MoCRA - Small Business Exemption

Section 612 of the Modernisation of Cosmetics Regulation Act (MoCRA) provides a specific exemption for small businesses in the cosmetics industry. To qualify as a small business under this section, a company must have average gross annual sales in the United States of less than $1 million, adjusted for inflation, over the previous three years. Additionally, these entities should not be involved in the manufacturing or processing of certain cosmetic products outlined in subsection (b). Qualifying small businesses are exempt from the Good Manufacturing Practice (GMP) requirements specified in Section 606 of MoCRA. They are also relieved from facility registration and product listing mandates set forth in Section 607. Furthermore, Section 605 stipulates a reduction in the duration for keeping adverse event records for small businesses, shortening the requirement from six years to three years.

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.’

If a US Responsible Person and/or facility meets the above definition they are exempt from Good Manufacturing Practice (GMP) requirements as laid down within Sec. 606, they are also not subject to facility registration requirements or product listing requirements as laid down in Sec. 607. Further, alongside this, Sec. 605 details that adverse event record keeping is reduced for Small Businesses down to 3 years rather than the standard 6 years. 

The definition above mentions the Small Business exemption does not apply to entities who engage in the manufacturing or processing of cosmetic products described in subsection (b). These products are the following:

If an entity produces one or more product types listed above, they will not benefit from the exemption. It is also worth noting that the product types listed above are unlikely to be viewed as cosmetic products in line with the FDA’s definition. 

When a business meets the threshold of $1m of sales over the last 3 years within the United States, they will be required to comply fully with MoCRA and would no longer benefit from the Small Business exemption. 

It is recommended that Small Businesses comply with all provisions of MoCRA as soon as they are able to as there are no penalties for staying ahead but there are penalties and FDA enforcement for businesses who should be complying with sections 605, 606 & 607. 

Book a demo of the Worldover platform today

Book a demo