(CBS4) — Calling its action “the first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products,” the Federal Trade Commission on Thursday announced sanctions against six U.S. businesses for allegedly making false claims in their advertisements.
One of those companies is Longmont-based Steve’s Goods.
Steve’s Goods was fined $75,000 by the agency.
It and the other five businesses were cited for falsely claiming their CBD products were medically or scientifically proven to improve serious health conditions such as cancer, autism, Alzheimer’s, arthritis, diabetes, schizophrenia, and age-related cognitive decline, the FTC stated in a press release.
Two of the other penalized companies were from California, two more from Utah, and the remaining one conducted strictly online sales. The highest fine was $85,000.
“The six settlements announced today 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.
Specifically regarding Steve’s Goods, the FTC stated in its formal complaint that the company misrepresented its products as having antibacterial properties that could prevent or reduce the risk of heart attacks, strokes, and other diseases.
Jordan Turner, Chief Operating Officer of Steve’s Goods, referred to the FTC’s action as random, over-bearing, and lacking consistency.
“I really resent the tone of the FTC on this,” Turner told CBS4. “I’ve never experienced a one-sided, heavy hammer like this. I think their intention was to put us out of business.”
Turner explained that his predecessor, James Rowland, referenced CBD as a possible solution to serious medical conditions in a blog posted about a year ago. But, he argued, the well-sourced blog tried to offer CBD products as an alternative only and did not ever “attempt to dissuade anyone from using know treatments” or cures.
Turner said he found it “offensive” that the FTC suggested that had occurred.
“I disagree with what they call advertising,” Turner said. “We’re not speaking the same language here in the legalese. It just so happens you can talk about that kind of thing (serious medical conditions) but not mention your product.”
Turner bemoaned the misleading information that exists, he says, in online sales of CBD products that is “egregious material” compared to the alleged infractions the FTC has singled out Steve’s Goods for.
But he also said the company “is trying to be a good steward” and accept mistakes that may come from the young marijuana/cannabis industry learning to walk in the world of big business.
“They are doing their job, I get it,” Turner said. “(But) it was weird. It was their first time through it. This was a precedent, which in missing in this industry. ‘Where’s the ceiling? How high? When do I hit my head?’”
Head, meet ceiling.
It’s not like they couldn’t see this coming. The FTC did send out four warning letters in 2019 – one each in April, July, September and October – to companies about unsubstantiated claims relating to CBD products. The letters threatened legal action.
And Steve’s Goods can be immediately fined thousands of dollars for any future infractions.
Still, Turner hopes future enforcement includes more communication or consultation prior to punishment, like industry representatives meeting with regulators to bring even more cohesion to the type of language being used in sales and non-sales environments.
“We just want Colorado to be known for doing things right, and for blazing a trail to get there. We have some direction now that we were missing before.”
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