The CBD Movement Podcast Episode 1 | How to Navigate the CBD Industry from a Legal Perspective

THE CBD MOVEMENT PODCAST

How to Navigate the CBD Industry from a Legal Perspective

Today's episode of the CBD Movement Podcast features Justin and James Prochnow with GreenbergTraurig.

Jim Prochnow concentrates his practice on Food and Drug Administration (FDA), Federal Trade Commission (FTC), and Drug Enforcement Agency (DEA) actions, advice and related litigation, which includes import detentions, government inspections, investigations and defense of class actions. He also counsels clients about regulatory issues associated with cosmetics, dietary supplements, homeopathic drugs, Over-the-counter (OTC) drugs, the use of CBD oil in products, the protocols and contracts associated with clinical trials, and cGMP compliance.

Justin J. Prochnow assists companies with regulatory, business, and legal needs in the beverage, food, dietary supplement, cosmetic, medical device, and OTC industries. Justin works closely with companies to ensure regulatory compliance with statutes and regulations enforced by the Food and Drug Administration, the Federal Trade Commission and other regulatory agencies. This includes the review of product labels, labeling, advertising, websites and other marketing materials. Justin assists companies with responding to governmental and regulatory actions, including FDA inspections and warning letters, FTC Civil Investigative Demands, and ASRC and NAD cases. He prepares and reviews business documents for industry members, including consulting, manufacturing, supply and distribution agreements. Justin and his team also defend industry companies from both governmental agencies and civil litigators in litigation ranging from breach of contract cases to the growing number of class actions alleging false and misleading advertising.

Speaker 1: Welcome to The CBD Movement Podcast where CBD experts Emily and Majid interview scientists, cultivators, government officials, and CBD pioneers to separate fact from fiction.

They'll tackle the tough questions around the health benefits of CBD, how it's different from marijuana and regulations governing the fact growing, multi-billion dollar industry.

From its seemingly overnight boom to future trends, The CBD Movement Podcast is your place to know what's happening first.

Majid: We're excited to have Justin and James Prochnow from GT Law, which is the seventh largest law firm in the country with over 2000 lawyers and many years of experience in the CBD industry. So if you work at a CBD manufacturing company and are wondering what marketing claims you can legally make or if you're just a consumer of CBD and you're wondering how best to legally travel with CBD, this is the podcast for you.

Emily: Thank you guys so much for being here today. Welcome to the CBD Movement Podcast. Would you like to tell us a little bit about GT Law and a little personal background on yourselves as well?

Justin Prochnow: Sure. This is Justin Prochnow. We are both at the law firm Greenberg Traurig, which I say is a small boutique law firm of about 2400 lawyers in 40 offices around the US and the world. Started off as a small law firm in Miami, and has now reached out to a number of offices in Florida, California, we're here in Colorado and across the United States, as well as offices around the world.

Currently I'm the co-chair of our food, beverage, dietary supplement practice here in Greenberg Traurig. So my practice is 100% representing companies in the dietary supplement, food, beverage, cosmetic industries. Really anything regulated by the FDA. And help companies with everything from reviewing labels, marketing and advertising materials, deciding whether ingredients are allowed in products, really from the helping out with food recalls. Anything from the FDA or FTC regulatory side of things. We also review a lot of business agreements, supply, manufacturing distribution agreements. And then if you don't talk to us on the front end, then we talk to you on the back end when you get a class action letter for that claim you shouldn't have been making because you should've talked to us at the beginning.

Majid: Glad we're talking to you in the front end.

Justin Prochnow: That's right.

James Prochnow: I'm Jim Prochnow, Justin's father. I've been a partner at Greenberg Traurig for the last 16 years. Prior to that, back in ancient history so to speak, I was a trial lawyer at the Department of Justice in Washington, DC, an assistant White House consult defending President Nixon in the Watergate proceedings back before you were born in 1973, 1974. I've been involved in the food supplement industry since 1990, 30 years ago. Back 30 years ago, there wasn't any CBD. I never heard the term CBD, and as a matter of fact, just as we were beginning to hear about marijuana at that time. But things have progressed since that time.

