Kushly Industries LLC; Analysis of Proposed Consent Order To Aid Public Comment, 28109-28110 [2021-10976]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 86, Number 99 (Tuesday, May 25, 2021)]
[Notices]
[Pages 28109-28110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10976]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 202 3111]


Kushly Industries LLC; Analysis of Proposed Consent Order To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis of Proposed Consent Order to Aid 
Public Comment describes both the allegations in the draft complaint 
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.

DATES: Comments must be received on or before June 24, 2021.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write ``Kushly 
Industries LLC; File No. 202 3111'' on your comment, and file your 
comment online at https://www.regulations.gov by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Reid Tepfer (214-979-9395) and Luis 
Gallegos (214-979-9383), Federal Trade Commission, Southwest Regional 
Office, 199 Bryan Street, Suite 2150, Dallas, TX 75201.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 24, 2021. 
Write ``Kushly Industries LLC; File No. 202 3111'' on your comment. 
Your comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to the COVID-19 pandemic and the agency's heightened security 
screening, postal mail addressed to the Commission will be subject to 
delay. We strongly encourage you to submit your comments online through 
the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Kushly 
Industries LLC; File No. 202 3111'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610, (Annex D), Washington, DC 20580; or deliver your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 
5610, (Annex D), Washington, DC 20024. If possible, submit your paper 
comment to the Commission by courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the https://www.regulations.gov website--as legally 
required by FTC Rule 4.9(b)--we cannot redact or remove your comment 
from that website, unless you submit a confidentiality request that 
meets the requirements for such treatment under FTC Rule 4.9(c), and 
the General Counsel grants that request.
    Visit the FTC website at https://www.ftc.gov to read this Notice and 
the news release describing the proposed settlement. The FTC Act and 
other laws that the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
that it receives on or before June 24, 2021. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing a consent order from Kushly 
Industries LLC and Cody Alt, individually and as an officer of Kushly 
Industries LLC (``Respondents''). The proposed consent order has been 
placed on the public record for 30 days for receipt of comments from 
interested persons. Comments received during this period will become 
part of the public record. After 30 days, the Commission will again 
review the agreement and the comments received, and will decide

[[Page 28110]]

