FTC/FDA Send Letters to THC Edibles Companies Warning of Risks to Children

Earlier this week, the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) sent cease-and-desist letters to several companies warning them that their products, which were marketed to mimic popular children’s snacks, ran the risk of unintended consumption of the Delta-8 THC by children. In addition to the FDA’s concerns regarding marketing an unsafe food additive, the agencies warned that imitating non-THC-containing food products often consumed by children through the use of advertising or labeling is misleading under Section 5 of the FTC Act. The FTC noted that “preventing practices that present unwarranted health and safety risks, particularly to children, is one of the Commission’s highest priorities.”

The FTC’s focus on these particular companies and products shouldn’t come as a surprise. One such company advertises edible products labelled as “Stoney Ranchers Hard Candy,” mimicking the common Jolly Ranchers candy, and “Trips Ahoy” closely resembling the well-known “Chips Ahoy.” Another company advertises a product closely resembling a Nerds Rope candy, with similar background coloring, and copy-cats of the Nerds logo and mascot. This is not the first time the FTC has warned companies about the dangers of advertising products containing THC in a way that could mislead consumers, particularly minors. In July of 2023, the FTC sent cease-and-desist letters to six organizations for the same violations alleged this week – there companies copied popular snack brands such as Doritos and Cheetos, mimicking the brands’ color, mascot, font, bag style, and more.

This batch of warning letters orders the companies to stop marketing the edibles immediately, to review their products for compliance, and to inform the FTC within 15 days of the specific actions taken to address the FTC’s concerns. The companies also are required to report to the FDA on corrective actions taken.

SEC Brings Fraud Charges Against Oil and Gas Company and Its CEO

Katten Muchin Law Firm

On August 4, the Securities and Exchange Commission instituted cease-and-desist proceedings against Houston American Energy Corp., an oil and gas exploration and production company, and John F. Terwilliger, its CEO, for making fraudulent claims about the company’s oil reserves. According to the SEC, during late 2009 and early 2010, Houston American raised approximately $13 million in a public offering and saw its stock price increase from less than $5 to more than $20 per share after fraudulently claiming that a Colombian exploration concession, in which Houston American owned a fractional interest, held between one billion and four billion barrels of oil reserves that would be worth the equivalent of $100 per share to investors. The SEC alleged that those estimates lacked any reasonable basis and were falsely attributed to the concession’s operator, who actually had much lower estimates. The SEC order charged Houston American and Mr. Terwilliger with violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act); Rule 10b-5, Section 20(b) of the Exchange Act; and Section 17(a) of the Securities Act of 1933. The SEC seeks a civil penalty and disgorgement from Houston American, and to prohibit Mr. Terwilliger from acting as an officer and director of the company.

Matter of Houston American Energy Corp. et al, Admin. Proceeding No. 3-16000 (Aug. 4, 2014).

ARTICLE BY

Of