Kevin Thompson: The DSA’s statement About CBD Supplements Is Trash

Kevin Thompson: The DSA's statement About CBD Supplements Is Trash

Kevin Thompson – The MLM Attorney stated on his facebook:

The DSA considers the sale of CBD supplements violative of their code of ethics.

In my opinion, this measure seems more motivated by anti-competitive reasons than legitimate legal concerns. I have a suspicion that some of the larger companies are tired of losing people to CBD-based companies and they wanted something done about it. There’s a base of companies in our industry that prefer to compete via policymaking than actual competition.

In the DSA’s statement, they mischaracterized the state of the law in the CBD field. The FDA has acknowledged, in so many words, that the “floodgates have been opened” and that regulation is coming regarding the over-the-counter selling of CBD supplements. In the meantime, it’s gray.

It is true that the FDA has issued GUIDANCE on the subject. But guidance is NOT law. And if it were to become law, it would be met with serious challenge from all over the country, particularly at the state level for states (like Tennessee) looking for new ways to juice up tax revenues.

Also, the FDA has not initiated a SINGLE enforcement action against a company solely for selling CBD products. Instead, they’ve sent warning letters to companies that make disease claims (a problem that those of us in the industry are already aware of).

So with that, the DSA’s statement is more like virtue signaling. Or stated another way, it’s just trash.


About The Direct Selling Association

Direct Selling Association (DSA) is the national trade association for companies that market products and services directly to consumers through an independent, entrepreneurial salesforce. DSA serves to promote, protect and police the direct selling industry while helping direct selling companies and their independent salesforce become more successful.

We started in 1910 as the Agents Credit Association by a group of representatives in Binghamton, New York hoping to resolve issues with agents unable to collect payments. Today we provide members various services from educational materials, access to industry research, networking opportunities, professional development, and other support programs. We work with Congress, government agencies, consumer protection organizations and others on behalf of our nearly 130 member companies. One of the most pivotal roles we play is through our commitment to self-regulation and our Code of Ethics.

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Comments (12)

  1. Well said Kevin. In my opinion the DSA is hearing their death rattle just as unions are dying. When Vemma and Herbalife got hit the DSA was silent; not even a cricket chirping. And let be honest, the FDA is the yard dog for the big pharmaceutical companies. They are seeing the future of declining revenues with the increase of CBD and the results. The government has created prohibition with marijuana and they want to to the same with CBD. Things need to change and direct sales and the power of the people is how things change, not with bigger government and more unnecessary laws.

  2. “In my opinion, this measure seems more motivated by anti-competitive reasons than legitimate legal concerns. I have a suspicion that some of the larger companies are tired of losing people to CBD-based companies and they wanted something done about it.” Kevin Thompson

    ouch! The DSA is making an awful mistake! Some of its members are already CBD carriers, many companies that are not members and are growing fast are not members yet. Is the DSA losing relevance? or worst, is the beginning of a slow self impose death?

    And if this DSA decision was really pushed by some network marketing afraid of the CBD explosion…shame to you guys, and you deserve the lost of members.

    I wonder why the DSA did not make similar statements when Cryptocurrency exploded into the Direct Sales industry?

    The DSA used to be respected, now unless it recovers, its sealed of approve will mean nothing..

  3. Do not be naive…regulatory initiatives will come. Too much money hangs in the balance but also a lot of potential for abuse. Yes, the legal rep for MLM is accurate about his points but that should not be construed as complete.

    We have not yet seen what is likely to happen during the “gold rush” approach from so many new entrants to NM. There are a lot of moving parts here folks… 4 points:
    1. The level of professionalism with OTC offers is all over the board. Credible companies might choose to let the dust settle while these missteps are happening. I have heard from a number of NM pros who are choosing to NOT promote CBD because they do not want to risk credibility due to guilt by association with bad managers and “flash in the pan” marketers.
    2. On the other side of the coin, if you are just now exploring CBD, it could accurately define you as me-too focussed and not as a leader in the industry of adding value. Images of a trench coat opening up and a salesy mentality might be the impression left with your prospect as you simply look to increase your wallet share.
    3. Misunderstandings related to all products associated with hemp, the plant that CBD comes from is significant. The States are looking to work within economic/social boundaries in an effort to legalize various aspects and yet there are so many different rules that do change from state to state. This suggests and could represent much more heavy lifting than remembering a states tax code.
    4. There are medical professionals that have been working with hemp for a long time and they are avoiding the NM options because of valid reasons that they will iterate to a clientele who are looking for medical relief by addressing their ECS through these products. What I have clearly heard… multiple times is that they plan to embrace new customers who have had success w/ CBD (as well as those who have not) and address their medical wellness through brand(s) of products that are much more studied, controlled, and possibly more potent… essentially more appropriately matched and requiring/leaning on Dr involvement.