So starting at about I remember 1990 when I got my first matter involving the FDA, the FDA had been a client of mine when I worked at the Department of Justice, and it was a marketing matter involving a claim today that would be so innocuous we wouldn't even be talking about it. But back then, the law was that you could not make any claims for food supplements legally. That changed when the Dietary Supplement Health and Education Act was enacted in 1994. That kind of opened the market for not only now what we're calling CBD products or hemp extract products, but everything else.

So in addition to what Justin talked about, one of the things that we spend a lot of time is defending false and misleading advertising statements or claims, including defending Federal Trade Commission investigations and NAD, which is National Advertising Division of the Better Business Bureau proceedings. They're all having to do with do you have good science to support your claims? I pointed that out because Justin raised an important issue, and that is how do we differentiate ourselves from... Is there any difference between CBD containing products and food supplements, for example. I'm pointing that out because it's the science that makes a great deal of difference. And as we go forward, we'll talk more about that.

The last thing I want to say about our firm and Justin and myself in particular is we pay a lot of attention to legislative developments and proposed legislative or regulatory developments. How can we make CBD perfectly legal and not continue to wander, not wander but be in an area that's uncertain because of statements and pronouncements made by the FDA? So it's one of these things that I hate to tell everybody. When I get up at 5:30, I turn on my computer to see what the latest development is with CBD and hemp extract products.

Majid: Great. Thank you so much. And just to be clear, you all have been working in the CBD space, if you will, for how many years now?

Justin Prochnow: It's a great question because I think the first company that I was doing work for really wasn't until about 2014, end of 2014, beginning of 2015. And at that point, there were not a lot of companies out there doing it. In fact, one of those initial discussions was how can we legally sell this? And at that time, there was no guidance from the FDA. There had been no big pronouncements about GW Pharma or anything like that. So it really was well, let's go through it and sell it like you would any other dietary supplement with botanical ingredients in there. So it's really been a pretty new five to six years type of phenomenon that has developed into... As we say a lot, we never thought we were going to be CBD and hemp lawyers.

I mean, it wasn't something we went out to be, and it's still a part of our practice. But on many days, it feels like that's all we talk about because two thirds of my time it seems like is spent on talking about CBD and hemp. And it's not just with CBD and hemp companies. It's with big box retailers and it's convenient stores. And it's lately a lot of the clothing apparel companies that are all looking to sell a topical right now with hemp or CBD in it and get into the mix until things become more clear and then dive into other things. So it's not just limited to the CBD or hemp companies. Everyone is interested in CBD and hemp.

James Prochnow: The only thing I would add on is because of the enactment of the 2014 Farm Bill which provided for some hemp related research opportunities is when I recall we really started getting involved in this. I echo what my son had to say, and that is before that time, I'm trying to strip my mind to see if we got involved in it at all. I can't remember anything. So I think that's probably a pretty good starting point.

Emily: We're so excited to have you here, and we announced beforehand to our community that we would be talking to lawyers in the space. And we got flooded with questions. The top one was probably what if anything should our CBD users be aware of when traveling with CBD domestically or internationally? It seems to be a really big topic and question that some people are nervous about. So if we could get your guidance on that, that would be amazing.

James Prochnow: I'm just going to address the international part of that to begin with because I'm going to Mexico on Saturday. The first rule is this, check to see what the law is of the country to which you are going. Actually, if you're going to be going through some other countries before you get to the country of destination, the wise thing would be check to see what the law is in those countries because none of them are the same as the United States. For example, some of the countries are following the pathway of the World Health Organization, which does allow some of the hemp extracts that contain 0.2% or less. Not 0.3% or less, which is the US standard of THC. But it's really important because usually the consequences are not that you're going to be jailed. However, some countries are very strict about marijuana and CBD, what we're talking about.

And remember this, the people who are in charge of enforcing the laws at international borders aren't as well versed in all the nuances that Justin and I are talking about today. They may think of CBD if they say CBD as marijuana, cannabis, illegal, bad drug. So I think I would also say this, unless there is a real medical emergency for this, I'd be very conservative about taking CBD containing products to another country.

