Regulatory Risks of Marketing CBD Infused Foods, Beverages and Supplements | Thompson Coburn LLP
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As a walk down the aisle of a grocery store shows, there are many companies that market CBD-infused foods, drinks, and supplements. And, as many of these companies know, the FDA has not approved the use of CBD in these products under the Federal Food, Drug and Cosmetic Act (âthe lawâ). It is important for companies to understand the regulatory risks associated with the sale of these products. By the way, companies should also be aware that if a CBD product does not contain the stated level of CBD or has other unsubstantiated label claims, the company may be subject to consumer fraud lawsuits. or legal action from competitors.
Overview
FDA enforcement ranges from sending a letter informing the company of the violation and requesting a correction to criminal prosecution. The enforcement tool used will depend on the nature of the violation, including consideration of the following: seriousness of the problem; number of people affected; the degree to which people are affected; the strength of proof that laws or regulations are being violated; the likelihood of success in solving a problem; and the availability of federal resources. Traditional FDA enforcement policies require the agency to use its administrative and civil remedies to deal with the immediate problem, then consider whether or not to refer the criminal charges to the US Department of Justice for prosecution. . The FDA primarily uses informal notices and warning letters as the first step in enforcement.
Administrative and civil execution options
FDA enforcement tools include:
- Warning letters. These notify a company of a violation and request a correction within a short period of time. It is the most commonly used enforcement tool, with the FDA issuing tens of thousands of warning letters per year. Regarding CBD in particular, the FDA has so far limited its application to warning letters, but it has clearly noted its considerable concerns about the safety of CBD products, as well as the claims on the labels of CBD products. , and therefore could take additional steps to control CBD in the marketplace.
- Issuing a Letter Form 483, which is a notice of violation issued by an FDA inspector following an inspection. Essentially, it involves asking a company to remedy violations discovered during an inspection.
- Seizure of adulterated or mislabelled product. The FDA has only used this application tool a handful of times.
- Reminders. Recalls are typically made on a voluntary basis following an FDA request, but the FDA has issued a mandatory recall on kratom products following the manufacturer’s refusal to issue a recall. An average year sees around 5,000 recalls.
- Injunctions. The FDA (through the US Department of Justice) can seek a court order to end the offending act. This mechanism is rarely used.
- Civil sanctions. The FDA can only pronounce civil penalties for certain violations of the law. Penalties for corporations, partnerships, or associations that bring adulterated food into interstate commerce do not exceed $ 389,550. Penalties should not exceed $ 779,098 for all such violations judged in a single proceeding. The penalties would be different if the purpose of the product is marketed as a medicine. Civil sanctions are rarely used.
Lawsuits
In addition to the above, the FDA may recommend criminal prosecution to the US Department of Justice. Whether to proceed is at the discretion of the DOJ. The FDA will generally employ civil or administrative remedies before recommending criminal action. Here are the potential criminal penalties for violating the law:
- The following fines are applicable for each offense:
- Up to $ 100,000 for an offense committed by a natural person that does not result in death.
- Up to $ 200,000 for an offense committed by a corporation that does not result in death.
- Up to $ 250,000 for an offense committed by an individual resulting in death or a felony.
- Up to $ 500,000 for a corporate misdemeanor resulting in death or felony.
Misdemeanor convictions can result in fines and / or imprisonment of up to one year. Felony convictions, applicable in the event of a second violation or intent to defraud or deceive, may result in fines and / or imprisonment for up to three years.
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