lawsuits stem from allegations that certain CBD products contain no CBD at all.  Meanwhile, companies asserting that their products can cure cancer or treat opioid withdrawal have found themselves in hot water with the FDA because of the lack of evidence to support these claims.  In the case of one such company making these claims, Curaleaf Holdings, Inc., investors have filed a class action against the company for damages resulting from a drop in stock price following the FDA’s issuance of a warning letter to the company regarding the company’s marketing of its products.

Still, other suits involve employees being fired after failing workplace drug tests, allegedly due to CBD products that contain THC, despite their representations to the contrary.  For example, a recent case in Washington alleges that 72-year-old Lester Garbicz, who was using CBD oil for arthritis and glaucoma, was fired immediately after testing positive for THC in a workplace drug test. And Mr. Garbicz is not alone: other cases, such as Horn v. Medical Marijuana, Inc., et al., are almost identical in that they involve individuals who consumed products marketed as “pure CBD,” only to lose their jobs for testing positive for THC.

Lawsuits like these have led to increased calls for more FDA regulation of these CBD products. But until the regulatory framework catches up to the industry, it remains critically important for consumers to do their research, and exercise caution when choosing to purchase CBD products.

The legal team at SFMS has substantial experience litigating consumer class actions, including false advertising matters. If you have any questions regarding this subject or this posting, please contact John Roberts (jroberts@sfmslaw.com) or Alec Berin (aberin@sfmslaw.com). We can also be reached toll-free at 866-540-5505.

Shepherd, Finkelman, Miller & Shah, LLP, is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania.  SFMS is an active member of Integrated Advisory Group (www.iag.global), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe.  For more information about our firm, please visit us at www.sfmslaw.com.

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