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Retailer Responsibilities Regarding





Introduction: On March 9, 2006, President Bush signed into law the USA Patriot Act, Title

VII of which is the Combat Methamphetamine Epidemic Act of 2005. Following is a

summary of the key Title VII requirements governing the retail sale of all cough and cold

products that contain the methamphetamine precursor chemicals ephedrine, pseudoephedrine

or phenylpropanolamine, collectively referred to here as PSE or PSE products, for simplicity.

(See also, ¡§Products Covered,¡¨ below).


Requirements Effective April 8, 2006:

1. Daily Sales Limit on Retailers: Retail sales may not exceed 3.6 grams PSE per

day per purchaser, regardless of the number of transactions. Retailers are not

required to consult a logbook to determine whether the sales limitation is

exceeded in any particular case. (See attached memorandum from Hogan &


2. 30-Day Purchase Limit on Consumers: Individuals are prohibited from

purchasing more than 9 g PSE per 30 day period. The federal statute does not

impose liability on retailers with respect to the monthly purchase limit. (See

attached memorandum from Hogan & Hartson)

3. Non-Liquid Forms: All non-liquid forms (including gel caps) of PSE products

must be sold in blister packs with no more than 2 dosages or in unit dose packets

or pouches.

4. Mail Order Limits: Mail order companies may not sell more than 7.5 grams to a

customer within a 30 day period.

March 30, 2006 1 Food Marketing Institute

March 30, 2006 2 Food Marketing Institute

Requirements Effective September 30, 2006:

1. Behind-the-Counter Placement: All PSE products must be placed behind a

counter (any counter) that is not accessible to purchasing consumers or in a

locked display case that is located on the selling floor. Retailers must give the

product directly to the purchaser.

2. Logbook: Retailers must maintain a logbook of information on transactions

involving PSE products. The logbook may be maintained in either written or

electronic form. (See ¡§Logbook Requirements,¡¨ below.)

3. Photo ID: In conjunction with the logbook requirement, retailers will be required

to ask for photo identification, issued by either a State or the Federal Government

or other appropriate identification.

4. Training & Certification: Retailers must train applicable sales personnel to

ensure that they understand the requirements of PSE product sales and submit

self-certifications to the Attorney General in this regard. (See ¡§Training &

Certification Requirements,¡¨ below).



Products Covered: All PSE products, including liquids, gel caps and pediatrics, are subject

to the provisions of the law. Products reformulated so that they no longer contain these

precursors may be sold without regard to the new statutory provisions. Moreover, the

Attorney General may grant an exemption for a product if the Attorney General determines

that the product cannot be used in the illicit manufacture of methamphetamine.

Logbook Requirements: (Effective September 30, 2006)

1. Information Required: Logbooks must capture the following information for

all PSE products:

a. Purchaser¡¦s signature;

b. Purchaser¡¦s name and address;

c. Date and time of sale;

d. Name of product sold; and

e. Quantity sold.

2. False Statements Notice: Logbooks must provide notice to purchasers that

entering false statements or misrepresentations in the logbook may subject

purchasers to criminal penalties under 18 U.S.C. Section 1001 and specify the

maximum fine and term of imprisonment under that section.

March 30, 2006 3 Food Marketing Institute

3. Purchasers¡¦ Obligations:

a. Sign the logbook and

b. Enter name, address, and date/time of sale.

4. Retailers¡¦ Obligations:

a. Check information entered by purchaser against photo ID and

b. Enter name of product sold and quantity.

5. Exemption: Logbook requirements do not apply to purchases of single sales

packages that contain no more than 60 mg of pseudoephedrine.

6. Format: Written or electronic.

7. 2-Year Retention Period: Each entry must be maintained for two (2) years

following the date of entry.

8. Privacy.

a. DEA will issue regulations governing the release of logbook information.

