At the same time that the Food and Drug Administration (FDA) is working to create a regulatory framework for hemp-derived CBD, it’s also cracking down on companies that are in its view irresponsibly marketing CBD products and making unsanctioned claims about their medical benefits.
FDA announced on Tuesday that it and the Federal Trade Commission sent warning letters to three such companies last month: PotNetwork Holdings in Florida, Nutra Pure in Washington state and Advanced Spine and Pain in New Jersey. The letters were sent “in response to their making unsubstantiated claims related to more than a dozen different products and spanning multiple product webpages, online stores and social media websites,” FDA Commissioner Scott Gottlieb said in a press release.
In a Twitter thread, the commissioner added that he was “concerned to hear recently that several national pharmacy chains and other major retailers have begun to sell or will soon begin to sell” CBD products and that the agency will “be contacting them to remind them of #FDA obligations and our commitment to protect consumers against products that can put them at risk.”
CVS and Walgreens both recently announced they will begin selling CBD-infused products.
We’ll be contacting them to remind them of #FDA obligations and our commitment to protect consumers against products that can put them at risk.
— Scott Gottlieb, M.D. (@SGottliebFDA) April 2, 2019
In the press release about the warning letters his agency has already sent to CBD companies, Gottlieb asserted that they used their websites to “make unfounded, egregious claims about their products’ ability to limit, treat or cure cancer, neurodegenerative conditions, autoimmune diseases, opioid use disorder, and other serious diseases, without sufficient evidence and the legally required FDA approval.”
At the same time, the warning letters announced today make clear that #FDA has and will continue to monitor the marketplace and use our authorities to take action against companies illegally selling these types of products when they are putting consumers at risk
— Scott Gottlieb, M.D. (@SGottliebFDA) April 2, 2019
FDA is hustling to provide manufacturers guidelines on marketing cannabidiol following the federal legalization of hemp last last year, but the process is complicated by the fact that CBD is the active ingredient in an FDA-approved drug, Epidiolex, and remains the subject of intensive clinical testing. Gottlieb has indicated that it will take years to develop a regulatory plan for CBD without further congressional action.
In the meantime, companies that continue to choose to engage in CBD commerce should be wary about making health claims about their products. The commissioner said FDA has “limited resources” for enforcement operations, but it would take action against companies that make “over-the-line” statements.
In the press announcement, FDA listed some of the unauthorized claims that the three companies made. For example, the products were touted as being able to treat cervical cancer, Alzheimer’s disease and substance use disorder.
“I believe these are egregious, over-the-line claims and we won’t tolerate this kind of deceptive marketing to vulnerable patients,” Gottlieb said. “The FDA continues to be concerned about the proliferation of egregious medical claims being made about products asserting to contain CBD that haven’t been approved by the FDA, such as the products and companies receiving warning letters today.”
“Selling unapproved products with unsubstantiated therapeutic claims can put patients and consumers at risk,” he said. “These products have not been shown to be safe or effective, and deceptive marketing of unproven treatments may keep some patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.”
Questions about what constitutes an unauthorized claim that would put a company at risk of enforcement action will likely come up at the agency’s just-announced public hearing CBD issues on May 31. Stakeholders are invited to submit information about the public safety impacts of CBD and how to manufacture and market products that contain the cannabis compound.
This piece was updated to include Gottlieb’s tweets about national pharmacy chains.
Photo courtesy of Nicholas C. Morton.
Illinois Saw Record-Breaking Marijuana Sales In June, Including From Out-Of-State Visitors
In the middle of a global pandemic and one of the worst unemployment crises in American history, Illinois marijuana retailers saw their busiest month on record in June, racking up more than $47.6 million in total sales.
No matter how you slice the data, released by the state on Tuesday, recreational cannabis sales last month shattered existing records in the state, which began legal sales to adults on January 1 of this year. Stores in Illinois sold nearly a million (994,545) cannabis items in June—5,000 more than any previous month—and brought in record sums from in-state residents ($35.3 million) and out-of-state visitors ($12.4 million) alike.
Tax figures are set to be released later this month by the state Department of Revenue. Until then, they’re difficult to accurately estimate. Unlike many other states to have legalized cannabis, Illinois collects different tax rates based on product type and potency. Local jurisdictions can also impose taxes of their own.
While some might be surprised to see such high sales figures in the midst of a global pandemic, the strong sales month is hardly an isolated incident. Sales in May also set new records after a relatively slow March and April. Prior to May, the top sales month was January, when stores first opened. On the inaugural day of legal sales, this past New Year’s Day, customers bought more than $3.1 million worth of products.