Justin Prochnow: From the state side of things, this was an issue, especially if you go back even maybe 2018 where people were getting arrested at the airport. Dallas-Fort Worth was pretty well known for stopping people there. There were other incidents, even outside of the airport of a woman at Disney World who was a grandmother, 70 year old grandmother arrested with CBD. And TSA has released a statement that says that it is legal to carry legal CBD. The problem is something that Jim mentioned, which is the people that are there at TSA or others, they don't always know the difference between CBD and marijuana. And a lot of them err on the side of caution and say, "Well, we don't know if it's over the 0.3%. So we're going to hold it and maybe it has to be tested."

So although it's technically legal to do it because it looks like potentially a drug in many ways, there's still a risk that you're going to be detained, potentially your product confiscated. This has come up more and more in law enforcement in different states where you have things like smoke-able hemp, which is below 0.3%, but it looks exactly like marijuana cigarettes. And it's a big problem for law enforcement, and you run a real risk of being stopped even though what you might be doing is totally legal because there's no real difference from looking at it as to whether it's a legal or not. You run the risk of potentially being detained until they get that sorted out.

Majid: But technically you're not doing anything illegal, is that correct? Or you could be depending on the state?

Justin Prochnow: When you're traveling?

Majid: When you're traveling domestically.

Justin Prochnow: Well, I'm thinking more right now, just on the airplane, like TSA won't do it because that's a federal spot. But when you're going from state to state, you do need to be aware of different states. And there are still states like Idaho, like South Dakota, like Hawaii that have said we don't want anything with CBD in our state. So you do have to know the individual states. More and more states have made it at least not a schedule one controlled substance potential violation, but there are still half a dozen to a dozen states that have said, "We don't believe CBD is legal in our state." So you really do need to know the state law [crosstalk] if you're carrying there.

Majid: [inaudible] states where technically it could be illegal.

James Prochnow: I would say less than a dozen. Along that line, Justin mentioned South Dakota because it's been one of those states that's been no whenever the question gets asked. In South Dakota, the House of Representatives enacted a legislation that would legalize industrial hemp. However, just like the Congress, you need the Senate to agree with that. And the Senate's taking it up tomorrow in South Dakota. So we'll see what action really happens.

On a related matter, because we're talking about international matters in part. And I know you'll probably ask this later, but I want to talk about the export of these products that are containing CBD products. The Federal Food, Drug, and Cosmetic Act, which is the overlying law that governs all of these products, including hemp products, contains special provisions that allow certain products to be exported, even if they're illegal in the United States. But it takes a really careful review of the type of product, the law of the country to which it's going. But there are some special export rules that companies should be aware of, and we often advise clients about that.

Majid: Speaking about companies, just real quick before I forget here. So just for folks because we know that most [inaudible] is not aware of this. 0.3%, as Justin mentions that, that's referring to the amount of THC in the compound of the oil. So if there's greater than 0.3% THC, that's considered marijuana. If it's below 0.3% THC, it's considered CBD. And so is that correct?

James Prochnow: It's considered to be hemp.

Majid: Hemp. I'm sorry. So it'd be hemp. [crosstalk][inaudible].

James Prochnow: Nomenclature's a big deal. Nomenclature is a big deal. Even when we get asked questions, we're listening carefully because people often intermix hemp, CBD, cannabis, species of cannabis, and it's important to be specific about what you're doing.

Justin Prochnow: I did want to go back to one thing that I had said before about the states because I want to clarify that. In most states, it's not going to be illegal to just have it in your possession. When I was talking about the states that have said it, it's really been more with respect to the sale of CBD and hemp, and certain states have said you cannot sell products with CBD or hemp in foods.

Majid: Okay.

Justin Prochnow: It's going to be very rare occasion when you would be stopped just because you have a tincture bottle on your person and it cause any issues. Those states that have said no is really more with respect to the FDA saying that it's not legal to be used in a food, beverage, supplement type of product. In those statements, it's not the mere possession of it.

Majid: Got it. There are certain states where even just having hemp oil in your position could create state level challenge.

James Prochnow: Right now South Dakota's one of them. [crosstalk].

Majid: There are a few.

Justin Prochnow: There are still a few. Idaho is another one that any level... It's not having hemp but it's any amount of CBD they've said is not legal. There's a few other states. The number of states where that is is probably a half dozen or less.

Majid: Okay.

Justin Prochnow: And then there are some other states that have said, "You're not allowed to legally sell it in our state."

