By Lindsey Stroud
Taxpayer Protection Alliance
The United States House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act on April Fool’s Day. This comprehensive, non-silly cannabis reform bill would remove cannabis from the classification of scheduled drugs under the Controlled Substances Act, erase previous cannabis-related convictions, and establish a federal tax rate on all products cannabis-based in the States.
Federal decriminalization and even legalization of cannabis is no joke, but some members of Congress believe the federal government needs more regulatory authority.
The bill, as currently drafted, states that “the Secretary of Health and Human Services, acting through the Food and Drugs Commissioner, shall hold at least one public meeting to discuss the regulations, the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.
Essentially, under the MORE Act, all cannabis products could (if not, would) be regulated by the United States Food and Drug Administration (FDA). And unfortunately, as has been proven time and time again, consumer products and innovation once languish under FDA regulations.
The FDA’s history dates back to the Food and Drug Act of 1906 and essentially morphed into the Food, Drug and Cosmetic (FD&C) Act of 1938, under which the agency still operates today. today. As of March 15, 2022, the FD&C Act featured 871 pages of bloated bureaucratic privileges granted to an agency that has long suppressed innovation in many consumer product sectors. Currently, there is no mention of cannabis in FDA regulations.
You don’t have to look too far into FDA regulations to understand that the agency is more of a hindrance than a supporter of innovation, and has enforced disastrous rules that hurt small businesses.
For example, under the FDA’s Center for Tobacco Products, all new tobacco products entering the market after 2007 must undergo a thorough approval process to even market their products. This has significantly reduced adults’ access to tobacco harm reduction products, although these products are promoted by public health agencies in other countries. Additionally, in September 2021, the agency actually issued denial orders to nearly one million vaping products that had been manufactured by small e-cigarette companies since 2016.
The FDA’s Center for Drug Evaluation and Research (CDER) oversees drug approval. Bringing a new drug to market is expensive and time-consuming. In fact, some studies have shown that bringing a new drug to market can cost over a billion dollars and take over a decade.
The Center for Food Safety and Applied Nutrition is the branch of the FDA that oversees about 78% of the foods Americans eat. With the Food Safety and Modernization Act of 2011, Congress gave the FDA “expanded authority to regulate the production of fresh produce at the farm level.” Unfortunately, as noted in a 2018 study by the U.S. Department of Agriculture, fixed costs in some requirements of the 2011 law meant that “compliance costs had to be higher as a share of revenue for small businesses.” “.
These are just a few snippets of the enormous authority the FDA already has over consumer products and the costs associated with regulations created by the FDA. If the FDA oversees the regulation of cannabis products, many small businesses could be locked out of what is already a legal market in their respective states.
Although the wording of the MORE Act does not have specific regulations in place, small businesses in the United States have already faced regulations imposed by the FDA on existing and legal consumer products.
In 2009, the FDA attempted to block e-cigarette shipments to the United States, using its CDER regulatory authority, and was quickly sued by e-cigarette manufacturers. Also in 2019, Congress gave the FDA authority to regulate tobacco products, creating the CTP. In 2012, the original 2009 litigation would be finalized with the United States Court of Appeals for the DC Circuit determining that the FDA could regulate e-cigarettes as a tobacco product.
In 2016, the FDA established the long-awaited deeming regulations, codifying federal regulations for new tobacco products, including those that entered the market after February 15, 2007 – or two years before the regulator’s authority. FDA on tobacco products. As of March 2022, only two companies had received marketing orders from the agency for their e-cigarette products, while many others received denials.
The lack of FDA regulation has allowed other adult consumer goods to thrive. For example, the craft beer market has flourished across America.
In 2012, two companies controlled 90% of the US beer market, but between 2008 and 2016, breweries “grow sixfold and the number of brewery workers increased by 120%.” Additionally, between 2007 and 2016, “shipments from the top five brewers… fell 14%.” In 2021, even amid the COVID-19 pandemic, craft beer sales grew by 8%, “bringing the share of small independent brewers in the U.S. beer market by volume to 13.1%.”
As noted, the FDA has not been the best federal agency for empowering small businesses. In fact, its regulation tends to favor large companies over the small companies that created the market.
Some in the cannabis space are paying attention to the actions of the FDA. Due to a lack of federal regulation, “only small, bold players have entered the hemp and hemp CBD space” and as of October 2021, no “Fortune-500-type companies have entered [the market] because the fear of regulatory uncertainty. In fact, the MORE Act could “herald a major overhaul as well-funded, well-positioned companies with comprehensive distribution networks replace smaller hemp companies.”
Fortunately, the MORE Act isn’t the only comprehensive cannabis reform bill before Congress. Rep. Nancy Mace (RS.C.) introduced the States Reform Act, which decriminalizes marijuana, sets a lower tax rate than the MORE Act and, most importantly, establishes a federal regulatory regime similar to that of alcohol.
The FDA does a questionable job of regulating adult consumer products as best they can. There is also overwhelming evidence that FDA regulations are stifling small businesses, even established ones. Congress should avoid giving this agency additional regulatory authority.
Lindsey Stroud is director of the Consumer Center of the Taxpayers Protection Alliance.