The regulations will provide for the following:

i. Information may be disclosed to federal, state and local law

enforcement agencies;

ii. Logbook information disclosure is only permitted to ensure

compliance with this title or to facilitate a product recall to protect

public health or safety.

b. Immunity. A retailer who releases logbook information in good faith to

federal, state or local law enforcement authorities is immune from civil


Retailer Training and Certification: (Effective September 30, 2006)

1. Training:

a. Individuals to be trained. Retailers must train all individuals who

deliver PSE-products to purchasers and cashiers who receive payments for

PSE-products to ensure that these persons understand the requirements

that apply.

b. Criteria. DEA will issue regulations on the training criteria.

2. Training Certification:

a. Retailers must certify that all retail store employees who conduct PSE

sales transactions have been trained.

b. Retailers must maintain certifications and records to confirm employee


March 30, 2006 4 Food Marketing Institute

c. Certifications must state that the retailer understands the legal

requirements and agrees to comply with them.

d. Separate certifications are required for each place of business.

e. DEA will establish certification criteria through the regulatory process, but

must provide for self-certifications.

f. State and local officials will have access to certifications.

3. Implementation: Retailers will be able to submit self-certifications over an

internet website to be established by DEA and receive an acknowledgement of

that submission

Consequences: The Attorney General may prohibit persons who sell products in violation of

the sales restrictions or the logbook, training, and certification requirements from selling any

scheduled listed chemical products.

Job Applicant Screening: Retail stores may take reasonable measures to guard against

employing individuals who may present a risk with respect to the theft and diversion of PSE

products, including asking job applicants whether they have been convicted of any crime

involving or related to PSE products or controlled substances.

Mail Order: As of April 8, 2006, mail order sales of PSE products will be limited to 7.5

grams PSE per customer during a 30-day period. Prior to shipping, the seller must verify the

identity of the purchaser in accordance with regulations to be issued by the Department of

Justice. Mail orders that must be reported to the Attorney General are not subject to the

logbook, training or certification requirements. Retail distributors who are otherwise exempt

from the current AG reporting requirement must, however, report transactions related to PSE


Pre-emption: The Combat Methamphetamine Epidemic Act of 2005 does not provide for

federal pre-emption, so state laws that are more restrictive than the federal law will remain in

effect. This is an area that is likely to generate intense debate as those who operate in states

with their own sales restrictions attempt to determine which law controls. DEA has advised

that they are evaluating the state laws and would like to take the position that, in each

instance, either the state law in its entirety or the federal law in its entirety controls, rather

than ¡§patchworking¡¨ different provisions from the state and federal law together. As of this

writing, no definitive position has been adopted by the federal government. However, even

once the federal government has rendered an interpretation, state governments may take a

contrary view. Accordingly, it will be important for retailers to monitor closely

developments on the federal, state and local levels with respect to these laws.




\\\DC - 61540/0001 - 2283068 v1



WASHINGTON, DC 20004-1109

TEL (202) 637-5600

FAX (202) 637-5910




March 30, 2006


TO: Deborah R. White

Food Marketing Institute

FROM: Joseph A. Levitt

Jaime T. Gallimore

RE: Retailer Liability under the Combat Methamphetamine

Epidemic Act of 2005

I. Introduction

You have asked us to review and analyze the scope of retailer liability

in the Combat Methamphetamine Epidemic Act of 2005 (¡§Combat Meth Act¡¨), which

was enacted as Section VII of the USA Patriot Improvement and Reauthorization

Act of 2005 (Pub. L. No. 109-177) (Mar. 9, 2006).

In relevant part, the Combat Meth Act contains sales and purchase

restrictions on FDA-approved, nonprescription ¡§scheduled listed chemical products¡¨

that contain ephedrine, pseudoephedrine, or phenylpropanolamine. This new

legislation amends various sections of the existing Controlled Substances Act, 21

U.S.C. 801 et seq., the comprehensive federal law regulating the manufacture and

distribution of controlled substances and chemicals to prevent abuse or diversion

into illicit channels of commerce.

