Business

Calif. CBD Companies Caught in Health-Claim Crackdown

By Willis Jacobson
Dec 18, 2020
Courtesy of FTC

Six sellers of CBD products, including two groups based in California, have been targeted by federal officials in the first law enforcement crackdown of allegedly deceptive health claims within the CBD marketplace.

The enforcement action, dubbed “Operation CBDeceit,” was revealed Thursday by the Federal Trade Commission (FTC). The involved companies have been accused by the FTC of making unsupported claims about CBD’s ability to treat a host of health issues, including cancer, heart disease, hypertension and Alzheimer’s disease.

The FTC has ordered each of the companies to stop making such claims immediately and announced that some will face monetary penalties. The FTC orders also prohibit the companies from making such claims in the future without scientific evidence.

“The six settlements … send a clear message to the burgeoning CBD industry: Don’t make spurious health claims that are unsupported by medical science,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Otherwise, don’t be surprised if you hear from the FTC.”

A look at the two California groups involved:

CBD Meds, Inc. and G2 Hemp, Inc.

  • The companies share the same owner and are based in Winchester, Calif. 
  • They were accused by the FTC of promoting products with online advertisements that contained false or misleading health claims related to the treatment of cancer, glaucoma, artery blockage and autism, among others. Some of the claims were purported to be supported by the U.S. government. 
  • No fines were levied.

Reef Industries, Inc.; Cannaterra, Inc.; and AndHemp, Ltd.

  • Reef Industries, which also does business as Reefcbd.com and Reef Wellness, is based Costa Mesa, Calif.
  • Cannaterra is based in Ontario, Calif.
  • AndHemp is a U.K. limited company with its principal office in Ontario, Calif.
  • The three companies have operated as a common enterprise, including sharing in allegedly misleading marketing practices since at least January 2019.
  • The FTC ordered the firms to pay an $85,000 fine.

Other companies caught in the crackdown:

  • Florida-based HempmeCBD, also known as EasyButter, was accused of making false claims as far back as January 2018. It was fined $36,254.
  • Utah-based Bionatrol Health was accused of making false health claims going back to December 2018, as well as deceiving a customer by changing an online order from one bottle to five bottles without that customer’s consent. The company was fined $20,000.
  • Utah-based Epichouse, which also does business as First Class Herbalist, has alleged marketing infractions dating back to September 2019. It was fined $30,000.
  • Colorado-based Steves Distributing, also known as Steve’s Goods, was accused of marketing violations going back to 2019. The FTC complaint also alleges the company falsely claimed its CBD and CBG products have antibacterial properties and prevent or reduce the risk of heart attack. The company was fined $75,000.

The FTC is an independent government agency tasked with enforcing civil antitrust law and protecting consumers by preventing anticompetitive, unfair or deceptive business practices. The agency said in a Thursday blog post that it has sent “multiple letters to businesses warning them about making questionable disease-related representations for CBD products and has taken law enforcement action against others.”

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