Majid: Would you be concerned if you had a CBD tincture in your pocket and you were traveling from state to state? Say you traveled all the states in the United States, would you be concerned still or you think really it's not something that significant at this point? It's federally legal.

James Prochnow: In my opinion, this is in my opinion, personal possession of it presents very little problems for individuals. States aren't really interested in taking action against individuals for possession of a usable amount, like in a particular small container or a individual container of CBD products. 99% of the issues have been with the transportation of hemp that's been harvested but hasn't been reduced yet to an extract or the transportation of extract because there, you're dealing with bigger volumes. And it's easier for people to enforce the laws than to take action against individual citizens. But Justin may have some additional commentary. [crosstalk]

Majid: [inaudible] for your average person.

Justin Prochnow: Very low level.

Majid: So you would not be concerned if it was in your pocket and you had traveled every state in this country?

Justin Prochnow: No. I don't think so. No.

Majid: Even South Dakota and Idaho?

Justin Prochnow: I just don't think that that's... They're not doing stop and searches for your tincture bottle. Again, as Jim said, it's been the trailer that gets pulled over in Oklahoma while it was going from Nevada to somewhere else, and then them say, "Well, what do you have in the back?"

Emily: Is that because the raw plant material is very hard to decipher between marijuana and hemp? You can't test for it.

Justin Prochnow: Well, you can test for it, but you can't see it from the naked eye. If a police officer or someone pulls you over... There was a case where someone was... I think it was Oklahoma where they were pulled over for some sort of traffic violation. A good, friendly tip from your lawyers is if you're hauling a trailer full of hemp, obey all the traffic signals.

Emily: That's great advice.

James Prochnow: That's absolutely true. I had a case just like that.

Justin Prochnow: They say, "What's in the back?" It smells. There's not a difference in the smell, and they say, "Okay. Well, you're saying that. I guess we'll test it. And it doesn't go anywhere until we test it and find out." There's been a big case in Idaho over the Blue Sky case where a bunch of product was seized, and the claim was under the 2018 Farm Bill, states are not allowed to interfere with the interstate transport of hemp. That was one of the big things from Farm Bill. However, at least in that case, the State of Idaho took the position that the 2018 Farm Bill provisions don't go into effect yet until the USDA starts certifying all the programs, and it's done a few of those now. So they took the position that they could interfere, and in Idaho, you can't have any CBD. So there's been a big ongoing court case about that.

So again, as Jim said, it's a much bigger issue with large shipments or product. The other area where we have seen a lot of state action has been at manufacturing facilities in states where it has not been legalized yet by any law or regulation among the state. We've seen State of California, State of New York, State Department of Health officials going into manufacturing facilities and asking, "Are you manufacturing any foods or beverages with CBD and hemp? And if you are, you need to stop because that's not allowed here. And if we come back and you're doing it again, we may pull your manufacturing license." So that's where we've seen a lot of the pressure from states has been with manufacturing facilities.

Majid: Thank us so much.

James Prochnow: And think about this, every day the law changes in these states. So it's an ongoing flowing matter. And every time we're asked to give a legal opinion, we have to go and check what's happened yesterday because it's that kind of a dynamic going on with the states.

Majid: Great. We'll have you all in next month now.

Justin Prochnow: Monthly podcast.

Majid: You're mentioning, Jim, about companies earlier, and so I thought maybe we could just touch on that for a second. So the audience here is anywhere from users to entrepreneurs, et cetera, what guidance would you give, if you can as briefly as possible. What guidance would you give on the type of marketing claims companies could likely make without having to get into trouble with FDA or-

Justin Prochnow: Sure.

James Prochnow: I'm going to talk about this for 30 seconds, and then Justin is anxious to jump in on this too because this is where we really spend a lot of our time. The basic answer is first of all is there is no differentiation in the law that's applicable to vitamins or other types of herbal supplements and hemp derivative products like CBD. The fundamental issue is you can't make any claim that purports to effect a disease that is treat, prevent, or cure a disease or an implied claim, something that's really kind of a strong implied claim.

And the second part of it is you have to have good science for whatever claim you're making. It's the fundamental core basically of the Dietary Supplement Health and Education Act so that consumers aren't defrauded about what they're being asked to put into their bodies. And for the same reason since, we're now, let's say for ingestibles, but it would apply to topicals as well in some respects. What the FDA is struggling with is the amount of safety data that's involved.

