What’s Up with the Multi Level Marketing of Hemp-Derived CBD?

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If you’re involved in any way in the Cannabis industry – whether you’re a patient, advocate, or cannabis business person – chances are, you’ve heard about Kannaway, or its “Buzz Launch,” or Real Scientific Hemp Oil (RSHO), or hemp vape, or Hemp Meds Px, or Medical Marijuana Inc., or CannVest, or all of the above. And you’ve probably even gotten annoying, overbearing email spam in your personal or business accounts, and maybe even spammy-sounding “testimonials” in social media groups you moderate, soliciting you to join in this “great” new business opportunity.

The whole topic has caused a huge deal of conflict in the Medical Cannabis community, with many pertinent questions hotly debated and largely unanswered. So what’s the real deal with Kannaway? Are these companies all related? Is hemp-derived Cannabidiol legal? And what’s the deal with the Multi Level Marketing?

It’s confusing on many levels, to say the least. But some of these questions have already been answered by trustworthy sources.

I’m not going to write about the sketchy past of the principals involved in the company(ies), as Mickey Martin already did a fine job of that, as did Forbes Magazine after him. If you want to know how these companies are related to each other, you can read this press release and google on for lots more.

I’m also not going to write about the effectiveness or lack thereof of the products themselves, as I haven’t and don’t intend to try them myself, nor do I wish do call into question the parents who claim these products are effectively treating their children’s epilepsy conditions.

As far as the legality of hemp-derived Cannabidiol, I trust Martin Lee of Project CBD (who is quoted in the Forbes piece) as well as statements available online that come directly from the DEA. As Lee tells Forbes, ““They are trying to get around the law that says [cannabidiol] is a Schedule 1 substance,” says Lee. “The history of the people running the show, the shadiness of the operation, suggests that they see a way to make a fast buck out of a population that is desperate for miracles, when you see the kids with epilepsy, for people who are sick.”

I am not a legal expert, and there are certainly some gray areas being exploited, but that’s only part of what I’m writing about here.

What I do want to write about is the question that has been on my mind since I first started hearing about these companies: Why a Multi Level Marketing business model? Sure, people buy Avon – and maybe even Amway – but let’s face it: MLM isn’t exactly the most well-regarded route to product success, and in fact is often seen as sketchy in and of itself, regardless of the product being sold.

So why Multi Level Marketing? The answer to this question might be more sinister than you’d care to imagine.

Let’s start with the parents of children with intractable epilepsy. We all know by now that the pharmaceuticals routinely prescribed to these kids don’t work all that well, and worse, cause symptoms that can greatly diminish quality of life, or even cause fatal reactions. These parents are desperate to find effective treatment for their children, and when they hear about CBD-rich medicine, it seems like the Holy Grail – and for some kids, perhaps it is.

But with a 10-month waiting list for Charlotte’s Web and a required move to Colorado, many parents are undoubtedly heartbroken that getting the promising treatment they learned about on CNN is hardly simple. In other medical states, it’s often difficult to find reliable access to CBD-rich Cannabis strains, and in non-medical states it’s damn near impossible, not to mention illegal.

Enter Kannaway. The company’s “Buzz Launch” includes a series of slickly produced videos that clearly cost a pretty penny – someone put a lot of thought as well as investment into the marketing. Hemp Meds hemp-derived Cannabidiol products are available through mail order in all 50 states, and parents using these products for their kids are telling all the other parents in all the online pediatric epilepsy groups that it works just as well as Charlotte’s Web – or even better. And these parents are fond of saying, “It’s 100% legal!”

Sound too good to be true? There’s probably a reason for that, or maybe even a few.

For starters, these products aren’t really legal – and Martin Lee isn’t the only one who says so.

Numerous organizations and individuals have directly contacted the DEA for clarification on Cannabidiol’s legal status, and the DEA’s response is always the same: it’s illegal, and Schedule I. For example, from procon.org: “The Drug Enforcement Administration’s (DEA) Office of Congressional and Public Affairs wrote in a Sep. 27, 2011 email to procon.org:
“Cannabidiol is currently controlled in schedule I under the drug code for marijuana, 7360… Cannabidiol has always been a schedule I controlled substance listed under marijuana.”

