If you’ve ever wondered whether Big Brother is watching you online, the answer is yes. I’m not just referring to the big data and privacy breaches such as Equifax’s recent $700 million settlement which has been reported in every major news outlet, or the recent $5 billion fine against Facebook levied by the Federal Trade Commission (FTC) after an extensive investigation into the company’s privacy practices. I’m referring to every regulated industry.
On July 22, 2019, Federal regulators from the U.S. Food and Drug Administration (FDA) published a public “warning letter” to Curaleaf, Inc. The letter advises the Massachusetts cannabis company that, after reviewing the company’s website, and Facebook and Twitter posts regarding the CBD products it markets, the FDA determined that the company is violating the FD&C Act and other FDA regulations:
1. [T]he “CBD Lotion,” “CBD Pain-Relief Patch,” “CBD Tincture,” and “CBD Disposable Vape Pen” products are unapproved new drugs sold in violation of sections 505(a) and 301(d) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), 21 U.S.C. 355(a) and 331(d).
2. [The] products are misbranded drugs under section 502(f)(1) of the FD&C Act, 21 U.S.C. 352(f)(1).
3. [The] “Bido CBD for Pets” products are unapproved new animal drugs that are unsafe under section 512(a) of the FD&C Act, 21 U.S.C. 360b(a), and adulterated under section 501(a)(5) of the FD&C Act, 21 U.S.C. 351(a)(5).
The letter goes on to note that the company is marketing “unapproved new and misbranded human drug products” and making unsubstantiated medical claims about the cannabis products it sells. The warning letter provides many examples.
The letter concludes with a specific directive to Curaleaf:
“You should take prompt action to correct the violations cited in this letter. Failure to promptly correct these violations may result in legal action without further notice, including, without limitation, seizure and injunction.
Within fifteen working days of receipt of this letter, please notify this office in writing of the specific steps you have taken to correct violations. Include an explanation of each step being taken to prevent the recurrence of violations, as well as copies of related documentation.”
Crisis Management and Mitigating Damage
Within 24 hours, Curaleaf issued a public statement responding to the FDA’s warning letter, saying:
“Curaleaf is committed to the highest standards of quality and compliance, and will work collaboratively with the FDA to resolve all issues addressed in the agency's letter. The Company will respond to the FDA letter within the required 15 working days. Compliance is a top priority for Curaleaf and the Company is fully committed to complying with FDA requirements for all of the products that it markets. We can affirm that nothing in the letter raises any issues concerning the quality and consistency of any Curaleaf product or calls into question the high safety standards of the Company's cultivation and manufacturing processes. Curaleaf CBD products are all derived from hemp and meet the requirements of the Farm Bill.”
As communications professionals, we find when evaluating this statement that it follows the basic tenants for crisis communications and holding statements.
Curaleaf responded immediately – as it should have, given that the FDA previously had issued an advisory in April 2019 warning the cannabis industry that it already had issued warning letters to three companies for making “egregious, over-the-line claims” and explicitly stating that the FDA “won’t tolerate this kind of deceptive marketing to vulnerable patients.”
Curaleaf’s statement tells the company’s story, comes off as honest and transparent, answers a foreseeable public question (i.e. “does this raise issues regarding the quality and consistency of the products?”), includes a disclosure regarding forward looking statements, and provides contact information for the media and investors.
So, what happens next?
Curaleaf and its attorneys (who need to be experienced in cannabis law, interstate commerce law, the 2018 Farm Bill, the FD&C Act, FDA regulations and a host of other issues) will go into hyper crisis management mode in order to respond to every allegation made by the FDA within the allotted 15 days. The company also will invest countless dollars and resources to respond to the FDA and to mitigate any potential damage.
It then likely will embark on a strategic and integrated marketing and public relations plan to mitigate any further damage to its reputation.
I can’t help but wonder if Curaleaf has a crisis management plan in place already. And if they don’t already have one, will they create a social media policy that ensures compliance review of its social media posts? Time will tell.
Does your law firm have a social media policy? If not, you should.
Here’s a clip from a presentation I gave on the importance of social media policies for law firms.
https://youtu.be/iZBHI6aPnl4