So when people come to us and say, "Can we say this," the first cut is very much looks like a claim that can be made under the Dietary Supplement Health and Education Act. It's something that supports a good blood system or supports something else, which is a legitimate claim that can be made for food supplements.

The second part of that is what science do you have to support your claim? This is an important issue in this particular industry, the CBD industry because as Justin said early on, it doesn't have a history of scientific studies about this. And it comes home to roost because of two other statutes that we haven't really talked about that are a part of this, and that is generally recognized as safe or grass. Grass is kind of an important concept not because it means marijuana, but because in order to include something in food, and we'll put aside dietary supplements here, you have to have something that's generally recognized as safe, which means you need to have really good evidence for an expert panel that the amount of CBD or the kind of CBD in your product is safe. It's a big issue.

And the second thing is you need probably to file a new dietary ingredient statement before you first market the product where the FDA looks to see what kind of evidence you have.

So going back to the beginning, we look to see what kind of a claim it is. Is it generally permissible, and then what science do you have? Justin, take it away.

Majid: Sorry, real quick on that. So if I walked down the aisle of vitamin store or Sprouse in the supplement, health section and I see those claims about bone health and all these other things, there is scientific data across all those vitamins and so forth?

Justin Prochnow: Allegedly.

Emily: What is good science? What is good science? How can companies choose where they invest in these studies and how-

Justin Prochnow: Well, first I wanted to say, remember in the car growing up and I would ask how far away we were, and you would say about five more minutes. That was the longest 30 seconds I've ever seen, which now gives me... Realizes when you said five minute, it's all relative to each other.

As far as the science, you asked about walking down the... And you raised a good point, and it's this. There is no requirement in the United States to get preapproval for dietary supplements. So when you walk down the aisle and you see these claims for bone health or supporting healthy levels of blood sugar or maybe even pain and inflammation claims, one of the things you see on every dietary supplement product that's required is that statement that says, "These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease." One of the reasons that's on there is because of the very fact that there is no preapproval. So you would like to hope that all of those companies have science for those claims, but the reality is that there's no requirement to have them vetted before they're put out on the market. So it's incumbent upon the FDA to take action against companies if they're making improper claims. And obviously there's a lot of products out there, and the FDA has limited resources.

So those companies that are putting the products out there are required to do that, and if the FDA doesn't take action, that is sometimes where the Federal Trade Commission or more so lately plaintiff lawyers jump into the fray and say, "There's no way you can be making that statement. There's no way you have the science to back that up." So the reality is you are supposed to have science, but there's not a huge vetting process before going on, and these days because of all of the lack of resources that the FDA and even the FTC has, the bigger risk from companies these days is plaintiff lawyers bringing actions on behalf of alleged aggrieved consumers over claims. Either those or there are groups of DAs in California or estate attorney generals that are bringing action say, "You're making these claims, and we don't believe that you have the science to back it up."

And to your point, what is good science? The standard for health claims for products is competent and reliable scientific evidence. And I could give you the long paragraph explanation the Federal Trade Commission does. I do a lot of speaking and presenting. I usually give that, and at the end I ask people, "Now how many people really understand what competent and reliable scientific evidence is?" The best answer is it's whatever the FTC basically decides for that particular product. There is a guidance that the FTC has released which kind of goes through how they evaluate science, and it's based on the type of claim that's being made and the category of products. It's based on the type of clinical study that was done, how many people, and they look at all of those things and evaluate is this sufficient science to make that claim or not?

The problem with CBD and hemp was up until the 2018 Farm Bill, it was potentially a schedule one controlled substance, which you're not allowed to use in a regular clinical study for a non-drug product. So there's just not a lot of science out there on CBD and hemp. So when you see these claims, various things, you really should have some science to back up those claims.

Majid: Thank you. That's helpful. As far as I know, you guys can correct me if I'm wrong. So CBDistillery and CV Sciences are the only two companies or brands that are publicly [inaudible] grass or generally recognized as safe based on the research that we've done, and as far as I know, that they've done so far.

Justin Prochnow: They are more than that.

