In Warning Shot, FDA Flexes Muscle on CBD Products and Health Claims

By David Gross

With a shot across Curaleaf Holdings Inc.'s bow, the U.S. Food & Drug Administration (FDA) put all cannabidiol (CBD) manufacturers, distributors, and retailers on notice. One question remains: "Who is next?"

The 2018 Farm Bill legalized hemp in the United States. While the FDA is expected to release new regulations on CBD products this fall, the agency is not waiting to send regulatory signals. Case in point: The FDA's Center for Drug Evaluation and Research sent Curaleaf a "Warning Letter" last week. In the letter, the FDA did not mince words in going after Curaleaf's marketing of CBD lotions, tinctures, patches, and disposable vaping pens for the treatment of anxiety, chronic pain, Parkinson's, Alzheimer's, heart disease, breast cancer, and other medical conditions. The FDA also targeted a pet product, Bido CBD for Pets. All of these products are available over-the-counter (OTC).

There are two key takeaways from the Warning Letter:

  • The FDA determined the Curaleaf products are not "dietary supplements."

  • The FDA determined the Curaleaf products are "new drugs."

The implications for Curaleaf and its peers are substantial and ripple through the entire CBD supply chain.

For starters, the FDA will not allow companies to roll out CBD products as "dietary supplements" under the Dietary Supplement Health and Education Act (DSHEA). Although health advocates have been clamoring for more stringent regulations on dietary supplements for over twenty-five years, the current regulations are nowhere close to the ones for drugs.

Worse yet, the FDA determined Curaleaf was selling unapproved "new drugs" under the Food, Drug & Cosmetics (FD&C) Act. This determination could force Curaleaf to move its CBD products into the FDA's "new drug" approval process. The FDA infographics below summarize this process, a process that can last a decade.

The FDA could have stopped there. However, it went further and appeared to preempt any effort to use an alternative OTC drug approval process, the OTC Drug Monograph Process, with two statements:

  • Curaleaf's human and pet products are "not generally recognized as safe and effective [GRASE] for the above referenced uses."

  • Curaleaf's human products are "offered for conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners."

The implications of these statements are clear. Since meeting the GRASE standard allows OTC drugs to bypass the "new drug" process and utilize the OTC Drug Monograph Process, the FDA will likely try to move CBD products under the "new drug" process. Moreover, the FDA may also attempt to require CBD manufacturers to show that their OTC products treat conditions that the FDA believes consumers can self-diagnose and treat. While this standard exists today for all OTC products, it is a standard that is hard to meet. If CBD manufacturers cannot meet this standard, they could find themselves seeking prescription drug approvals or forced out of the market.

In response to the FDA's letter, Curaleaf promptly removed health claims from its website and social media sites. However, Curaleaf did not withdraw its products from the market. In a press release, Curaleaf stated, "We can reaffirm that nothing in the letter raises any issues concerning the safety of any Curaleaf product...Curaleaf CBD products are all derived from hemp and meet the requirements of the [2018] Farm Bill." The first part of this statement is inaccurate, because the FDA characterized Bido CBD for Pets (pure, bacon, and salmon flavors) as "unsafe" and "adulterated.” The second part, with its mention of the Farm Bill, could be designed to set the stage for a legal showdown that pits the FDA's authority to regulate CBD against the Farm Bill's legalization of hemp.

In contrast to Curaleaf's response to the FDA's Warning Letter, CVS Health moved quickly to pull all Curaleaf products from CVS stores and has no plans to resume selling them.

This fall, the FDA is expected to issue new regulations for CBD products. Litigation is likely, if not inevitable. Regardless, the FDA has now put all CBD manufacturers, distributors, and retailers on notice, and the Wild West period for CBD products could be coming to an end. As Curaleaf and its peers continue to push the regulatory envelope, national distributors and retailers with CBD product lines should rethink the risks and refine their plans. Those who don't may find themselves in the FDA's sights.

David Gross is a Founder & Managing Director at Strategic Value Partners (SVP). SVP delivers tangible results through strategic planning, team building and development, and intensive change management. SVP serves aerospace and defense, automotive, healthcare, natural resource, retail, and TMT companies. SVP also collaborates with alternative investment managers. In every case, SVP's goal is to create exponential returns while proactively managing strategic, operating, and financial risks. For additional information, please visit or email