America’s leading CBD company is facing a costly court battle after being accused of selling products wrongly labeled as ‘dietary supplements’.
Colorado-based company Charlotte’s Web says it will vigorously defend itself following the filing of the law-suit in California. The looming court battle adds to the gloom shadowing the industry following last week’s U.S. Food And Drug Administration (FDA) announcement that CBD poses ‘real risks’ to users’ health.
A second company, Infinite Product Co, trading as Infinite CBD, has also been named in a second class-action with both alleging the companies have misled consumers by marketing their products as dietary, or food supplements.
Company Disputes Claims
A Nutraingredients website report names the same plaintive in both actions saying that in the Charlotte’s Web case they had bought a bottle of CBD oil which was allegedly labelled as a ‘dietary supplement.
Both have been filed with the Central District of California court and follow on from last week’s announcement by FDA, and the issuing of warning letters to 15 firms over the incorrect labelling and advertising of their CBD products.
The FDA’s letters to these companies – found here – reiterate its stance on CBD as a dietary supplement.
They say: “(The) FDA is not aware of any evidence that would call into question its current conclusion that CBD products are excluded from the dietary substance definition.”
Charlotte’s Web issued a statement rebutting the claims but the news rocked the share price, which fell by 10% before recovering slightly. While the ‘class-action’ law suit has yet to be served the billion-dollar company says in it statement that it is ready for the fight:
“(Charlotte’s Web) became aware of a yet-to-be served class-action suit having been filed in the Northern District of California that alleges that the Company’s products are mislabeled as dietary supplements. The Company believes that its products are accurately labeled and that the claims are without merit. The Company intends to vigorously defend itself against any such suits.”
Charlotte’s Web holds itself up as one of the respectable citizens in the frontier town that is the unregulated U.S. CBD market.
FDA Has Its ‘Full Support’
Its products are found in almost 10,000 stores throughout the country and it strongly supports efforts to deliver regulatory discipline.
The MotleyFool website reports on the views of its CEO Deanie Elsner, speaking during its recent third-quarter earnings conference call when he said it ‘fully supports the FDA’s position on unsubstantiated claims and we are working closely with our partners on these efforts’.
The report goes on to say that Charlotte’s Web seems to be gearing up to adapt accordingly once the FDA acts. It quotes Elsner as saying:
“We continue to progress our expansion plan so that when the FDA regulations are set for the CBD category, we are ready with the infrastructure and capacity to disproportionally capture that growth.”
A class-action lawsuit is one in which a group of people with the same or similar injuries caused by the same product or action sue the defendant as a group.
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