When it comes to CBD, entrepreneurs would be well served to start with the end in mind.
The foreseeable outcome is federal regulation – just like any other consumed food or dietary supplement on the market.
While it is understandable that CBD manufacturers would prefer to run their businesses without any government intervention, being left unchecked has made the sector vulnerable to unscrupulous behavior.
Without regulation in place, anyone can sell CBD products.
Consequently, there are plenty of bad actors out there without experience growing hemp or making high-quality hemp extracts.
In fact, independently tested CBD products seldom contain the amount of CBD promised on their labels. Worse, untested CBD products may contain heavy metals and pesticides that can cause adverse health effects.
In December, the U.S. Federal Trade Commission announced its first crackdown on deceptive marketing claims for CBD products. These claims covered a range of scientifically unsupported benefits – including treatment of cancer, heart disease, hypertension and Alzheimer’s disease – and included allegations of false scientific findings.
Six companies received fines ranging from $20,000 to $85,000 and must publicize the settlements on all platforms, from their company social media accounts to their own websites. The companies also had to inform consumers who purchased the products about the settlements.
If regulatory history has taught us anything, it is that when it comes to problems with health and wellness supplements, regulation often stimulates improvements in public health. In addition, regulation brings legitimacy to the industry, which is just what the industry needs to spur the next big surge of confidence in CBD.
Regulating other wellness products
A good analog to CBD is the nutritional supplements market.
As far back as the 1920s, the Bureau of Chemistry – precursor of the U.S. Food and Drug Administration – was tasked with assessing the validity of certain vitamins. Were the label claims accurate? Did products actually contain the vitamins they purported to and in the amounts listed?
The federal government would wrestle with those questions for decades.
Ultimately the U.S.:
- Established a laboratory dedicated to the study of vitamins.
- Prohibited the misbranding and adulteration of cosmetics and medical devices.
- Participated in countless lawsuits against companies making false claims.
In 1994 the FDA strengthened regulations surrounding dietary supplements. That law requires manufacturers to give the FDA evidence that a new ingredient should be safe.
Since 2006, dietary supplement safety has been monitored through the FDA’s Center for Food Safety and Applied Nutrition Adverse Event Reporting System.
Manufacturers, packagers and distributors of dietary supplement products are required to report all serious adverse events within 15 business days following initial receipt of the information.
These laws have led to a safer supply chain.
For instance, since 2004 the FDA has pulled more than two dozen products off the shelves that claimed to cure erectile dysfunction. The laws have also led to a surge in the popularity of nutritional supplements. Today, Americans spend more than $37 billion a year on dietary supplements.
Ready for regulation
Three years ago, the U.S. decriminalized growing the hemp plant and…
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