Understanding the FTC’s 2025 Negative Option Rule
The Federal Trade Commission’s updated Negative Option Rule took effect in 2025, reshaping legal risk and compliance obligations for every recurring charge, auto-renewal, and subscription plan marketed in the U.S.—including those for CBD and hemp-derived THC beverage clubs. After a delayed rollout and robust legal challenges, mid-July 2025 became the landmark date for full enforcement. The rule now governs both B2C and B2B negative option programs, capturing everything from monthly CBD tincture shipments to loyalty clubs with recurring beverage discounts.
Why Now? The FTC’s Consumer Protection Pivot
The shift comes amid surging consumer complaints about hidden fees, hard-to-cancel memberships, and unclear autorenewals. The FTC’s stated mission: ensuring every American understands what they’re signing up for, how to get out, and what they’re paying—and bringing subscription practices in line across all industries, including the fast-growing cannabinoid products sector.
What Does the Rule Require? Key Takeaways for Cannabis, CBD, and THC Beverage Sellers
1. Clear and Conspicuous Disclosures—Before Consent
Businesses must present all material terms of a subscription or continuity plan (price, auto-renewal frequency, cancellation steps, refund eligibility, and total cost) in a manner that is “clear and conspicuous.” This disclosure must stand apart from other terms and be delivered immediately before any billing information is collected.
What This Means for Hemp Subscription Clubs
- The offer page for a CBD tincture subscription, or a D9 seltzer club, must spell out auto-renewal terms—not buried in fine print or a modal window.
- Disclosure language must be prominent, readable, and proximate to the consent button (“Start My Subscription,” etc.).
Obtaining consumer agreement is now a two-step process. Consent to the negative option feature (the auto-renewal or continuity part) must be:
- Separate from agreement to the overall purchase.
- Captured in a manner demonstrating clear intent, such as an unchecked checkbox or a distinctive electronic signature specific to auto-renewal authorization.
Regulators are especially wary of “pre-checked” forms and ambiguous design that misleads consumers into accepting ongoing charges inadvertently.
It must be as easy for a consumer to end a subscription as it was to enroll. The new standards require:
- A prominent, direct way to cancel (online, where sign-up was online).
- No forced last-ditch phone calls or lengthy retention chats—consumers can still be offered a discount, but the option to cancel must be on the same page and effective immediately.
Example: Compliant Cancellation User Experience (UX)
- For a hemp beverage club, the account dashboard could feature a “Cancel My Subscription” button beside each membership plan. Once clicked, it must either:
- Process the cancellation directly (with instant confirmation), or
- If a retention offer is shown, still provide an immediately accessible, prominent confirmation/cancellation button.
4. Renewal Reminders and Recap Notices
While the FTC rule institutes uniform disclosure standards nationwide, certain states add further obligations. Colorado, for instance, mandates that negative option sellers send out yearly renewal reminders, irrespective of federal law. This dual-trigger means:
- Subscription and auto-ship businesses must track state-based requirements in addition to the federal baseline.
5. Material Misrepresentations Strictly Prohibited
Any mischaracterization of product terms—e.g., misleading claims about the health benefits of CBD, the presence of intoxicating THC, or the nature of discounts—may trigger parallel enforcement under the FTC Act.
Practical Examples for Hemp and Cannabis Subscription Models
CBD Oil Subscription Clubs
A compliant sign-up flow:
- Landing Page: All subscription terms visible above the CTA button: “$39.99/month. Recurs every 30 days until cancelled. Cancel anytime online.”
- Consent Step: A dedicated checkbox: “I understand this is a subscription that will renew monthly at $39.99 unless cancelled.”
- Post-Enrollment: Immediate email with a summary of terms and cancellation options.
- Account Area: Web-based “Cancel” button, requiring no more steps than sign-up.
THC-Infused Seltzer Monthly Club
- Terms and price structure highlighted in product carousel and checkout.
- Consent for membership separate from broader terms and conditions.
- Cancel/modify plan via web with single-click confirmation.
- Renewal reminders: Email and SMS alerts 3–4 weeks before the next billing cycle, with direct links included.
Loyalty Points Plans with Auto-Applied Discounts
- If customers are automatically enrolled in recurring purchase programs for discount eligibility, the same disclosure, consent, and cancellation protocols apply.
Enforcement: What Has the FTC Done So Far?
While few high-profile FTC actions have emerged in the cannabinoid sector (yet), non-cannabis companies have provided vivid warning shots. Recent FTC settlements and lawsuits (see Uber One settlement coverage) have targeted:
- Failure to clearly explain renewal dates and costs.
- Onerous phone-based or multi-step cancellations.
- Pre-checked consent boxes.
- Hiding key contract terms in non-obvious places on mobile apps.
CBD and THC subscription providers should expect identical scrutiny. The FTC specifically signaled in its July 2025 enforcement guidance that it will prioritize sectors where consumer confusion is high and product claims are complicated.
Legal Uncertainty: The Rule Challenged—But States Step Up
A coalition of businesses and trade groups mounted last-minute legal challenges to the new Negative Option Rule, alleging that the FTC overstepped its congressional mandate. In July 2025, the Eighth Circuit vacated the FTC rule on procedural grounds, but this did not eliminate auto-renewal compliance requirements—especially as many states (Colorado, California, Maine) are pushing forward with their own, sometimes stricter, subscription laws. As of mid-2025, the FTC signaled ongoing enforcement discretion, while industry law firms recommend treating the vacated rule as a provisional baseline, not a safe harbor.
For CBD, hemp, and THC subscription businesses, this means:
- Federal and state laws may diverge; default to the stricter standard when in doubt.
- Stay alert for new judgments and state-level subscription reform.
- Document every consent, disclosure, and cancellation action for audit purposes.
Top Compliance Tips for 2025 and Beyond
For Businesses:
- Audit every subscription journey—from landing page to post-cancellation communication.
- Update legal and marketing copy to ensure “clear and conspicuous” disclosures on every signup page.
- Separate consent for auto-renewal, not bundled into a single T&Cs checkbox.
- Build or buy a robust cancellation UX—no dark patterns or hidden hurdles.
- Automate state-specific reminders for renewals where required by law.
- Keep proof: Log all disclosures, consent transactions, and cancellations for at least the duration of the customer contract.
For Consumers:
- Always read the fine print—demand clarity before entering any CBD, hemp, or THC beverage club.
- Remember: Cancellations should be instant and as easy as joining.
- Report suspicious practices or noncompliant cancellation flows to the FTC or your state attorney general.
What’s Next? Staying Ahead in a Patchwork Compliance World
For the cannabis, CBD, and THC beverage industries, the FTC’s Negative Option Rule has upended subscription marketing practices nationwide. Enforcement—federal and state—will only accelerate, and compliance must be continually monitored for new developments.
Stay competitive, keep your compliance edge, and minimize risk by regularly checking for updates at CannabisRegulations.ai. Our tools and professionals track every federal and state shift—so your hemp, CBD, and THC subscription business stays ahead of the curve in 2025 and beyond!
