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Case Study: CBD Products and the “Wild West” of Fraudulent Labels

Mark

CBD

Case Study: CBD Products and the “Wild West” of Fraudulent Labels

By Mark Kastel, Director, OrganicEye

Since Congress charged the USDA with protecting organic stakeholders from fraudulent practices, illegal organic marketing claims have been the most common violations reported to the agency. Our most recent report at OrganicEye examines the rapidly expanding CBD market, uncovering numerous examples of gross violations flying under the radar screen.

In Spotting the Hackers of Hemp: The Value of Authentic Certified Organic CBD Products, we offer examples of companies claiming organic status without going through the rigorous third-party inspection and auditing process required by federal law. As with certified organic food, organic CBD eliminates the risks and hazards of environmentally dangerous farming practices, including the use of synthetic fertilizers, pesticides, sewage sludge, and GMOs. Organics also shuns toxic ingredients and processing substances and practices, like volatile solvent extractions.

In addition to representing conventional hemp products as organic, we found marketers engaging in illegal subterfuge, including creating their own ‘organic’ logos because they can’t use the official USDA seal and using the word ‘organic’ in their brand names when the products do not qualify for organic labeling.

The meteoric growth of hemp production and its associated products was made possible by the congressional Farm Bills of 2014 and 2018 (with the stipulation that the hemp contain no more than .3% tetrahydrocannabinol, or THC).

With aggressively growing consumer demand for hemp-derived cannabidiol (CBD) and related products, it is not surprising that some marketers engage in misleading or even fraudulent practices. The global CBD market is expected to expand at a compound annual growth rate of 22.2% from 2019 to 2025, putting it on track to reach $23.6 billion by 2025.

Jay Feldman, executive director of Beyond Pesticides and a former member of the National Organic Standards Board, told me that, in previous investigations, including Pushing for Organic Cannabis as Industry Grows, Beyond Pesticides found widespread use of toxic pesticides in hemp (or cannabis) production, making the need for legitimate certified organic products especially important to public health and environmental protection. Because the U.S. Environmental Protection Agency (EPA) has not fully evaluated the potential hazards of pesticide residues from its production and cumulative risk, exposure through ingestion, absorption through the skin, and inhalation raises serious safety concerns, according to various scientific sources, including Environmental Health Perspectives.

OrganicEye’s research on CBD marketing was generated in response to multiple accounts of questionable organic claims sent to the project by industry stakeholders and concerned consumers.  The report reviews organic claims made by a cross-section of manufacturers of CBD products; provides an overview of organic CBD production and the certification process; and separates authentic organic products—certified organic from the farm to the consumer—from those with unsubstantiated organic claims.

A number of the brands investigated were properly certified by an accredited certifier under the USDA organic program.  When companies indicated that their products were organic but were not able to provide verification or evidence that the products were actually produced and packed by a certified organic operation, OrganicEye included them in a formal legal complaint filed with USDA’s Agricultural Marketing Service. 

We believe many of those claims are misleading, at best, and likely illegal, when the company itself is not certified.

The USDA Certified Organic seal signifies that rigorous standards have been met by both the farm producer and the processor—and subsequently verified by a USDA accredited certifying agency. Some companies that do not appear to be certified organic have created their own logos to use instead, often appearing to mimic the official seal.

Organic claims on websites [of non-certified marketers] are almost too numerous to mention. Phrases such as “organic,” “organically grown,” “organic methods,” and “organic farming practices” are common but, without USDA organic certification, they are not verifiable.

OrganicEye also filed formal complaints against marketers using “organic” in their corporate or brand names when not exclusively selling certified organic products. The report concluded that, although there has always been some degree of fraud, misuse, and misleading marketing in labeling language in the organic industry, it seems to be particularly flagrant in the wild west of CBD products.

Jahan Marcu, PhD, Editor in Chief at American Journal of Endocannabinoid Medicine, told me, “Companies that have gone through significant challenges to be compliant, and do things right, will appreciate this report.” And I hope he’s right.

Along with concerns about organic authenticity issues, there have been numerous consumer interest, media, and regulatory exposés highlighting CBD potency inaccuracies and contaminants. The Clean Label Project’s [M2] investigation into the true content of America’s best-selling CBD products was covered by NBC and CBS. In addition, FDA conducted a testing and labeling investigation in 2019.

The OrganicEye report marks the first time anyone has drilled down on the organic claims that have become so ubiquitous in the marketing of CBD products.

We are requesting that the USDA promulgate new regulations that will require online retailers, whether selling organically labeled CBD products or food, to disclose on their websites the name of the accredited certifier—just as it is legally required on packaging. Like a brick-and-mortar retailer, where consumers can inspect the packaging and verify the required organic certification disclaimer, shoppers online should have the same ability.

The good news is there are plenty of choices for legitimate certified organic CBD products listed in the appendix to our report. Now it is up to USDA to step up their game to protect ethical industry participants and consumers who are willing to invest in authentic organic products from the bad actors in the CBD marketplace.

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Mark Kastel has worked to protect the interests of ethical farmers, entrepreneurs, and their customers from unethical practices for almost 20 years. He runs OrganicEye, a Washington-based organic industry watchdog. He can be reached through the organization’s website: www.organiceye.org.

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