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MoCRA's Small Business Exemption for Cosmetic Industries -Highlighting Exceptions

Date: 5/10/2024

small business exemption mocra

Are you a cosmetic manufacturer navigating the complex landscape of regulatory compliance? Look no further than the Modernization of Cosmetics Regulation Act (MoCRA), where a small business exemption could be your saving grace. Let's delve into what this exemption entails and how it could benefit your business.

Section 612 of MoCRA details the exemption a ‘Small Business’ can benefit from if they meet the definition. The definition of a small business within Sec. 612 (a) is ‘Responsible Persons, and owners and operators of facilities, whose average gross annual sales in the United States of cosmetic products for the previous 3-year period is less than $1m, adjusted for inflation, and who do not engage in the manufacturing or processing of cosmetic products described in subsection (b), shall be considered small businesses and not subject to the requirements of section 606 or 607.’

Thanks to the relentless efforts of organizations like the HSCG, MoCRA includes provisions that grant exemptions for small businesses. If you meet the criteria, you could be exempt from various requirements, including compliance with Good Manufacturing Practices (GMP), facility registration, product registration, and even record-keeping of adverse events.

But what exactly qualifies as a "small business"? It boils down to two main factors: your annual revenue and the types of cosmetic products you manufacture.

First, let's talk revenue. Your business is considered a small business if your sales revenue from cosmetic products falls below a certain annual cap. As of 2023, this cap stands at $1 million per year, with adjustments for inflation annually. This figure is calculated based on the average income over the previous three years.

For example, if your average annual revenue over the past three years is less than $1 million, congratulations! You qualify as a small business and could be eligible for the exemption.

But there's a catch.

In order to qualify for the exemption, your business must not manufacture certain types of cosmetic products. These include:

  1. Cosmetic products that regularly come into contact with the mucous membrane of the eye during normal use, such as eyeliner, mascara, and potentially eye shadow.

  2. Cosmetic products that are intended for injection.

  3. Cosmetic products that are meant for internal use.

  4. Cosmetic products designed to alter appearance for more than 24 hours and are not typically removed by the consumer, like brow or eyelash dye, acrylic or gel nails, or gel nail polish.

By understanding these criteria and navigating the intricacies of MoCRA, small cosmetic businesses can unlock valuable exemptions, easing their regulatory burden and allowing them to focus on what they do best: creating quality products for their customers.

In conclusion, for small cosmetic manufacturers, the MoCRA small business exemption could be a game-changer. Take advantage of this opportunity to streamline your compliance efforts and propel your business forward in the competitive cosmetics industry.

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