whether it should withdraw from the agreement and take appropriate 
action or make final the agreement's proposed order.
    This matter involves the Respondents' advertising of products 
containing cannabidiol (``CBD Products''). The complaint alleges that 
Respondents violated Sections 5(a) and 12 of the FTC Act by 
disseminating false and unsubstantiated advertisements that claimed: 
(1) CBD Products effectively treat, mitigate, or cure diseases or 
health conditions including: Sleep disorders, including insomnia and 
narcolepsy; psychiatric disorders, including depression, bipolar 
disorder, post-traumatic stress disorder, psychosis, and anorexia 
nervosa; cancer; multiple sclerosis; Parkinson's disease; hypertension; 
Alzheimer's disease; acne, psoriasis, eczema; arthritis; muscle spasms; 
pain resulting from endometriosis; and dysmenorrhea; and (2) studies or 
scientific research prove CBD Products effectively treat, mitigate, or 
cure multiple sclerosis, generalized anxiety disorder, post-traumatic 
stress disorder, panic disorder, obsessive-compulsive disorder and 
social anxiety disorder, depression, cancer, sleep disorders, 
hypertension, Parkinson's disease, Alzheimer's disease, acne, 
psoriasis, and eczema, and improve sleep.
    The order includes injunctive relief that prohibits these alleged 
violations and fences in similar and related conduct. The product 
coverage would apply to any dietary supplement, drug, or food 
Respondents sell or market, including CBD Products.
    Part I prohibits Respondents from making any representation about 
the efficacy of any covered product, including that such product 
effectively treats, mitigates, or cures diseases or health conditions 
including: Sleep disorders, including insomnia and narcolepsy; 
headaches; psychiatric disorders, including depression, bipolar 
disorder, generalized anxiety disorder, panic disorder, obsessive-
compulsive disorder and social anxiety disorder; post-traumatic stress 
disorder, psychosis, and anorexia nervosa; cancer; multiple sclerosis; 
chronic drowsiness; Parkinson's disease; hypertension; Alzheimer's 
disease; acne, psoriasis, eczema; arthritis; muscle spasms; pain 
resulting from endometriosis; and dysmenorrhea; unless the 
representation is non-misleading, including that, at the time such 
representation is made, they possess and rely upon competent and 
reliable scientific evidence that substantiates the representation is 
true.
    For purposes of Part I, competent and reliable scientific evidence 
must consist of human clinical testing of the covered product, or of an 
essentially equivalent product, sufficient in quality and quantity 
based on standards generally accepted by experts in the relevant 
disease, condition, or function to which the representation relates, 
when considered in light of the entire body of relevant and reliable 
scientific evidence, to substantiate the representation is true. Such 
testing must be: (1) Randomized, double-blind, and placebo-controlled; 
and (2) conducted by researchers qualified by training and experience 
to conduct such testing.
    Part II prohibits Respondents from making any representation, other 
than representations covered under Part I, about the health benefits, 
performance, efficacy, safety or side effects of any covered product, 
unless the representation is non-misleading, including that, at the 
time such representation is made, they possess and rely upon competent 
and reliable scientific evidence sufficient in quality and quantity 
based on standards generally accepted by experts in the relevant 
disease, condition, or function to which the representation relates, 
when considered in light of the entire body of relevant and reliable 
scientific evidence, to substantiate the representation is true.
    For purposes of Part II, ``competent and reliable scientific 
evidence'' means tests, analyses, research, or studies that (1) have 
been conducted and evaluated in an objective manner by experts in the 
relevant disease, condition, or function to which the representation 
relates; (2) are generally accepted by such experts to yield accurate 
and reliable results; and (3) are randomized, double-blind, and 
placebo-controlled human clinical testing of the covered product, or of 
an essentially equivalent product, when such experts would generally 
require such human clinical testing to substantiate the representation 
is true.
    Part III requires that, with regard to any human clinical test or 
study (``test'') upon which Respondents rely to substantiate any claim 
covered by the order, Respondents must secure and preserve all 
underlying or supporting data and documents generally accepted by 
experts in the field as relevant to an assessment of a test.
    Part IV prohibits Respondents from misrepresenting: (1) That any 
covered product is clinically proven to treat, alleviate, or cure 
chronic pain, multiple sclerosis, anxiety, depression, cancer, sleep 
disorders, hypertension, Parkinson's disease, Alzheimer's disease, 
acne, psoriasis, and eczema; (2) that the performance or benefits of a 
covered product are scientifically or clinically proven or otherwise 
established; or (3) the existence, contents, validity, results, 
conclusions, or interpretations of any test, study, or other research.
    Part V provides Respondents a safe harbor for making claims 
approved by the Food and Drug Administration. Parts VI and VII require 
Respondents to pay the Commission $30,583.14 and describe the 
procedures and legal rights related to that payment. Parts VIII, IX, 
and X require Respondents to provide customer information to the 
Commission and to provide notice of the order to customers, affiliates, 
and other resellers.
    Part XI requires Respondents to submit an acknowledgement of 
receipt of the order, and for the individual Respondent to serve the 
order on certain individuals, including all officers or directors of 
any business the individual Respondent controls and employees having 
managerial responsibilities for conduct related to the subject matter 
of the order, and to obtain acknowledgements from each individual or 
entity to which a Respondent has delivered a copy of the order.
    Part XII requires Respondents to file compliance reports with the 
Commission and to notify the Commission of bankruptcy filings or 
changes in corporate structure that might affect compliance 
obligations.
    Part XIII contains recordkeeping requirements for accounting 
records, personnel records, consumer correspondence, advertising and 
marketing materials, and claim substantiation, as well as all records 
necessary to demonstrate compliance with the order.
    Part XIV contains other requirements related to the Commission's 
monitoring of Respondents' order compliance.
    Part XV provides the effective dates of the order, including that, 
with exceptions, the order will terminate in 20 years.
    The purpose of this analysis is to facilitate public comment on the 
order, and it is not intended to constitute an official interpretation 
of the complaint or order, or to modify the order's terms in any way.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2021-10976 Filed 5-24-21; 8:45 am]
BILLING CODE 6750-01-P