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FTC Threatens Civil Penalties for Unsubstantiated Claims

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Marketing CBD products is a challenge. For years we’ve written about risks associated with making health-related claims in marketing. But there’s another avenue that the federal government doesn’t like: unsubstantiated claims. Last week, the Federal Trade Commission (FTC) decided to ratchet up enforcement and sent out warning letters to nearly 700 companies (some of which offer CBD products) concerning their alleged unsubstantiated claims.

FTC’s template warning letter, styled “Notices of Penalty Offenses,” is here. The letter notes that it includes the FTC’s Notice of Penalty Offenses Concerning Substantiation of Product Claims (or “Substantiation Notice“) and Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials (or “Endorsement Notice“). It also notes that receipt of a notice of penalty offenses can lead to civil penalties of up to $50,120 per violation. Under federal law, in some cases each day of continuing activity could be construed as a separate violation.

The FTC’s various notices address a host of potential issues, which we may dig into in detail in subsequent posts. For today, there are two general buckets of concerns: unsubstantiated claims and issues around endorsements (I’ve written about FTC endorsement issues on a few occasions, see here for example).

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Happy Holidays from The Canna Law Blog

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Wishing all of our readers, along with friends and families, the very best this holiday season.

Whether you celebrate Hanukkah, Christmas, Kwanzaa, Winter Solstice, Festivus, or something else, we hope you can kick back and enjoy this wonderful time of the year.

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How Important is the SAFE Banking Act, Anyway?

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I’m pretty sure that more ink has been spilled on the Secure and Fair Enforcement Act (“SAFE Banking”), than any other proposed cannabis law. It just won’t pass and it just won’t die. Specifically, SAFE Banking was introduced in 2017 and it passed the House seven times (seven times!) with bipartisan support since 2019. The public likes it too: here’s a November 2022 Data for Progress poll revealing that “By a +65-point margin, voters support ensuring that banks do not discriminate against legitimate marijuana-related businesses.” This bill should pass, right?

It’s getting closer. SAFE Banking will finally go to mark-up this week in the Senate Banking Committee. That Committee is preparing to vote before October 1, although what they’ll be voting on at this point isn’t entirely clear. (For some chatter on that, check out this Marijuana Moment piece from last Friday.) But let’s assume that SAFE Banking, after mark-up, holds onto its key tenets. It would prevent federal banking regulators from:

prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as a lawyer or landlord providing services to a legal cannabis business); terminating or

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Employment Law Issues for Struggling Businesses

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We all know the Oregon cannabis industry is struggling. We write often about the causes on a macro level, possible solutions, and what we see as business litigators. We haven’t written much about one of the basic areas of employment law that applies to Oregon marijuana businesses: workers rights to wages and employer responsibilities. As marijuana businesses shutter, employees and employers should pay careful attention to Oregon’s wage laws. This post addresses basic things marijuana employees and employers ought to know about paying wages when employment ends.

No formal contract is required to create an employment relationship

There is no requirement under Oregon law for a formal contract to establish an employment relationship. As long as the ordinary elements of contract formation are present an employment relationship exists. Usually this means that the person for whom the service is performed (employer) agrees to have another perform the service (employee) for a certain remuneration (wages). And where the putative employer has a right of control over the services provided by the putative employee.  Typically this boils down to compensation and right-of-control.

When these elements are present an employer’s promises of wages and benefits are binding. On the flip side, the general

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