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 Federal decriminalization and even legalization of cannabis is no joke, but
there are some in Congress who think that the federal government needs more
regulatory authority.
The bill, as currently written, charges that “the Secretary of Health and Human
Services, acting through the Commissioner of Food and Drugs, shall hold not less
than one public meeting to address the regulation, safety, manufacturing,
product quality, marketing, labeling, and sale of product containing cannabis or
cannabis-derived compounds.”
Essentially, under the MORE Act, all cannabis products could (if not, would) be
regulated by the U.S. Food and Drug Administration (FDA). And unfortunately, as
proven time and time again, consumer products and innovation languishes once
under FDA regulations.
The history of the FDA dates to the 1906 Food and Drug Act and essentially
morphed into the 1938 Food, Drug and Cosmetic (FD&C) Act, which the agency still
operates under today. As of March 15, 2022, the FD&C Act is 871 pages of bloated
bureaucratic privileges afforded to an agency that has long suppressed
innovation across many sectors of consumer products. Currently, there is no
mention of cannabis at all in FDA regulations.
One doesn’t need to look too far in FDA regulations to understand that the
agency is more of a barrier to, rather than a supporter of innovation, and has
applied disastrous rules that harm small businesses.
For example, under the FDA’s Center for Tobacco Products, all new tobacco
products that enter the market after 2007 must undergo an extensive approval
process to even market their products. This has significantly lessened adult
access to tobacco harm reduction products, despite these products being promoted
by public health agencies in other countries. Moreover, in September 2021, the
agency actually issued denial orders to nearly 1 million vapor products that had
been manufactured by small e-cigarette firms since 2016.
The FDA’s Center for Drug Evaluation and Research (CDER) oversees drug approval.
Bringing a new drug to market is expensive and takes time. In fact, some studies
have shown that bringing a new drug to market can cost more than $1 billion and
take more than a decade.
The Center for Food Safety and Applied Nutrition is the FDA branch that oversees
about 78 percent of the food consumed by Americans. With the 2011 Food Safety
and Modernization Act of 2011, Congress gave the FDA “expanded authority to
regulate fresh-produce production at the farm level.” Unfortunately, as noted in
a 2018 study by the U.S. Department of Agriculture, the fixed costs in the
certain requirements of the 2011 Act meant that “compliance costs to be higher
as a share of revenue for smaller firms.”
These are just a few snippets of the massive authority FDA already has over
consumer products and the costs associated with FDA-created regulations. Should
the FDA oversee the regulation of cannabis products, many small firms could be
shut out of what is already a legal market in their respective state.
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While the language of the MORE Act does not have specific regulations in place,
small businesses in America have already faced regulations imposed by the FDA on
existing and legal consumer products.
In 2009, the FDA tried to block shipments of e-cigarettes to the U.S, using
their CDER regulatory authority, and was promptly sued by e-cigarette
manufacturers. Also in 2019, Congress gave the FDA authority to regulate tobacco
products, effectively creating the CTP. In 2012, the original 2009 litigation
would be finalized with the U.S. Court of Appeals for the D.C. Circuit
determining that FDA could regulate e-cigarettes, as a tobacco product.
In 2016, the FDA established the long-awaited deeming regulations, codifying
federal regulations for novel tobacco products, including any that had entered
the market after February 15, 2007 – or two years prior to FDA regulatory
authority over tobacco products. As of March, 2022, only two companies had
received marketing orders from the agency for their e-cigarette products, while
many more have been issued denials.
The absence of FDA regulation has permitted other adult consumer goods to
flourish. For example, the craft beer market has blossomed across America.
In 2012, two companies controlled 90 percent of the American beer market, but
between 2008 and 2016, breweries “expanded by a factor of six, and the number of
brewery workers grew by 120 percent.” Further, between 2007 and 2016, “shipments
from five major brewers … fell by 14 percent.” In 2021, even amid the COVID-19
pandemic, craft beer sales grew by eight percent, “raising small and independent
brewers’ share of the U.S. beer market by volume to 13.1%.”
As noted, the FDA has not been the best federal agency in empowering small
businesses. In fact, its regulations tend to favor large corporations at the
expense of the small businesses who created the market.
Some in the cannabis space are paying attention to the actions by the FDA. Due
to a lack of federal regulations, “only bold, small players have entered the
hemp and hemp CBD space” and as of October, 2021, no “Fortune-500 type
corporations have entered [the market] because a fear of regulatory
uncertainty.” In fact, the MORE Act could “herald a major shakeup as well-funded
and well-positioned corporations with comprehensive distribution networks would
replace smaller hemp companies.”
Thankfully, the MORE Act isn’t the only comprehensive cannabis reform bill
before Congress. Representative Nancy Mace (R-S.C.) has introduced the States
Reform Act, which decriminalizes marijuana, sets a lower tax rate than the MORE
Act, and more importantly, establishes a federal regulatory scheme that is
similar to alcohol.
The FDA does a questionable job at best regulating adult consumer products.
There is also overwhelming evidence that FDA regulations snuff out small
businesses, even established businesses. Congress should avoid giving this
agency any further regulatory authority.
Lindsey Stroud is director of the Taxpayers Protection Alliance’s
Consumer Center. |
