The marijuana industry “will continue to grow,” a federal economic committee said in a new set of recommendations, which means action must be taken to ensure it is followed more diligently under a system allowing analysts to follow the markets and publish statistical data. .
In a proposal published in the Federal Register last week, the White House Office of Management and Budget (OMB) outlined policy recommendations for the 2022 update of the North American Industry Classification System. (NAICS), which is used to categorize businesses and compile market data. in the United States, Mexico and Canada.
The suggestions include a proposal to take cannabis retailers out of a miscellaneous category and index them separately into a new category where they will be grouped with tobacco, e-cigarette and tobacco stores. Other recommendations were also made on indexing agricultural businesses and cannabis, hemp and CBD wholesalers into specific NAICS categories.
These may seem like nominal moves – and they don’t represent the broader change that industry advocates wanted to see – but it demonstrates that the federal committee behind these recommendations recognizes the growing legitimacy of the marijuana industry and wants to make it easier for economists to research it like any other category of business.
The United States Economic Classification Policy Committee (ECPC), which includes the OMB, the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics, took into account several previous public comments that urged it to restructure the NAICS for cannabis. retailers.
A comment that was submitted by the Census Bureau itself suggested that marijuana retailers and vape shops could be divided into two distinct categories. But that left open the possibility of combining cannabis stores and vape retailers, as the ECPC ultimately recommended.
“The ECPC notes that there is ample evidence to suggest that the retail market for electronic cigarettes, e-liquids, related accessories, and medical and recreational marijuana will continue to grow, albeit with increasing regulation at levels. federal and state “, the committee mentionned in response to the census comment.
“Generally speaking, vape shops and marijuana stores are mainly engaged in retailing smoking supplies,” he continued. “Considering the commonalities of the production process and the continued growth of the market, the ECPC recommends creating a new industry, titled ‘Tobacco, e-cigarette and other smokers’ stores” by combining the NAICS industry 453991 with electronic cigarette stores and marijuana stores, currently classified in NAICS 453998, All other miscellaneous retail stores (except tobacco stores).
A Census Bureau representative summarized the main changes, telling Marijuana Moment that “marijuana stores were not identified as a separate industry in previous versions of NAICS, and it is not recommended to group them into an industry. separate in NAICS 2022, but rather to combine them with tobacco and other smoking supply stores.
As such, this category update would not mean that researchers could extract specific and nuanced data on marijuana companies, as it would still be lumped into the broader classification of the e-cigarette industry. However, this would reduce the scope of currently available data, which could prove useful in future analyzes.
For each NAICS code, there are corresponding industry index entries — essentially detailed descriptions of the types of businesses that fall into the category.
Although cannabis retailers were not listed as a separate industry from NAICS when the system was last updated in 2017, marijuana is currently listed as an index entry for other categories dealing with merchant wholesalers and crops grown “under cover” and in an “open field”. ”, In addition to the miscellaneous category for retailers.
At the very least, this recommended update would be a symbolic step in the right direction when it comes to advocates, especially with ECPC’s note that the cannabis industry “will continue to grow”. But industry experts had hoped that the ECPC would have taken another route and completely separate the cannabis market from tobacco or any other industry.
It was the recommendation of economist Beau Whitney, who said in a 2020 comment on the question that, “given the size of the legal marijuana market and its current influence on the U.S. economy, it is appropriate and justified to create your own set of NAICS codes, so that federal, state agencies and local communities, as well as academics, research institutions and businesses, will have the specific data they need to make informed, data-driven decisions.
Beyond marijuana, the ECPC also recommends updating the NAICS categories for agriculture and wholesale to include “cannabis and hemp” as corresponding index entries. These classifications include “Other food crops grown under cover, 111998, all other miscellaneous agricultural crops, and 424590, agricultural commodity commodity merchant wholesalers,” the explanatory statement reads.
In addition, the committee recommended adding CBD index entries to the NAICS categories “325998, All Other Miscellaneous Chemical Products and Preparations Manufacturing, 424690, Merchant Wholesalers of Other Chemicals and Allied Products, and 459999, All other miscellaneous retailers. ”
The expert group also wants to change the separate classification system for North American products to take into account CBD.
None of these changes have been codified yet, and a 45-day public comment period is now. open so that people have a say proposals.
In the meantime, the Census Bureau is taking its own steps to improve federal data on the marijuana industry in a different way. He announced in February, for example, that he would add a question on the cannabis tax to the annual and quarterly reports that states submit in order to “modernize the content of the survey to maintain the relevance and sustainability of this data. “.
It will ask states to share information on tax revenues generated by legal marijuana markets, in addition to data on licensing fees derived from the industry.
Beyond modernizing data, reporting state cannabis tax revenues while marijuana remains illegal at the federal level could further demonstrate to lawmakers the economic opportunities of regulating the plant.
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