    Think it through and measure carefully what you intend to win and keep as customers.

    1. About health professionals, one of the main reason many health professionals stay away from network marketing is not because NM itself but the very small profit found when retailing the products. We introduced a bulk program just weeks ago and it had been a hit with health professionals. It us still very New but my projections tell me that this is a game changer.

  4. Kevin, my colleague and friend:

    Point well taken.
    It is suggested that while all the primary stakeholders, including the FDA, Congress and CBD industry, diligently and methodically work their way through a path to market for CBD, while balancing the issue with the existing regulatory framework, that secondary and ancillary stakeholders, such as the DSA, may wish to follow the metaphorical medical term, “watchful waiting”.

    It is important to remember that the DSA is first and foremost a “trade association” whose primary duty is to help its members both prosper, while at the same time they participate in the search for responsible dialogue and regulatory solutions. It will not serve a useful purpose to drive away its members. In other nuanced areas, for instance the disparity between the FTC and the direct selling industry on the role of personal use in pyramid regulation, or state employment/labor departments and direct selling on the determination of employee vs. independent contractor, the DSA has always tried to play a constructive and supportive role to its membership and the public, as such complex issues slowly evolved to consensus among stakeholders.

    Although it would be major “overkill” to reference the DSA as an “officious intermeddler”, this is a bit of a first, and it really was not necessary for the DSA to insert itself into the “process” of resolution by posing potential untenable choices to members.

    First, the FDA has not based its concerns on either “safety or efficacy”, but rather a technical regulatory regimen that requires an exemption from marketing a natural ingredient once that ingredient is included in a separate product that the FDA has approved for prescriptive medical use.

    Second, the DSA has never weighed in a products that technically contain an unapproved ingredient. For years, prior to the food industry undertaking to achieve GRAS status for the sweetner, Stevia, direct selling and other companies used Stevia in products.

    And even when DSA companies marketed Ma Huang (Ehphedra) for weight loss, in the face of federal and state safety warnings, the DSA did not interject itself.

    So, one must ask why is it necessary in the face of a growing multibillion dollar CBD industry, of which direct sellers are only a small fraction of participation, that the DSA feels compelled to insert itself.

    Probably a simple fix and respectful of the many DSA members and prospective members on this very nuanced subject which is in process of resolution by all the stakeholders, from FDA to Congress to industry, is to extend the effective date of this DSA directive from 90 days to 24-36 months. No resolution is possible in 90 days, but 24-36 months is a reasonable projection of time for Congress to act or the FDA to adopt regulations, given the fact that both have recognized a desire to achieve a path to market for CBD.
    And if the FDA, notwithstanding its position that CBD is not an approved ingredient, has failed to take any enforcement action in the absence of medical claims in violation of DSHEA, a reasonable question is “why should the DSA be in such a hurry to take enforcement action when the authorized federal agency appears to wish to allow the resolution process to play out in a deliberate fashion with the input of all stakeholders?”… why be so draconian when the government is exhibiting restraint?

    Jeff Babener
    Babener & Associates

    1. I appreciate your valuable feedback, Jeff. I always appreciate the historical perspective you provide in your commentary. Agreed, the DSA’s move is unprecedented and unhelpful. They had an opportunity to provide leadership and support some of their member companies as this new product category is established. Out of all of my clients, and I’m sure you’re seeing this on your end too, the companies that provide CBD products are generating excellent customer numbers. These companies are worthy of support, not condemnation. I agree that a 24 month wait-and-see period would’ve been a more responsible approach. But that brings me back to my comment (the one that Business for Home published)….the DSA’s decision seems anti-competitive and is not based on legitimate policy concerns.

      The DSA’s relevance is waning month-to-month. There’s a lack of leadership. And among the in-house attorneys that think they understand the industry, there’s a lack of intelligence.

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