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Are Independent Beauty Brands Being Overburdened by Ever-Increasing State Regulations?

Published June 25, 2023
Published June 25, 2023
Troy Ayala

Many beauty industry experts would agree that the Modernization of Cosmetics Regulation Act (MoCRA) passed in late 2022 was long overdue but far from perfect. As the first major update to the Food and Drug Administration’s (FDA) cosmetics authorities since 1938, MoCRA imposed several new requirements for cosmetic manufacturers and brands. However, some clean beauty brands and industry advocates argue that there were several provisions that didn't go far enough, particularly in regard to ingredients and ingredient safety.

In an attempt to fill in some of the gaps in the newly updated federal legislation, some states have continued to enact cosmetics legislation that outright bans the use of potentially harmful chemicals in cosmetics. This new wave of state laws limiting the use of certain ingredients in cosmetic products (or banning them altogether) started before MoCRA passed and is in part responsible for the updated federal legislation. The increasing number of state regulations provided some much-needed momentum for the federal government to update its laws to address a growing amount of consumer concerns.

But if every state continues to expand its own rules and regulations, how will beauty brands be able to navigate a regulatory landscape with potentially 50 different standards? And what impact will this state-by-state legislation have on small, independent beauty businesses that might not have the resources or bandwidth to ensure compliance?

In an effort to understand the nuances of these various state legislation efforts, BeautyMatter spoke with industry experts to find out the impact these laws might have on the beauty industry.

Where MoCRA Falls Short

Passed with bipartisan and industry support, MoCRA was a great start in reforming how cosmetics are regulated, but the legislation is missing a few key elements. MoCRA did not ban any specific ingredients, and the federal preemption provision allows states to continue to enforce existing bans or limits on ingredients in cosmetic products, enact new bans and limits on ingredients, and continue to enforce any law that requires reporting of cosmetic ingredients.

“Part of the whole point of the industry working together to make sure that MoCRA got passed was to help prevent this type of action at the state level by providing a fair and comprehensive set of regulations to oversee [cosmetics] at the federal level,” Independent Beauty Association (IBA) President and CEO Don Frey told BeautyMatter.

“Each one of these [state regulations] seems to have just a slightly different list of ingredients in them, so it becomes extremely difficult for the industry as a whole—particularly small businesses—to be able to keep track of all these regulations, make sure they're complying, and also not constantly be having to go back and reformulate and recast all their targets because yet another ingredient that is safe is all of a sudden now on a list in some random state."

Generally speaking, it is easier and quicker to pass state legislation than it is to pass federal legislation. This is because the nature of federal legislation is such that it affects everyone in the entire nation, whereas states have a smaller constituent base to answer to. MoCRA’s definition of safety is rather vague on purpose and allows for individual states to set their own standards.

“The fact that there are these patchwork bills coming out means the federal regulation is missing something important, which I believe it is,” says Karen Yarussi-King, President at Global Regulatory Associates, a regulatory consultancy for small and medium-sized cosmetic companies. “It's missing a position on ingredients, and a position on natural, clean, nontoxic, safe, etc. It's still the Wild West.”

For now, it’s up to the states to pick up where the federal government left off. Organizations like the Environmental Working Group (EWG) are not waiting for the federal government to act on cosmetics reform. They’re going straight to the states to advocate for bills that they believe contribute to safer cosmetics.

“The Food and Drug Administration rarely takes steps to ban or restrict ingredients on a federal level, even though there are ingredients allowed in cosmetics that could cause health harms,”  Melanie Benesh, EWG’s VP of Government Affairs, tells BeautyMatter. “States play an important gap-filling role where the federal government has fallen short.”

State legislation is often the quickest path to effect change, and clean beauty brand Beautycounter has been a longstanding advocate for cosmetics reform at both the state and national levels. Chief Impact Officer Jen Lee recently provided testimony to the Washington State Senate Environment, Energy and Technology Committee in support of the Toxic-Free Cosmetics Act in March 2023. Her testimony helped influence the Washington State Toxic-Free Cosmetics Act (HB 1047), which was recently signed into law and restricts the manufacture, sale, and distribution of cosmetics containing harmful chemicals, including PFAS, formaldehyde, mercury, and more. Beautycounter’s community of advocates sent over 1,000 emails to their state legislators urging them to support and pass this bill. This passage marks the 12th piece of legislation that Beautycounter has influenced. Washington's Toxic-Free Cosmetics Act bans more chemicals of concern in beauty and personal care products than any other state.

“There's a specific reason why MoCRA didn't address toxic chemical bans, [and that’s] because they wanted to leave the door open so states could weigh in and be able to legislate for themselves,” Lee tells BeautyMatter. “A lot of federal-level activities happen because there's a significant movement in state-level laws. I think you have to look at both, and I don't think it particularly makes sense in a non-bipartisan topic like this that one needs to trump the other.”

The states show no signs of slowing down when it comes to creating their own laws to protect consumers in the wake of MoCRA. Currently, Beautycounter’s advocacy efforts are geared towards the Nevada PFAS ban, the California chemical ban, the New York chemical ban, the Oregon chemical ban, and the Illinois chemical ban.

“We actually really believe every state matters,” says Lee. “Our strategy is to weigh in on every state as long as we have the resources and the capability and time to do it.”

