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Florida Lawsuit Asks for More Oversight for CBD and Hemp

— October 25, 2019

Florida hemp and CBD class action demonstrates the need for more state and federal regulation of CBD and hemp.

A class action lawsuit filed in Florida is calling for more regulation around CBD and hemp across the state.  The lawsuit alleged that DiamondCBD, based in Fort Lauderdale, and First Capital Venture Co., based in Denver, Colorado, misrepresented the levels of CBD in the products they sell.

The lawsuit was originally filed by Miamian Kathryn Potter and claimed Potter purchased $119.97 worth of CBD gummies from DiamondCBD’s website, and the page stated that 150 mg to 550 mg of CBD would be in the available selections.  However, the actual amount in at least one of those products that was shipped to Potter was far less than what the website stated.

“[T]he CBD industry has quickly become a billion-dollar-plus industry,” according to the lawsuit. “Unfortunately, as is often the case with emerging industries subject to minimal regulation, the CBD market is ripe for exploitation by unscrupulous businesses, and it has been compared to the ‘Wild West.’”

Florida Lawsuit Asks for More Oversight for CBD and Hemp
Photo by Kimzy Nanney on Unsplash

Erin Smith Aebel, a Tampa-based health attorney often represents companies looking to enter the in-demand industry said the recent regulation at the state and federal levels has the industry “in flux.”  She added, “It’s kind of a big fad right now, but, eventually, I think it’s going to be regulated and it’s going to calm down.  But, yes, if you’re in the business of selling this stuff, you need to be very careful about the accuracy of your claims.”

In December 2018, the federal government made it legal to grow and sell hemp under the Agriculture Improvement Act, better known as the Farm Bill. The bill requires that CBD products contain less than 0.3 percent THC, the ingredient that makes users “high.”

The plan Florida is making moving forward would require that all CBD and hemp products sold in the state have a scannable barcode linking consumers to a certificate of analysis by an independent laboratory that has tested the products’ hemp levels.  As of right now, there is no tangible way to determine the exact amounts in all of the products consumers are paying for.

CBD companies offering infused food products could find themselves facing sanctions from the Food and Drug Administration (FDA), according to Aebel, given new laws pertaining to marketing these products as if they are food-based and, therefore, “natural.”

“The FDA does not want any of these products making any kind of healthcare-related claims unless they’ve actually been tested,” she said. “The efficacy of the products, how they’re advertised and labeled, and what they’re used for is also being looked at very closely by the FDA right now.”

On September 18, the FDA issued a warning letter to Naples-based Alternative Laboratories over its Green Roads CBD oil which was being marketed as a dietary supplement.  The FDA warned that the product “does not meet the definition of a dietary supplement” and said the company “could face seizure of its supply unless the packages are corrected.”

The FDA and Federal Trade Commission (FTC) also sent a joint letter earlier this year to DiamondCBD and the company responded, “PotNetwork Holdings and DiamondCBD take the health and safety of its customers seriously.  Upon receipt of the March 2019 FDA/FTC letter we took immediate action to review our website.  In an abundance of caution, we removed the information cited in the letter.  We provided a written response to the letter in April 2019 and have not been contacted since.  We continue to provide our customers with a variety of high quality CBD products.”

Tara Tedrow, a Central Florida attorney specializing in cannabis regulations, said the current lawsuit in Florida just proves there needs to be more oversight and compliance across the board.

“The complexities of labeling requirements for hemp CBD products involve not only Florida but federal regulations,” Tedrow said. “This lawsuit may not be a catalyst for specific regulatory changes in Florida’s new hemp rules, but it certainly underscores the necessity for hemp companies to understand applicable state and federal laws pertaining to product labeling and advertising.”


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