The End of a Federal Baseline for Subscription Compliance
In July 2025, the Eighth Circuit Court of Appeals vacated the FTC’s updated Negative Option Rule—widely referred to as the “Click‑to‑Cancel” Rule—just days before its July 14 effective date (Mayer Brown, DLA Piper). This rule was designed to create a uniform national standard for subscriptions and auto‑renewing direct‑to‑consumer (DTC) programs—especially for industries with recurring payment models, such as CBD and hemp-derived THC brands. Its sudden nullification has triggered uncertainty and left cannabis compliance teams to navigate a complex web of state and federal auto-renew requirements now in effect for 2025–2026.
This guide provides a practical compliance roadmap for CBD and THC DTC brands seeking to manage subscription risk and maintain best-in-class checkout, renewal, and cancellation flows.
What Was the FTC Negative Option (Click‑to‑Cancel) Rule?
Background: The FTC’s amended Negative Option Rule (published October 2024) was set to require:
- Clear and Conspicuous Disclosure of all automatic renewal terms before purchase
- Easy and Parity Cancellation, mandating a cancellation mechanism as seamless as enrollment (i.e., “click-to-cancel” for online subscriptions)
- Affirmative Informed Consent (such as a standalone check-box for renewal terms)
- Annual Renewal Reminders and full transparency about how and when charges would be assessed
The rule also prohibited businesses from making misrepresentations about trial offers, savings, or cancellation requirements. For cannabis and CBD brands, this provided clarity at the federal level about subscription UX, checkout mechanisms, and post-purchase messaging.
However, following a legal challenge, the Eighth Circuit vacated the rule on procedural grounds (Sidley), meaning none of these new provisions are federally enforceable as a standalone rule.
Federal Enforcement: The FTC Isn’t Standing Down
Key Takeaway: The FTC’s vacated rule does not mean DTC brands can relax. The FTC is still:
- Pursuing subscription “dark pattern” cases under Section 5 of the FTC Act
- Enforcing the Restore Online Shoppers’ Confidence Act (ROSCA) for online auto-renewals
- Collaborating with the FDA and state AGs to crack down on deceptive marketing and sign-up flows (Holland & Knight, 2025)
Recent 2025 enforcement actions have targeted:
- Unclear or buried disclosures of renewal terms
- Hard‑to‑find or multistep cancellation processes (e.g., cancel by phone only, despite online signup)
- Misstated trial periods, price increases, or “never pay full price” savings claims
For the cannabis sector, ROSCA specifically requires that any transaction involving a negative-option feature (including hemp/CBD and hemp-derived THC subscriptions, where lawful) disclose all material terms prior to obtaining the consumer’s billing information, and provide an easy way to stop recurring charges.
Fail to comply, and brands risk FTC complaints, warnings, fines, or public settlements.
The New Compliance Landscape: State Automatic Renewal Laws (ARLs)
Without a federal baseline, you must master state laws in your shipping destinations.
California’s Revamped ARL (Effective July 1, 2025)
(SFCounsel, Cooley, DTO Law)
- Clear and Conspicuous Pre-Purchase Disclosures of all renewal terms, placed in close proximity to the consent mechanism
- Affirmative Consent via a standalone check-box solely for renewals
- Cancel Anytime Parity: Customers who sign up online must be able to cancel online—without being forced to call, email, or interact with a live agent
- Instant Cancellation: If a business offers any discount or retention offer during cancellation, a prominently displayed button for immediate cancellation must appear on that same page
- Annual Renewal Reminders:
- Sent in the medium used for ordering or in the manner the consumer usually interacts with the brand
- Application: Applies to new, amended, or extended contracts as of July 1, 2025
New York, Colorado, and Massachusetts (and Others)
- New York: Requires stand-alone consent, clear disclosures, and “simple, online cancellation”
- Colorado: Mandates pre-billing and renewal reminders, plus a direct cancel method matching sign-up modality
- Massachusetts: Will implement similar ARL rules starting September 2025
- Many Other States: Maine, Minnesota, and Vermont (among others) have added expanded definitions, extra renewal reminders, or stricter consent requirements (Kelley Drye & Warren)
What This Means for CBD & Hemp-THC Subscriptions
If you ship, sell, or market DTC subscriptions to consumers in any of these states, you obligate yourself to that state’s additional compliance burdens—even if your business is based elsewhere.
Translating Subscription Compliance for Cannabis/CBD Checkout Flows
Checkout UX & Affirmative Consent
- Embed stand-alone checkboxes for auto-renewal consent, distinct from overall terms-and-conditions acceptance
- Present key renewal terms (price, billing frequency, cancellation method) immediately before payment in a clearly visible format (high-contrast font/colors)
- For online sign-up, offer a prominent “Cancel Subscription” option in account settings, not simply an email or phone number
- Send immediate purchase receipts reiterating renewal terms and describing how to cancel in one step
- For annual or longer-term subscriptions, automate renewal reminder emails matching each customer’s preferred communication channel
Cancellation Flow
- Ensure “cancel anytime” parity: consumers can cancel using the same method as sign-up, within a few clicks
- If presenting a discount offer during cancellation, the same page must feature a bold “Cancel Now” button (per new California rules)
- Avoid “hard to find” cancel links, forced calls, or requiring more information than at signup
Disclosures for Hemp/CBD & Hemp-THC
- Don’t use vague savings claims or misleading trial offers. Material terms must be clear and accurate at each step
- Remember the 2018 Farm Bill and FDA rules: products must remain federally legal according to hemp-THC content and labeling (Lea Payments)
Enforcement and Risk Outlook for 2025–2026
Federal Trend
- The FTC is pursuing major cases under its general authority—even without the Negative Option Rule—focused on misleading or unfair cancellation, insufficient consent, and dark patterns
- ROSCA remains a critical federal standard for negative-option programs (including CBD/hemp)—noncompliance here risks both FTC and state AG scrutiny
State Surges
- States like California, New York, and Colorado have dramatically increased AG enforcement of automatic renewal and continuity marketing
- Plaintiffs’ attorneys are targeting non-compliant brands with class actions, especially in California post-July 2025
- Subscription bans or consumer restitution are on the table for severe or repeated violations
Compliance To-Do List for 2025–2026
1. Audit All Auto-Renew Flows: Map your checkout, email, and cancellation flows. Benchmark against the strictest state you ship to.
2. Update Disclosures and Consent: Integrate stand-alone renewal consent, high-visibility disclosure, and simple opt-out for all markets.
3. Cancellation Should Mirror Signup: If you offer online signup for subscriptions, online cancellation must be frictionless and just as easy.
4. Monitor State Law Updates: State and local ARLs change frequently; subscribe to trusted industry alerts or consult platforms like CannabisRegulations.ai for updates.
5. Train Staff and Monitor Enforcement: Ensure every customer support touchpoint is aware of new ARL requirements. Monitor FTC and state AG settlements.
Conclusion: Navigating the Patchwork, Protecting Your Brand
With the demise of the FTC’s Click-to-Cancel Rule, cannabis, CBD, and hemp-derived DTC brands must operate within a fragmented framework of state ARLs and federal ROSCA rules, plus ongoing FTC “dark patterns” enforcement. For 2025–2026, the path to subscription compliance is:
- Know your customers’ states—adapt subscription UX to the strictest rules required
- Document and display material terms conspicuously at every relevant consumer touchpoint
- Make both signup and cancellation experiences simple, direct, and equitable
Staying ahead of emerging regulation is essential to avoid fines or litigation. For real-time compliance tracking, best-practice templates, and enforcement updates, leverage CannabisRegulations.ai as your subscription compliance partner for 2025 and beyond.