(I’ll note here that I know the usual suspects will eagerly and stubbornly comment ad nauseam that emails and notes from the DEA or FDA don’t mean a thing, and cite some obscure case law deal from 10 years ago. Please ignore them, because seriously, the feds have spoken on this, really.)

If you watch Kannaway’s “Buzz Launch” marketing videos, you might notice the focus on just about every awesome thing about CBD/hemp while explicitly avoiding making any claims that their products are intended for medical use. The fact is, even if the products themselves are in a legal gray area, or legal as nutritional supplements, it is absolutely, undeniably illegal to advertise them as “medicine.” Which brings me back to my original question: why a Multi Level Marketing strategy?

I have thought about it a lot, and the more I thought, the more I began to wonder: Is it possible that Kannaway is using a Multi Level Marketing scheme so that if the DEA comes after them, they can just say that they made absolutely no medical claims about their products, and it was all just their affiliate marketers aka desperate parents?

When I asked CBD expert Jason Cranford what he thought about this, he replied: “I absolutely agree with that. I think what’s going on is, the owners of these companies can’t market it as medicine, because it’s imported into this country as a dietary supplement. So the owners can’t market it directly as a medicine for seizure disorders, because they’ll get in trouble with the FDA. So what they’re doing is, they’re giving these parents these marketing packages that are delivered to them through people who aren’t even affiliated with the company, and these 3rd party people are telling the parents what to say in their marketing efforts.”

“So the parents who are marketing the products – who (also) aren’t officially associated with the company – are marketing this under false pretenses. And if they get in trouble, then the owners of the company can just say, ‘hey, we never told them to say that.’”

In fact, right on the front page of Kannaway’s website, is a disclaimer which states: “The statements posted on this website by various users are the opinions of the users alone. The administrator of this website, his or her employer(s), affiliates, or employees are not responsible for the content of the statements, and shall not be held liable in any way for the content of these statements.”

You might wonder why these parents are participating, but that’s an easy question to answer: they get free or highly discounted medication for their kids in exchange for “spreading the buzz” about the products. Parents who wish to remain anonymous have reported to Ladybud Magazine that Hemp Meds Px has sent them not only “medicine” for their children, but “gifts” like expensive video cameras so they can document their children’s success. These parents say they have been told by the company that they will continue to receive “gifts” and “medicine” as long as they keep promoting the product and sharing their “success stories” with other parents online. While this part of the marketing strategy isn’t illegal in and of itself, it does help to explain how the process works.

It’s important to note that Hemp Meds’ “high CBD” product targeted toward pediatric epilepsy patients is extremely pricey. For parents who are desperate, it’s easy to understand the temptation of getting free or discounted products by becoming spokespeople for the company. Again – these are desperate parents. The medicines they’ve tried aren’t controlling their kids’ seizures. They don’t want to move to Colorado. Their finances have been depleted by medical bills and missed work. And along comes a company that offers to give them free or reduced price “medicine” touted as “legal” – as long as they help to promote it. Who could really blame these parents for saying yes?

“It is almost astonishing that a company like Kannaway aka Hempmeds is allowed to exist in this day and age,” replied Mickey Martin, when I asked him if he thought Kannaway was using parents as marketers to protect the company from legal recourse. “On one hand it shows a coming of age for the cannabis industry that such elaborate fraudsters have taken root; but on the other hand it is such blatant affinity fraud based in an obvious pyramid scheme. As prohibition ends and the industry is forced to grow up in a quasi-legal manner we should not be surprised to see common crooks masquerading as healers.”

“The sad part,” continued Martin, “is that the company is enlisting thousands of unsuspecting families and individuals to distribute their products, which are still considered Schedule 1 controlled substances by the DEA, putting people at risk. It is gross that these folks continue to push their inferior products made from hemp sludge from industrial machines on people in the name of medicine and that they use innocent people to carry their bullshit message.”