Oregon, which began commercial sales to adults in 2015, has also seen record cannabis sales this year amid the coronavirus pandemic. Relative to 2019, an unusual spike in sales came in March, which officials attribute to consumers stocking up on products as stay-at-home orders took effect. Oregon then saw a record-high sales month in April, the first full month under the coronavirus lock lockdown, boosted in particular by sales around April 20.
But while Oregon analysts expect the strong sales to continue awhile longer, they warned this spring of a coming downturn as COVID-19’s consequences—on both Oregon’s population and its economy—work to diminish consumer demand and purchasing power.
“Expectations are that some of these increases are due to temporary factors like the one-time household recovery rebates, expanded unemployment insurance benefits, and the shelter in place style policies,” the state’s Office of Economic Analysis said in a May report. “As the impact of these programs fade in the months ahead, and bars and restaurants reopen to a larger degree, marijuana sales are expected to mellow.”
For states, the busy cannabis sales have brought in record tax revenue at a time when many cities and states need it most. As the Chicago Daily Herald reports, state sales taxes are off by more than $181 million compared to the 2019 fiscal year. Also down are hotel taxes ($64 million), automobile taxes ($7 million) and public utility taxes ($64 million).
While Illinois cannabis tax revenue for June has yet to be reported, it’s likely that amount will also set a record given its close relationship to total sales.
The state has consistently brought in tens of millions of dollars from legal marijuana sales each month since sales launched. Per state policy, 35 percent of that money goes to the state’s general fund, 25 percent goes to aid communities disproportionately affected by the war on drugs, 20 percent goes to substance use treatment and mental health programs and 10 percent goes toward the state’s bill backlog.
In May, Illinois officials announced they would use $31.5 million of marijuana tax revenue to fund restorative justice grants to communities harmed by the drug war. “Equity is one of the administration’s core values,” said Lt. Gov. Juliana Stratton (D), who made one of the state’s first legal cannabis purchases, “and we are ensuring that state funding reaches organizations doing critical work in neighborhoods most impacted by the war on drugs.”
Summer Dreams Of Marijuana-Infused Slushies Are Melted By Oklahoma Regulators
Bad news for Oklahoma medical marijuana patients trying to beat the summer heat with a marijuana-infused slushy: State regulators say the icy beverages “are unlikely to meet requirements set forth in Oklahoma statutes and rules” for cannabis products.
As the weather heats up, THC-infused slushy machines have been popping up at more and more Oklahoma dispensaries. Made by companies such as Glazees, which offers flavors such as watermelon and blue raspberry, the THC-infused drinks sell for about $12-$15.
But despite their popularity with some patients, regulators say the slushies fail to comply with a number of state rules, such as a requirement that products be packaged in child-resistant containers. Dispensaries themselves also “are not allowed to alter, package, or label products,” regulators said.
State rules further require that all medical marijuana products be tested in their final form. “In this instance, the finished product is the slushy mixture to be dispensed to patients/caregivers, not the syrup,” regulators said. “If water, ice, or any other substance is added to the product, additional testing is required to ensure the product is safe for consumption and final-product labeling is accurate.”
The OMMA has received multiple inquiries regarding the processing and dispensing of marijuana-infused slushies on-site at medical marijuana dispensaries. Learn more here: https://t.co/3b6XFzYe2f pic.twitter.com/MPq4Z3PWft
— Oklahoma Medical Marijuana Authority (@OMMAOK) July 2, 2020
Regulators didn’t specify how adding water or ice to cannabis products could affect consumer safety, however.
The Oklahoma Medical Marijuana Authority (OMMA) issued the update on Thursday in what it called a “slushy-machine guidance” memo. The office said it had received “multiple inquiries regarding the processing and dispensing of marijuana-infused slushies on-site at medical marijuana dispensaries.”
It’s not the first obstacle encountered by Oklahoma marijuana businesses, which began popping up across the state voters passed a medical marijuana law in 2018.
Earlier this year, lawmakers passed a wide-ranging medical cannabis expansion bill, which would have allowed out-of-state residents to obtain temporary licenses, permitted licensed businesses to deliver marijuana to customers and eliminated jail time for for first-time possession convictions. But Gov. Kevin Stitt (R) then vetoed the bill, and lawmakers didn’t hold a vote to override the action.