Majid: There are more. Okay. There are more now. And our legal department here is very strict about what we can claim and not claim, but you're seeing that... I mean, there's hundreds if not maybe thousands of CBD brands today, and I'm sure you're seeing all sorts of extreme claims out there. That's got to be risky on their part, right?

James Prochnow: Well, the answer is this. It is extremely risky, but every company in our judgment, the way that we do it is this. If companies come to us for claims, I'm not ultra conservative about claims because we want people to be able to share information about what the products can do. Those companies that are going beyond the envelope are putting themself at risk, as Justin said, for class action claims, by FDA warning letters, and by Federal Trade Commission matters. In some companies frankly, it doesn't matter as much as it is to a large companies. Let's say like CBDistillery where it's a large company. There are considerations.

Something else I want to say is for example, when you are more sophisticated and you need bank loans, financing from other investors, they look carefully to see what kind of claims are being made and whether you are in compliance with the law because in most banks or lenders of any sort wants you to be able to represent that the claims you're making are consistent with the law. And when we give legal opinions about that, there's not room for expansion beyond what should be done.

So some small companies really don't have those... They're not doing what's right, but they're not restricted practically like some of the large companies are.

Majid: So if we come to you and say, "Hey, we want to write this claim that CBD helps with arthritis," your next question you're probably going to have is, "Where's the data?" And then what kind of data would you want to see?

Justin Prochnow: Well, you raise a good point, and what I was going to say is Jim is I think the first and very clear dividing line is what Jim had mentioned before is you cannot sell a non-drug product to diagnose, treat, cure, or prevent a disease. So my first comment when you said you want to sell this to cure arthritis is, "Great. Let's see your application for a new drug," because that's a drug. If you sell it for arthritis, that's a drug. There's no question. So my number one thing would be, "You should not be making the claim for arthritis unless it's a drug."

The FDA's action in this area gives pretty good evidence that that is the main dividing line. If you look at the FDA action against hemp and CBD companies, it's consistent of 50 plus warning letters. I think we're at 54 warning letters now against companies, and in every one of those letters with maybe the exception of one, the first issue that the FDA brings up is that the company was making unauthorized claims about the diagnosis, treatment, cure, or prevention of disease. And they're pretty clear disease claims. It will help with cancer, with arthritis, with Alzheimer's. That has been the number one dividing line.

So my number one thing to anyone would be don't make a claim about disease. That is the surest way to get action from the FDA is to mention disease claims. Only then after that has the FDA gotten into the, "Oh, and by the way, we don't really believe that's a permissible ingredient," because of the investigation by GW Pharma and the whole exclusionary clause, which we could do a whole nother podcast about it sometime. But that really is the dividing line.

So my first one would be don't make a claim about arthritis. Now what Jim and I do sometimes is look, you can't make a claim about arthritis, but we could potentially come up with a claim about helping to maintain joints, to... Again, when you sell dietary supplements, I keep saying it, but it's the number one mantra, don't diagnose, treat, cure, prevent a disease. So you talk about maintaining healthy items. You maintain healthy joint function. You maintain good cardiovascular system. It's all about maintaining or supporting healthy conditions as opposed to treating conditions, and that's where we try to move the claims.

James Prochnow: And I would say there are ways that you can make claims that CBD can cure cancer, but to do that, you have to get permission from the FDA. There's a log that's titled health claims, not health-related claims, but it's a special term called health claims where if you want to make a claim like that, you can file an application with the FDA and give them the science. And then they go through a process, a formal process for trying to relate a particular ingredient or let's say a product to the prevention or reduction of the chance of a disease. For example, there are also what's called qualified health claims where under certain circumstances if you apply to the FDA and you have enough good science, let's say calcium to support something to do with bone loss. You can go to the FDA and ask for their permission to use statements like that. That's not been done with CBD at all.

Justin Prochnow: And it's not a quick process. I just want to make that... We're talking several years, probably multiple hundreds of thousands of dollars in testing and things of that nature. So it's not something where you just fill out the application and 30 days you get back that health claim. It's very few that actually get authorized for that type of...

Emily: So what about sharing testimonials? Because at CBDistillery, we get so many incredible, amazing, moving testimonials, and they have medical claims in them. How can companies still share real stories that real people are giving them without getting in trouble?

