MoCRA Small Business Exemption: Who Qualifies, Who Does Not, and What the Exceptions Cover

MoCRA includes a small business exemption that relieves certain cosmetic companies from the facility registration, product listing, and some recordkeeping requirements imposed on larger companies. The exemption applies to businesses with average gross annual sales of cosmetic products in the United States of less than $1 million over the preceding three-year period. For many small foreign cosmetic brands testing the US market or selling through limited channels, this exemption appears to remove the need for FDA compliance — but the exemption is narrower than it first appears, and several important MoCRA obligations are not covered by the exemption at all.

The $1 million threshold and how it is calculated

The small business exemption applies to entities whose average gross annual sales of cosmetic products in the United States over the preceding three years are less than $1 million. This is calculated based on US sales only — worldwide sales are not included in the calculation. The calculation uses gross sales (before deductions for returns, allowances, or discounts), and it averages over three years, so a company that had $500,000 in US cosmetic sales in year one, $800,000 in year two, and $1.5 million in year three would have a three-year average of approximately $933,000 and would still qualify for the exemption. However, a company that exceeds the $1 million average in any subsequent three-year period must comply with all MoCRA requirements, including retroactive facility registration and product listing.

What the exemption covers

The small business exemption, when applicable, relieves the company from the facility registration requirement, the product listing requirement, and certain recordkeeping requirements. This means that a qualifying small business does not need to register its manufacturing facility with the FDA under MoCRA, does not need to list its individual cosmetic products with the FDA, and has a reduced adverse event record-keeping period (three years instead of six). These exemptions can significantly reduce the regulatory burden for small brands that are just beginning to sell in the US market.

Critical exceptions to the small business exemption

The exemption does not apply to several categories of cosmetic products, regardless of the company's sales volume. Products that come into contact with the mucous membrane of the eye under customary or reasonably foreseeable conditions of use are not covered — this includes eye shadows, eyeliners, mascaras, eye creams marketed for use around the eye, and contact lens solutions that are classified as cosmetics. Products that are injected are not covered. Products that are intended for internal use are not covered. And products that are intended to alter appearance for more than 24 hours under customary conditions of use and that are not removed by the consumer in the normal course of use are not covered.

These exceptions mean that a small brand with annual US sales of $200,000 that sells mascara, eyeliner, or eye shadow must still register its facility and list those products with the FDA under MoCRA. The exemption may still apply to the brand's other products (lip products, skincare, body care) that do not fall within the exceptions, but the eye products trigger full compliance obligations regardless of the company's size. This dual-status situation — some products exempt, others not — creates administrative complexity that many small brands do not anticipate.

Obligations that apply regardless of exemption status

Even when the small business exemption applies, several MoCRA obligations remain in effect. The safety substantiation requirement applies to all cosmetic products — every company, regardless of size, must maintain adequate substantiation of safety for its products and ingredients. The adverse event reporting requirement for serious events (15-business-day FDA notification) applies to all responsible persons, regardless of size. The requirement to include adverse event contact information on the product label applies to all products. And the prohibition on adulterated and misbranded cosmetics under the FD&C Act applies regardless of company size or exemption status. A small business that claims the exemption is not exempt from making safe products or from reporting serious safety problems.

How FDABridge helps small cosmetic brands

FDABridge helps small foreign cosmetic brands determine whether the MoCRA small business exemption applies to their US operations, identify which products fall within the exemption exceptions, and complete facility registration and product listing when required. Our services are designed to be accessible to brands of all sizes. Visit fdabridge.com/cosmetics to see our cosmetics services or fdabridge.com/contact to discuss your specific situation.