The Colorado Attorney General’s (AG) Office recently entered into a settlement agreement with Bee’s Knees Enterprises, LLC, dba Bee’s Knees CBDs, addressing allegations of violations of the Colorado Consumer Protection Act (CCPA). The CCPA generally prohibits deceptive trade practices, including false representations or advertising, and allows for public or private enforcement and civil penalties. The settlement agreement resolves claims against Bee’s Knees without admitting liability.

According to the settlement agreement, Bee’s Knees’ primary revenue stream comes from selling hemp extracts to business customers that manufacture the extracts into hemp-infused products, but it also sells consumable, intoxicating hemp products, among other products, on its website directly to consumers. Colorado alleged that from 2019 to October 2024, Bee’s Knees engaged in deceptive business practices, including misrepresentations about the source, quality, and chain of custody of its products; false affiliations with nonprofit organizations; and inadequate age-verification systems for products that should not be accessible to minors.

Key Allegations

1. Misrepresentation of Product Source and Quality
   • Bee’s Knees misrepresented the source of its hemp extracts, claiming they were from licensed hemp farms and Colorado Department of Public Health and Environment-approved sources without possessing supporting documentation.
   • Bee’s Knees’ certificates of analysis and chain of custody documentation were found to be unverifiable.
2. False Advertising on Website
   • Bee’s Knees’ website contained inaccurate statements about the origin and organic status of its products.
   • Bee’s Knees falsely implied affiliations with nonprofit organizations by displaying their logos without permission or actual donations.
3. Lack of Age Verification
   • Bee’s Knees’ website lacked an age-verification system to ensure minors cannot purchase intoxicating hemp products, despite warnings about keeping such products away from children.

Settlement Terms

1. Monetary Penalties:
   • Bee’s Knees agreed to pay $495,000 in civil penalties, with an initial payment of $75,000 by December 31, 2024, followed by incremental payments until December 31, 2027.
   • An additional $270,000 in penalties will be suspended contingent on Bee’s Knees making all prior payments on time consistent with the terms of the settlement agreement.
2. Compliance and Corrective Actions:
   • Bee’s Knees must comply with the CCPA and other applicable laws in the future.
   • Bee’s Knees must remove misleading statements and unauthorized logos from its website.
   • Bee’s Knees is required to obtain and maintain all necessary licenses and permits for its operations.
   • Bee’s Knees is required to develop and implement an age-verification policy to prevent minors from purchasing restricted products.
3. Ongoing Obligations:
   • The settlement agreement imposes continuing obligations on Bee’s Knees and its affiliated entities to ensure compliance with the agreed terms.
   • The Colorado AG retains the right to enforce the settlement agreement and pursue further legal action if violations occur, but it will not initiate any civil action or proceeding under the CCPA against Bee’s Knees for conduct prior to the effective date of the settlement agreement that relates to the subject matter of the agreement.

Why It Matters

The settlement agreement is only one example of the power that the CCPA provides the Colorado AG to enforce generally applicable laws against companies that sell intoxicating hemp products.

As another example, the Colorado AG filed a complaint[1] against Foxhole Farms LLC on November 21, 2024, in which he alleges that Foxhole Farms violated the CCPA by misrepresenting the true potency, concentration, and ingredients of chemically converted cannabinoids; failing to use any adequate or reasonable age verification system, allowing minors to order and receive delivery of high concentration psychoactive cannabis products; selling edible “copycat” cannabis products that resemble and/or are identical to popular children’s candy and snacks without labeling them as containing cannabis; falsely and deceptively advertising certain products as “industrial hemp” when these products were in fact “marijuana”; and failing to obtain required permits or licensure for the cultivation of industrial hemp or the sale of finished cannabis products, misrepresenting expired cannabis cultivation licenses as current and valid, and improperly altering or amending expired cannabis cultivation licenses; and selling cannabis products into Colorado that are prohibited due to containing excessive amounts of tetrahydrocannabinol.

Finally, most states have consumer protection laws similar to the CCPA, so the Colorado AG’s actions serve as an example of how other AGs could rely on these generally applicable laws to prohibit or restrict companies from selling intoxicating hemp products in addition to, or in lieu of, clear laws regulating those products.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.

[1] https://www.regulatoryoversight.com/wp-content/uploads/sites/835/2024/12/Colorado_v_Foxhole_Farms_11.21.24.pdf

Troutman Pepper State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation.
	Judy Jagdmann Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
	Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on heavily regulated industries.
	Michael Yaghi Michael is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues.
	Samuel E. “Gene” Fishel Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years.
	Chuck Slemp Chuck advises clients on a wide range of complex issues that frequently involve government actions, including investigations, inquiries, regulatory matters, and litigation. With a distinguished background in the law and public service, he served as chief deputy attorney general of Virginia before joining the firm. In addition to overseeing the Department of Law and Division of Debt Collection, Chuck managed a team of attorneys who handle complex litigation and investigations. He also directed the attorney general’s legislative affairs and represented the attorney general in various capacities.
	Tim Bado Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Chris Carlson Chris Carlson represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
	Blake R. Christopher Blake collaborates with clients on matters related to government contracting, investigations, and disputes. His senior-level government experience generates valuable insights and strategies for clients across a variety of industries.
	Natalia Jacobo Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	Susan Nikdel Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Trey Smith Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation.
	Daniel Waltz Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom.
	Cole White Cole is a member of the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) group. He has a decade of experience working in the attorney general community, having joined the firm from the Wyoming Office of the Attorney General, where he was assistant attorney general.
	Stephanie Kozol Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.