A CBD manufacturer in Arizona has been fined $30,000 for misleading marketing

By Jordan Gertje on July 8, 2021

Kushly, and its CEO, Cody Alt, are being sued for allegedly making misleading and unsubstantiated health claims about Kushly’s CBD product. In its most recent law enforcement action, the U.S. Federal Trade Commission (FTC) announced a settlement regarding misleading cannabidiol (CBD) product claim back in May.

The FTC asserts that Kushly advertised misleading claims about their CBD products’ ability to treat or cure a variety of ailments, ranging from acne and psoriasis to more serious disorders. Many of the claims Alt made in blog postings, such as one promoting Kushly’s CBD candies with the heading “Eat Away Chronic Pain.”

Furthermore, the FTC’s complaint claims that without giving any scientific evidence at the time of these comments, the respondents deceived consumers by fraudulently claiming that scientific research or medical experts indicated CBD products could successfully treat critical conditions. “There may be some benefits of CBD, but there’s no proof that it can treat serious health conditions in Kushly’s advertising, such as Parkinson’s, multiple sclerosis, or cancer,” stated by Daniel Kaufman, director of the FTC’s Bureau of Consumer Protection.

As a result of the FTC’s complaint, Cody Alt has agreed to stop promoting deceptive representations of health benefits for its CBD-based goods, which include anything from CBD oils, capsules, gummies, topicals, skin care, etc., unless backed behind reliable scientific evidence with citable research.

In addition, the firm will pay the FTC almost $30,000 in consumer redress. The fine amount is equivalent to the amount of money consumers spent on Kushly’s deceptively marketed items, according to the FTC. The exact amount of the fine equaling $30,583.14.

Since last December, this is the seventh enforcement action that the FTC has made against CBD manufacturers regarding implications that their CBD products could prevent, treat or cure serious health conditions. The Daniel Kaufman made a commented, “This is the seventh case we’ve bought against CBD sellers who should know better than to make unsupported health claims for their products.”

It’s worth noting that the FTC took these steps on its own, as opposed to previous FTC actions regarding CBD were largely carried out in coordination with the FDA. While the FDA usually conducts its initial enforcement actions through warning letters, which do not carry fines, FTC-initiated actions usually require a monetary sanction to resolve. The action is a major reminder that the regulatory organizations are increasingly examining unfounded health claims made by CBD manufacturers, notable those connect to cancer and other serious health conditions, as the industry waits for instructions from the Food and Drug Administration (FDA) on how to advertise their CBD products.

Clearly the Federal Trade Commission’s actions in the past six months show that they are not waiting around for the FDA to issue a warning letter on these unfounded health claims. They have also made it clear they will act on any advertising or marketing that appears to be deceptive. CBD companies have considerable cause to be wary of unsubstantiated medical claims.