James Prochnow: You're right to raise the question. It's probably one of the most common things that we see, and the law is not crystal clear about this area. But fundamentally the law is this that if you're using, let's just say testimonials, you can't use a testimonial that includes a claim that you couldn't make as a company yourself. So that's the number one rule.

The second rule gets, not rule, the second principle to keep in mind is that idea of customer reviews. So basically now we're involved in free speech. So basically if you have customer reviews in which you don't try to pick and choose which ones to use, except you can eliminate curse words and things like that. If you have an open forum for things and you're not suggesting things one way or another, the question always is are you taking ownership of those customer reviews? If you do a truly independent, wide open customer reviews where you're not implying what the answer should be and you're not paying people, not giving away free products but it's totally information review. That's the way to go about doing it. At that point, we're not really saying testimonials anymore. We're using customer reviews. There's not a lot of difference between the two but testimonials normally are something that don't qualify as a customer review, and you're somehow compensating the people for what they're doing.

Justin probably has comments about this as well.

Justin Prochnow: Yeah. I've done a lot of speaking on this topic. I would say that the FDA does not necessarily agree with the position that customer reviews if you don't touch them and just provide them, you're not still responsible for. The FDA takes the position if they're on your website and you have control over them, then you are responsible for them. There are some situations that we've said I would say more of like a forum, like a blog type of area. But if it's just the customer reviews that are being listed after the product, the FDA definitely views those as similar to consumer testimonials, and that you should not be allowing reviews that make disease claims, again, as Jim said.

Essentially when you use a review or testimonial in your advertising, the company is now adopting that statement as a statement of the company. And not only are they responsible for the claims, but the company is also responsible for substantiating any claims made in a testimonial.

So let's say we have science for our product that it will help with strong bones and it will help with cardiovascular system, and someone else makes a legal claim that says, "I lost 25 pounds using this product." Perfectly legal to say, but if we don't have the science that you can lose 25 pounds from that, then we shouldn't be using that review because now we're also endorsing the fact that our product, you can lose 25 pounds from it.

So you do have to be careful from customer testimonials, and I would say I do a lot of website review for companies. It's the number one area where companies probably go over the line. I would say the two areas, and it's the two areas the FDA is looking at more carefully are testimonials and customer reviews and blog areas because they do view... If the blog is on your thing, especially if you're posting articles... If I've got a company that sells a ginger supplement and I'm posting articles on my blog page of my website that say, "Top 10 ways ginger can help reduce cancer," the FDA will attribute that as I am now promoting my product that happens to contain ginger for treatment of cancer. So you have both expressed claims where, "Hey, this product will treat cancer," but you have implied claims. And any information that you provide regarding your product or the main ingredients in your product are going to be viewed as implied claims for your product.

James Prochnow: I might say this. There is a special section under the Dietary Supplement Health and Education Act that permits companies to provide information about ingredients. In clinical studies done on ingredients, even if they have an effect on a disease, it's a special section called Section Five of the Dietary Supplement Health and Education Act. But it must be very carefully followed because the idea is this. The law wants customers or consumers to have information about food supplements. However, if you do that, you can't be promotional in nature. So I could post on a website information about CBD and effects on its disease if it's a legitimate publication and you follow the strict guidelines, and you're not promoting your product on the same page.

So it's one of those careful things, but I wanted people to be aware of that because there are opportunities not to promote your company for doing things but to inform consumers about the connections sometimes between CBD and a result which they wouldn't otherwise be able to say.

Majid: Any thoughts on where you think the FDA's going to land here in the coming months as it tries to sort out guidance?

James Prochnow: I think the FDA is a slow moving amoeba that's going to continue to move slowly. Right now the major issue that's involved legislatively is the fact that one of the provisions of the Dietary Supplement Health and Education Act is what the FDA has been saying makes all CBD illegal. I disagree with that. However, the FDA says and points to a particular clause that says, "If an article or an ingredient was first approved for study as a drug, that it can't be used in a food or dietary supplement." And the question of course is is that enforceable? Second of all is, when we sell something as an herb extract, is that CBD? Because CBD was approved as the drug but herbal extract wasn't.