Oklahoma activists also filed a proposed marijuana legalization ballot measure in December, but it’s unlikely the campaign can gather enough signatures to put the measure before voters this November. Their signature-gathering was largely delayed due to the coronavirus pandemic, and only last week did the state Supreme Court rule that the campaign could initiate petitioning. Supporters now have about 90 days to gather nearly 178,000 signatures from registered voters.
Photo courtesy of Max Pixel
Yelp Blocks Marijuana Businesses From Two Key Advertising Features
Yelp is no longer offering two key advertising features to marijuana-related businesses, the company confirmed to Marijuana Moment.
Two cannabis businesses have shared an email from Yelp announcing the policy change. It states that the company had “unfortunate news” and that it will be removing both the “Business Highlights and Portfolio advertising options for cannabis-related businesses, effective immediately.”
“We will be removing these programs from your Yelp page over the course of the next few business days,” the email continues.
The Berkeley Patients Group (BPG), which is the longest-running cannabis dispensary in the country, told Marijuana Moment on Wednesday that it has already seen a significant impact since receiving the notice two days earlier.
“This is yet another blow for us—amidst a devastating pandemic, no less,” BPG Director of Marketing Lauren Watson said. “Yelp was one of only a few effective advertising channels available to legal cannabis companies, and now, without warning, we’re being shut out. Just two days after the new policy was implemented, we’re seeing over a 60 percent decline in page views.”
In a tweet, the chief technology officer of cannabis delivery company Bud.com shared a screenshot of the email from Yelp.
Two features forward – one feature back? We just got this email from Yelp: they have elected to discontinue a few of the few advertising options for cannabis businesses on their platform: pic.twitter.com/ZbidzrNbrG
— Justin Hall (@jah) June 16, 2020
“It’s frustrating to pay taxes and compete with unlicensed folks who can advertise digitally against you,” he said.
Yelp has listings for both licensed cannabis operators and unlicensed cannabis operators. All of them could purchase advertising features. It's frustrating to pay taxes and compete with unlicensed folks who can advertise digitally against you. Difficult for Yelp to check & manage
— Justin Hall (@jah) June 16, 2020
The Business Highlights service allows individuals to pay to feature up to six descriptors on their page showing what “makes their business unique” such as “family-owned.” The separate Portfolio option is another paid feature where businesses can include photos of projects they’ve completed “to showcase their quality of work, expertise, and specializations along with additional details such as cost and project timelines.”
A Yelp spokesperson told Marijuana Moment that the company made the policy change in February—though these two marijuana businesses said they only received notice of the change this week. Just prior to when the company says it made the decision to block marijuana firms from the premium products, an NBC News investigation found that Yelp’s site included pages for unlicensed cannabis dispensaries, prompting the launch of the verification process.
The company allows “cannabis businesses on our platform in all states where it is either recreationally or medically legal, as it’s important that consumers have access to first-hand information about these businesses,” the spokesperson told Marijuana Moment.
The representative did not directly reply to a question about the reasoning for the policy change. Instead, they discussed how Yelp does not “take revenue from cannabis businesses that have not purchased our Verified License product.”
“By verifying their license to operate, Yelp is able to confirm to consumers that the business has satisfied the requirements of their local regulator to operate legally,” they said. “Once verified these businesses are then eligible to purchase Yelp’s enhanced profile product only, at this time.”
Asked for clarification about whether verified marijuana businesses are eligible for the two advertising services mentioned in the email announcing the change to current clients, the spokesperson confirmed they are not.
“If a cannabis company purchases Verified License, they’re then only eligible to purchase Yelp’s enhanced profile product, at this time,” they said.
The company did not immediately respond to a follow-up question about why at least some businesses were not notified about the policy change until this week even though the company says it made the decision four months ago.
“This is just one more example of prohibition discouraging companies from working with legal cannabis businesses, depriving them of the basic and vital services enjoyed by every other industry,” Morgan Fox, media relations director for the National Cannabis Industry Association, told Marijuana Moment. “Given Yelp’s size and accessibility, this unfortunate decision will certainly be a blow to many cannabis businesses which are already hurting because of the pandemic, as well as lack of access to relief funds and other financial services.”
“Thankfully, there are some other services out there that can provide business information to consumers which are either tailored to cannabis or are willing to work with related businesses,” he said.
While Yelp provides the verification service for licensed marijuana businesses, the cannabis-focused directories Weedmaps and Leafly have both taken steps in recent months to prevent unlicensed shops from being advertised on their sites. WeedMaps said it removed about 2,700 listings for illegal dispensaries as of January and Leafly reported that it booted about 1,000 as of September 2019.
Photo element courtesy of Flickr/StickerGiant.