Suit against medicinal chocolate maker good reminder that mistakes on your labels over ABV%, THC, or CBD content are an invitation to a lawsuit, regardless of your intent.
Craft and nascent industry producers and manufacturers rarely face the realities of consumer fraud litigation that runs rampant for larger industry players. The reason is simple – deep pockets. The type of plaintiffs’ class action firms that go after these cases would rather chase the likes of MedMen and MillerCoors who can afford to pay out, and whose products sell at such large quantities that class sizes even over trivial class injuries, can amount to big awards.
Recently, however, small producers in craft beer and those in the fledgling cannabis industry have made news over mistakes or suits that are ripe for the type of class action complaints over improper product advertising or untruthful disclosures.
The recent fiasco involving 450 Brewing should put craft brewers on notice that testing for ABV and not just relying on some form of calculation done at the brewery is a better method for ascertaining truthful information for use on the labels. This is a problem when cans or labels are ordered in bulk to save money, but variations in batch strength may be outside tolerance levels for ABV reporting on malt beverages (+/- 0.3%). But the angle left out of reporting over that type of story is just how much exposure comes from that kind of mistaken product disclosure. Remember, Anheuser was sued for just that type of purported mistake a few years ago.
Testing by a law firm and then finding a plaintiff may be frowned upon, but it’s how many of these suits come about. Take for example the recent lawsuit against Bhang Corporation over false/deceptive/misleading product labels on its cannabis laden medicinal chocolates. The lawsuit alleges that the complainant purchased Bhang’s products believing them to have the THC and CBD content as labeled, but that an independent lab test commissioned by the plaintiff showed that the levels of CBD and THC in the products were less than what was disclosed on the packaging. In most states, this type of mislabeling is both a statutory cause of action under the state’s consumer fraud laws, but also gives rise to regular fraud and negligent misrepresentation claims – which is what Bhang was sued for in this case.
The Bhang Products contain the statements, representations, and warranties, which were/are and are false, misleading, and deceptive claims and advertisements set forth on packaging, labeling and in advertisements as alleged herein. On information and belief, the Bhang Products do not contain the amounts and/or levels of THC and/or CBD identified on the Products’ labels, packaging, and marketing materials. Independent lab testing commissioned by Plaintiff of the Bhang Products reveals that the amounts and/or levels of THC and/or CBD do not conform to the statements, representations, and warranties set forth on the front and back labels, packaging, or marketing materials of the Bhang Products. The actual amounts and/or levels of THC and/or CBD are substantially less than stated on the front and back of the labels, packaging, and marketing materials by Defendants. Consumers, such as Plaintiff and the proposed class purchase medicinal products for the amounts and/or levels of THC and/or CBD. The amounts and/or levels of THC and/or CBD are not only material, but the primary reason consumers purchase THC and/or CBD products such as Bhang Products. But for the false statements, representations, and warranties contained on the Bhang Products’ front and back labels, packaging, and marketing materials.
Testing is expensive, but not as expensive as a suit over mislabeling.
Sending your products to a lab for testing prior to labeling and marketing is the best way to ensure you avoid these types of claims.