So both the FDA and the industry and the public want some change so that commerce can be carried on in a way that's legal and not subject to this gray cloud of the FDA. The FDA is working on this but slowly. If you depend on the FDA to issue a regulation, you might be waiting another decade. And I say that, that's an exaggeration. But the law has to be change. So I think Congress is aware of this. Both Mitch McConnell and others are doing their best. I see the law changing, but I think it'll take until the end of the year perhaps, or even the next Congress for that to happen. Otherwise, I think most of the acts will be in the state legislature as the FDA and the Congress move toward doing away with this gray area, but nobody is in a hurry to make this happen in an election year.

Justin Prochnow: The FDA obviously recognizes the significance. They had a hearing last May. There's not any other ingredients right now that have captured their attention like this. A couple years ago caffeine was a focus with energy drinks and being used in foods and to kids. But the business on this right now is so different.

And now what really oftentimes shakes it loose faster from the federal perspective is when individual states start having all sorts of different laws. And we saw this happen with the GMO things where Vermont passed a non-GMO and then California and then eventually they passed the non-GMO legislation from a federal perspective because all these individual states we're having requirements. Well, we're at that point right now with CBD and hemp.

I assist a lot of companies with their labels, reviewing the packaging and labeling. And right now we have 12 different states that have individual state requirements for their state. There's five states that require a QR code on their packaging where you post the C of A. Minnesota requires the name and address of the testing lab to be on your label. Oklahoma requires the country of origin and whether it's natural or synthetic. Colorado has their own little phrase. Florida right now is sending a task force around to see whether a very specific statement that says, "This product does not contain more than 0.3% delta-9-tetrahydrocannabinol by dry weight." It has to be exactly on the label of their product.

There's all these individual requirements, and when you have that many, for a company to actually comply with the federal regulations and all the state, you would need all of those accordion drug facts panels to pull out to be able to see it all. So when you have that start to happen, it makes it clear that you need some sort of federal, centralized legislation for it. The FDA keeps pushing slowly based on the fact that they don't believe there's the safety data to make a decision. But they're going to need to do something.

Majid: That's incredibly helpful. Thank you so much that you just added that statement for Florida. So Florida, we love you.

Just real quick because it's rare we get to have a father-son duo here for The CBD Movement Podcast. Do you have any insight or perspective on what's great about working in the same law firm as your son or as your father?

Justin Prochnow: It's funny. I tell a lot of people that... I do have a lot of people are like, "Oh, I could never do that." I mean, we've always worked together well. For a while, after I had graduated law school, he was only working for law firms that you were not allowed to hire relatives. So I was asking whether that was on purpose or not. I would say it's for the most part great. As a younger lawyer, I would come in and he would tell me to tuck in my shirt or my collar, and that would bother me. I'd say the biggest thing is at our law firm, our email address is our last... Most people, it's our last name and first initial. We both have the same first initial, and he was there a year before me. So I have to make mine prochnowjj, and so what happens is he gets a lot of my emails. So as I tell people, it's bad enough when someone else gets your email, but when it's your father getting your email, you have to be a little more discriminate about who you hand out your email address to.

James Prochnow: I would say it's been a delightful experience. Sometimes he reminds me, he thinks I'm the comma king of the world. I use too many commas. And so occasionally I have to go back with him with some interesting comment about, "I think there's a missing word in the second sentence or the third paragraph." But I will say this, he and I agree on what the law is and our philosophy and our approach toward the law. Sometimes when I hear him talk because he's developed into a prolific speaker he is, I tell my wife at home, I say, "This is like identical to the words that I would've used." It's been a really delightful relationship.

He actually joined me after being out of law school for 10 years, which I think was good because he was a prosecutor in Denver, developed other experience. And so from my perspective, it works really well because if he has a client that he gets too busy about, not too busy about but is too busy just because of things, I can do that or vice versa. So I have complete confidence in everything that he says and proud to work with him.

Justin Prochnow: And then when he goes to Mexico for a month, I can take care of all his work.

Emily: Well, it seems like you both are on the same page. I can tell just from sitting across from you. So thank you so much for being here. This has been so helpful, and we're really grateful for everything that you both are doing for this industry. And thank you for joining us.

James Prochnow: Our pleasure. Thank you.

 

This transcript was exported on Aug 11, 2020 - view latest version here