An increasing number of celebrities and social media personalities are endorsing the use of cannabidiol (CBD) products through social media. Many of these “influencers,” however, fail to account for and comply with the complex regulatory environment surrounding CBD advertisements. In the United States, the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) both limit the use of certain language in CBD endorsements. As these advertisements attempt to reach the broadest possible audience, violations by influencers are especially noticeable to regulators, who have stepped up their enforcement efforts in this area.
What Is CBD?
With the passage of the 2018 U.S. Farm Bill, hemp-based CBD products were removed from the Drug Enforcement Administration’s list of scheduled substances, thereby decriminalizing the possession of such CBD products. The Farm Bill defines hemp as a strain of the Cannabis sativa plant species that does not contain more than 0.3% of the psychoactive component tetrahydrocannabinol (THC). Instead, hemp has significantly higher concentrations of CBD. The legalization of recreational and medicinal marijuana in certain states refers to the cannabis plant containing high levels of THC, which may also contain some CBD. Certain states, such as California, have stringent requirements regarding the advertisement of cannabis products, but these rules do not apply to hemp-based CBD products.
Affiliate Marketing on Social Media Platforms
Affiliate marketing, which is the centerpiece of this article, occurs when an influencer earns a commission for referring his or her followers to a brand or site. These referrals usually happen through affiliate links (e.g., brand.com/influencer) or promotional codes (e.g., typing “Influencer Name” as a promotional code during checkout).
As a result of the removal of direct advertising of CBD products by two social media giants, influencers have gained prominence as a method for CBD companies to improve traction in this increasingly crowded space. With influencers earning up to $50,000 for a single sponsored post, affiliate marketing provides influencers with a lucrative business opportunity. As sponsored affiliate advertising becomes more prevalent, the FTC and FDA have taken more interest in the regulation of advertising infractions.
CBD Advertising Regulations: The FTC and FDA
The FTC and FDA are leading the federal regulation of CBD products and advertising, and the agencies collaborate to prevent unlawful activity, including through social media platforms.
In 2009, the FTC issued guidelines concerning the use of endorsements and testimonials, which seek to prevent companies from using these marketing tools to circumvent advertising laws. The guidelines state that all cases of a “material connection,” including paid relationships and free products, between the endorser and advertiser must be “clearly and conspicuously” disclosed in the sponsored post. For example, an influencer promoting a product must state the disclosure without the viewer needing to click “more” in the caption. In 2017, the FTC provided updated FAQs regarding such disclosures and other endorsement claims.
In more recent news, the FTC filed its first lawsuit involving COVID-19-related claims. The FTC sought injunctive relief in federal court and simultaneously filed an administrative action against a defendant that had marketed its CBD products as able to treat and prevent COVID-19. The defendant had also been the recipient of a warning letter from the FDA regarding illegal marketing of its CBD products. This lawsuit demonstrates the FTC’s ability to quickly investigate and respond to unsubstantiated health claims and, as discussed below, the FTC will act swiftly in response to egregious CBD advertisements. FTC commissioners have made clear that deceptive influencer marketing is a top priority for the agency.
Congress specifically preserved the FDA’s authority to regulate products containing CBD under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the Public Health Service Act. One of the FDA’s main concerns is the “proliferation of egregious medical claims being made about products asserting to contain CBD that haven’t been approved by the FDA.”
The FDA also has significant safety concerns regarding the use of CBD in foods and dietary supplements, because of potential liver damage. The FDA’s present position is that CBD products cannot be marketed as food or dietary supplements. With that said, the FDA has generally used its discretion in enforcing these restrictions in regard to the CBD products on the market, as long as the products do not contain claims about the treatment of diseases.
Last year, the FTC and FDA sent joint warning letters to CBD companies that claimed their products could treat Alzheimer’s, cancer, and other serious diseases. The agencies asserted that the touted health benefits were unsubstantiated health and efficacy claims. The FDA has indicated that its enforcement actions will focus on situations in which a product developer makes unproven claims to treat serious diseases, as “patients may be misled to forgo otherwise effective, available therapy and opt instead for a product that has no proven value or may cause them serious harm.” With that said, the FDA has also stated that the addition of CBD to cosmetic products is lawful. These products, however, cannot make claims that the product cures, treats, or prevents any disease or health-related condition, including aches and pains, which are classified as topical external analgesic drug products.
The FDA has an entire web page dedicated to regulatory resources, FDA communications, and FAQs regarding the use of CBD in various products. The FDA has previously suggested it is open to developing a regulatory framework if it can be shown that CBD meets the regulatory standards. Given its recent report to Congress, it is unlikely anything will be released in the near future.
Drafting or Reviewing Social Media Posts
Because of the regulatory issues surrounding CBD advertisements, influencers should work together with the CBD company on the language of the social media post. Special attention should be given to profile posts, rather than disappearing stories, since they are intended to remain public forever. If possible, any statements intended for use in disappearing stories should be shared with the CBD company to reduce the likelihood of problematic content.
How to Advertise CBD Products: Tips for Influencers
Below is a quick list of practical tips for influencers when entering into a CBD affiliate marketing contract:
- Do not state that the CBD product could treat, mitigate, cure, or prevent diseases, including aches and pains
- Do not state that CBD products are lawfully marketed in all 50 states. For instance, powerful lobbying groups have successfully stalled legislation in California regarding CBD
- Work with the CBD company to preview the post prior to publication or receive help writing the post
- Review the FTC’s Endorsement Guides and FAQs describing disclosure rules and examples of properly promoting products through social media
- If receiving a free product or payment for a sponsored post, ensure such disclosure is “clear and conspicuous”
The passage of the 2018 U.S. Farm Bill decriminalized hemp-based CBD, which has led to a surge of CBD products. As CBD companies are prohibited from direct advertising through many social media and traditional marketing platforms, an increasing number of them are turning to celebrities and social media influencers for affiliate advertising. With the CBD market expected to grow to $23 billion in 2023, CBD companies will increasingly look to influencers as a way to promote their products. The FTC and FDA have increased their focus on and scrutiny of influencer marketing and CBD advertisements, so influencers need to fully understand the CBD advertising rules and regulations.
© 2020 Venable LLP. Using, distributing, possessing, and/or selling marijuana is illegal under existing federal law. Compliance with state law does not guarantee or constitute compliance with federal law. This informational overview is not intended to provide any legal advice or any guidance or assistance in violating federal law.