CBD company Diamond CBD amicably settles class-action lawsuit

Jul 31, 2020

On Thursday, popular CBD innovator, manufacturer and distributor Diamond CBD, and their parent company PotNetwork Holdings settled what was set to be a class-action lawsuit against the brand following a dispute over labeling claims made on some of their products. According to both parties, the case was settled amicably via meditation on July 14, though details of the settlement were not disclosed to the public.

All indications are that both parties were pleased with the settlement's outcome, with Rodney A. Max of the Upchurch Watson White & Max Mediation Group noting in the filing that "counsel have done an outstanding job of achieving resolution while representing the best interests of their clients." Attorneys will be filing the final settlement with the court once all documents have been completed in the next few weeks.

“Without disclosing the particular terms of the settlement, our company is pleased to have amicably resolved this matter,” said PotNetwork Holdings CEO Kevin Hagen.

In the original suit, filed last September by Kathryn Potter, who represented the class as the plaintiff and Diamond CBD disagreed with Diamond CBD on what constituted appropriate labeling procedures for the consumer cannabidiol industry. Though less than 10 years old, the CBD industry is expected to be worth upwards of $23 billion within the next five years.

At the center of this lawsuit was the lack of industry regulations and oversight by the Food and Drug Administration, a federal agency that has been promising regulatory oversight for well-over a year now. Although Diamond CBD, as one of the country’s most widely recognized brands, and other such companies have instituted several checklist items to keep their processes transparent for consumers, including lab-testing, open certificates of analysis, clear product labeling, and more, they have, for the most part, been left on their own to determine how to proceed.

It’s an ensuing vacuum that has created confusion among consumers and industry insiders alike. Although companies like Diamond CBD have done their best to meet a certain standard, most in the industry are still waiting for FDA guidance to clear up what has been a confusing period.

The FDA’s lack of regulations has held up several important cases in federal court this year. In Colette v. CV Sciences, Inc., where the plaintiffs made a claim of fraudulent and deceptive advertising practices regarding CBD products, the judge in the U.S. District Court for the Central District of California issued a stay until the FDA institutes rules and regulations over the industry. Another case in the Southern District of Florida Snyder v. Green Roads of Florida saw the same thing happen.

The presiding judge in the Diamond CBD case did rule differently and was prepared to allow the case to move forward despite the FDA’s lack of policy guidelines. However, last week, the FDA submitted a draft policy to the White House for review, which led many experts to believe that official regulations could come down any day now.

Prior to the settlement, the judge did dismiss some of the plaintiff’s claims, making the point that she had no standing to sue the company for products she never bought nor intended to purchase again in the future. 

Meanwhile, with the lawsuit now behind them, Diamond CBD awaits the draft policy guideline from the FDA and is eagerly looking to the future, which includes plans for several new product launches on the consumer CBD market.

“[We plan] to continue our focus of providing the very best, top-quality hemp-derived products to our customers,” said Hagen.

(Full Disclosure: PotNetwork Holdings is the parent company of PotNetwork)
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