The Federal Trade Commission has issued its first refunds to customers of Kushly, a CBD-based company. The FTC accused Kushly of making unsupported claims about the health benefits of its products and failing to disclose that it paid affiliates for favorable reviews and endorsements.

Kushly made "several unsupported claims in their advertising concerning the health benefits of their products," the FTC stated.

Kushly is not the first company to be accused of false marketing. And it may not be the last, as federal regulators continue to scrutinize cannabis companies for mislabeling their products and deceiving customers.

In January 2019, Kushly agreed to pay a $3 million penalty after making "several unsupported claims in their advertising concerning the health benefits of their products," according to an announcement by the Federal Trade Commission (FTC). The agency also indicated that Kushly failed to produce adequate evidence supporting those claims and did not disclose that they paid affiliates for favorable reviews and endorsements.

For example, the company said its gummies would ease migraine pain and prevent headaches from occurring; its creams and salves could treat or even cure disorders such as psoriasis, eczema, and acne.

For example, the company said its gummies would ease migraine pain and prevent headaches from occurring; its creams and salves could treat or even cure disorders such as psoriasis, eczema, and acne.

The FTC said Kushly failed to have evidence for these claims.

"CBD does not cure anything," the federal agency wrote in a statement announcing its charges against Kushly. "It is a compound found in cannabis plants that may offer some health benefits."

The FTC said that in addition to making these claims, Kushly didn't produce adequate evidence to back them up.

The FTC's complaint against Kushly states that the company falsely marketed its products as "all-natural, pesticide-free, and pesticide-tested" when they contained pesticides. In addition to making these claims, Kushly didn't produce adequate evidence to back them up.

The FTC also alleges that Kushly made deceptive claims about its products being organic or non-GMO when they weren't organic or contained genetically modified organisms (GMOs). The agency is seeking a court order requiring the company to stop making allegations about their products and pay refunds for consumers who bought them.

The company also "failed to disclose that it paid affiliates for favorable reviews and endorsements," according to the agency.

Kushly also paid affiliates to write positive reviews and endorsements on a variety of social media platforms, including Facebook and Instagram, according to the FTC.

In some cases, these promotional posts generated tens of thousands of dollars in sales for Kushly — with none of it going back to the consumer who posted them, according to an FTC statement.

CBD products are becoming increasingly popular in the United States, and Kushly is not the first company to be accused of false marketing.

CBD, an active ingredient in cannabis, treats pain, anxiety, and other conditions. It's not psychoactive, so it doesn't get you high, and it's also not addictive or a controlled substance. CBD is legal in all 50 states — but some of the marketing tactics used by brands like Kushly have drawn the ire of regulators for being deceptive and misleading consumers about what they're buying.

Kushly isn't the first company to be accused of falsely marketing its CBD products. In February 2019, Seneca Foods was fined $1 million by New York state officials who said its "5-Star Hemp Oil" food supplement was falsely advertised as containing cannabidiol (CBD). The Food and Drug Administration has also sent warning letters to companies selling CBD products that are marketed as dietary supplements but contain unapproved drugs — including Kanesville Botanicals, who received one such letter last year.

Conclusion

It's important to remember that CBD is not a magic pill. While some studies have shown benefits for certain conditions, it's still unclear how much of this is due to the placebo effect. The FTC issued a warning about these products earlier this year, but it seems Kushly didn't get the message. We hope other companies learn from their mistakes!