"When everyone has to make safer products, responsible brands get a more level playing field.”
By Melanie Benesh, VP of Government Affairs, EWG

The Impact of State-by-State Legislation on Small Beauty Brands

MoCRA stopped short of banning specific ingredients, and instead requires cosmetic companies to substantiate product safety. According to Yarussi-King, this is done on purpose, as a lot of smaller independent brands take claims from third-party manufacturers’ raw materials documents as fact without doing any additional safety or efficacy testing.

“I have a funny feeling that [MoCRA] skipped banning raw materials to force people to do safety testing,” she says.

Yarussi-King estimates that 50 percent of the independent brands she consults for have not done any safety testing before meeting with her. Yarussi-King argues that the proliferation of “clean lists” from retailers and organizations can give brands and consumers a false sense of safety. The FDA has now been granted mandatory recall authority if it determines that there is a reasonable probability that cosmetic products are adulterated or misbranded, so companies have to be able to show that their product is safe through testing.

“There are some small brands that say, ‘All my ingredients are a one or two on the EWG scale, so I don't have to test.’ False. You've got some companies saying, ‘Well, I meet the Sephora clean list, so I don't have to test.’ False. ‘Well, I'm only using natural ingredients, so I don't have to test.’ False,” says Yarussi-King. “All these [organizations] basically have convinced the small companies that they don't have to do testing as long as they’re certified or meet their clean list, which is all false.”

While MoCRA doesn’t outright ban materials, many states have and will continue to do so, and for small brands to comply, a lot of them are going to have to go back and reformulate their products. Not only does this cost brands time and money, but every time you reformulate, it can affect the quality of the product.

“Some of the things in particular that have been outlawed in some of these state legislations are certain preservatives that are relatively commonly used in many formulas,” says Frey. “Those preservatives are used because they're safe and effective at those levels, as well as cost-efficient.”

Due to the product safety provision in MoCRA, all reformulated products will have to go through additional safety testing, which can take a lot of time.  “What I get very concerned about is efforts just to maintain products in the marketplace is really going to take over the same efforts that normally would be used to create new innovative products for the marketplace,” says Frey.

There’s no doubt that these state and federal regulations will end up being very expensive for small brands to be fully compliant, and they’ll have no choice but to pass on that additional cost to the consumer. If small brands can’t keep up, they risk losing the ability to sell products in certain states with more strict regulations until they can reformulate. If brands don’t want to reformulate across the board, they may be forced to formulate different products to be sold in different states.

“It's the big brands trying to crush the little guys,” says Yarussi-King. “They're banking on the fact that [small brands] have cut corners. Forced to do what everybody else has to do, they're not going to be able to become a strong brand, and then they can either kill them or buy them.”

“I get concerned about all these ancillary costs being added on to these products. It’s going to make it more challenging for people that are already struggling in hard economic times to afford these essential products.”
By Don Frey, President + CEO, IBA

The Impact on the Industry at Large

Increasing state legislation creates a domino effect: If multiple states pass laws forbidding the use of formaldehyde in cosmetics, that’s a good indicator that a federal regulation will get enacted in the future as well. Creating movement in every single state is a key strategy for many clean beauty brands and advocates.

“When states step in to ban ingredients of concern, consumers get safer products and are exposed to fewer chemicals of concern,” says Benesh. “And when everyone has to make safer products, responsible brands get a more level playing field.”

Beautycounter has brand advocates in all 50 states and trains them to meet with their state legislators to be able to weigh in and tell their stories. Many small, independent beauty brands are against increased regulation and argue that they don’t have the resources or access to manufacturers to reformulate their products. The beauty industry is evolving so quickly that many smaller brands can’t keep up. Skincare start-up Wldkat, Kristen Bell's skincare brand Happy Dance, and indie clean makeup brand Athr have all shut down this year, citing ​​mounting financial pressures. In spite of this, Beautycounter believes that increased state regulation doesn't pose an economic threat to beauty brands, no matter their size.

“There's really no reason to say there's an economic obstacle,” says Lee. “If we're able to [produce clean and safe cosmetics] and have a robust preservative system, there's no reason other public companies that are very well known can't do it as well.”

So, how will beauty brands be able to navigate a regulatory landscape with potentially 50 different standards? As more states continue to pass legislation, all beauty brands will need to stay up to date on the latest state and federal laws regarding cosmetics. Moving forward, companies are going to have to manufacture for the most stringent level of safety standards, just to be safe.

IBA is performing more state-specific outreach to keep its members informed, and working with other trade associations to make legislators aware of the issues that these different state laws create.

“We're working to try and find ways to get in front of these various state laws,” says Frey. “We're going to have to amplify our voice—more than we have in the past—because these laws are just happening. And we need to make sure that [the laws are enacted] in such a way that they don't go overboard in overregulating the industry.”

Frey points out that beauty and skincare products are often seen as optional or extra, but in reality, they are essential items that people of all socioeconomic backgrounds use every day to keep their skin and bodies healthy. He argues that we need to make sure that the industry is able to maintain democratic access to high-quality and effective products.

“I get concerned about all these ancillary costs being added on to these products,” said Frey. “It’s going to make it more challenging for people that are already struggling in hard economic times to afford these essential products.”


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