And So it Begins: Lawyers Set Sights on CBD Market Over False Claims & Impure Products

At the end of last year, when President Trump scrawled his signature onto the 2018 Farm Bill, commercially grown hemp escaped decades of senseless prohibition as any cannabis plant with less than 0.3% THC was suddenly classified as “hemp”.

The hemp plant has thousands of uses and its fibrous stalks and nutrient-packed seeds have been used by cultures worldwide for hundreds of years. But, more recently, as we have discovered more about the potential health benefits of cannabidiol (CBD), the fact that most hemp varieties naturally carry higher amounts of CBD and little or no THC have put this variety of our favorite plant in high demand as farmers from coast to coast consider replanting their own traditional fields with this hot new regenerative and lucrative cash crop.

But until domestic hemp production can rise high enough to meet the ever-growing demand for CBD products in the U.S., the manufacturers of those products will source their key ingredient from just about anywhere and their shady morals along with the severe lack of regulation over hemp-derived CBD products has created a market rife with corruption and today’s version of the snake oil salesman.

Legal experts saw the writing on the wall as soon as Trump signed that new bill into law and those with clients in the CBD industry began to warn those companies that blowback litigation was sure to intensify as these products became more mass-produced and got put into the hands of more and more consumers. Alas, that is exactly what we have witnessed here in the first half of 2019.

Some of the cases we are seeing are business-to-business in nature. Take, for example, the recent story of JNV Farms versus C&N Ag LLC up in Oregon. JNV claims that it entered into a manufacturing agreement with C&N in which they would provide 13,800 pounds of CBD-rich hemp biomass to C&N who would then process it all into CBD isolate extract with C&N would then market and sell. Their alleged agreement has them splitting any profit at the end 50/50, according to JNV.

The material was delivered to the defendant in December of 2018 with the understanding that C&N would test the product and immediately begin the extraction process on the mountain of mids. Instead, JNV Farms insists that they got ghosted almost immediately and were denied access to the material or the resulting extracts completely before all communication between the two parties broke down completely.

The result now is a $2.5 million dollar lawsuit between the two.

With little or no regulatory oversight weighing on operators in this newly opened sector, it should surprise nobody when materials disappear, yields don’t make sense, or when fly-by-night companies live up to that description.

On the consumer end of the spectrum, every CBD manufacturer thinks they want their product in front of as many grannies & soccer moms as possible, but with every “Karen” you slang your product to, your chances of having them “ask for the manager” compounds upward.

We are already seeing a slew of consumer-led lawsuits against heavily branded low quality CBD companies. Most often, it is a dispute over what the label says is in the package versus what an independent lab test reveals is actually in it.

In the mildest cases, the actual CBD content may not quite match up with what the label promises. In more extreme cases, a product may be found to have zero CBD content despite label claims to the contrary. But in jawdroppingly stupid cases, such as the one reported on late last year by VICE, studies have detected such impurities as synthetic marijuana and a compound most commonly found in cough syrup when testing popular CBD products taken directly off of store shelves.

That’s right… Spice & ‘Tussin

Now ambulance chasing lawyers smell some blood and casting calls for allegedly aggrieved retail consumers have been flooding social media as attorneys nationwide see these well-funded CBD start-ups as fruit ripe for the picking.

So, as a CBD manufacturer who actually does have a moral compass and who strives to offer a safe and effective product, what can you do to avoid such a legal pitfall?

Look no further than legal cannabis markets like California and emulate their SOP’s. The rigorous mandatory third party lab testing done on all legal weed in the state annoys many operators and adds to the cost of the goods sold, but it performs a necessary task of keeping everyone honest. I don’t care how many tons of hemp biomass you process, that honesty is always a small yield in this new market, but proper testing will provide accurate labeling and dosing and would certainly reveal if anyone had added any bogus ingredients.

Since the federal government released the hemp plant from the shackles of prohibition, it will be up to them to establish some regulatory framework that can somehow work in all 50 states. I’m not real excited to see what they come up with for hemp, or eventually for weed. In the meantime, as a consumer caveat emptor and know your source anytime you consume or recommend any hemp-derived CBD products.

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