Deborah R. White

March 30, 2006

Page 2

\\\DC - 61540/0001 - 2283068 v1

This memorandum only addresses federal statutory standards for overthe-

counter products containing ephedrine, pseudoephedrine, or

phenylpropanolamine. It is important to note that the Combat Meth Act does not

pre-empt state laws regulating listed chemicals or controlled substances that are

more restrictive than the federal law. Many states have passed their own statutes

imposing limitations on the retail sales of these products. These state laws may

have different or more restrictive rules and/or penalties. Retailers should be aware

of both the federal and any applicable state or local laws.

II. Summary of Key Points

„FƒnThe Combat Meth Act contains separate provisions for: (a) retailers; and (b)

consumer purchasers.

o The 3.6 gram daily sales limitation is a retailer limitation.

o The 9 grams per 30 day limitation is a consumer purchaser


These provisions are independent of each other and carry different penalties.

„FƒnThe requirement for the logbook is solely a recordkeeping requirement for

access by governmental law enforcement officials. Retailers are expressly

not required to consult the logbook for purposes of implementing the 3.6

gram daily sales limitation.

„FƒnCivil and criminal penalties on retailers are tied to knowing or reckless

violations of the statutory provisions.

III. Relevant Provisions of the Combat Meth Act

A. Retailer Sales Restrictions

Two particular sections of the Combat Meth Act apply to retailers or

¡§regulated sellers¡¨ of scheduled listed chemical products. Section 711(b)(1) requires

that: (1) retail sales to any purchaser must not exceed a daily amount of 3.6 grams

of a product with a base of ephedrine, pseudoephedrine, or phenylpropanolamine;

and (2) all non-liquid forms (including gel caps) of scheduled listed chemical

products must be sold in blister packs with no more than 2 dosage units or in unit

dose packets or pouches. 21 U.S.C. 830(d)(1), (2). Both of these provisions take

effect thirty days after the March 9, 2006 passage date, or April 8, 2006.

Deborah R. White

March 30, 2006

Page 3

\\\DC - 61540/0001 - 2283068 v1

Section 711(b)(1) also adds a new paragraph (e) to Section 310 of the

Controlled Substances Act, which is entitled ¡§Regulation of listed chemicals and

certain machines.¡¨ 21 U.S.C. 830. Paragraph (e) sets various restrictions on retail

transactions of scheduled listed chemical products. Some of these restrictions

include: (1) placement of products ¡§behind-the-counter¡¨ away from direct consumer

access; (2) creation and maintenance of logbooks detailing each transaction and

purchaser of scheduled listed chemical products; (3) photo identification

confirmation prior to purchase; (4) privacy protection of logbook information; and (5)

personnel training and related self-certifications to the Attorney General. These

provisions apply as of September 30, 2006.

B. Consumer Purchase Restrictions

In addition to the 3.6 grams daily quantity sales restriction, the law

also restricts the quantity that consumers may purchase at retail during a 30-day

period to 9 grams of a product with a base of ephedrine, pseudoephedrine, or


This restriction, which is contained in Section 711(e), is completely

separate from the retailer provisions in Section 711(b), and it amends a different

section of the Controlled Substances Act (Section 404(a)), entitled ¡§Penalties for

simple possession.¡¨ 21 U.S.C. 844(a). This provision is effective thirty days after

the March 9, 2006 passage date, or April 8, 2006.

IV. Enforcement and Penalties

A. Retailer Restrictions

A separate section of the Combat Meth Act -- Section 711(f) entitled

Enforcement of Requirements for Retail Sales -- sets forth the civil and criminal

penalties attendant to the retail sales restrictions described above. This section

amends Section 402(a) of the Controlled Substances Act (21 U.S.C. 842(a)

(¡§Prohibited Acts¡¨ and applicable ¡§Penalties¡¨) to add to its list of unlawful acts, the

specific restrictions on daily sales limits of 3.6 grams, blister packaging for nonliquid

forms, and retail transaction requirements, including behind-the-counter

placement, logbooks, and training/certifications. Specifically, under Section 402(a)

as amended, it is unlawful for regulated sellers to:

Deborah R. White

March 30, 2006

Page 4

\\\DC - 61540/0001 - 2283068 v1

(1) sell at retail a scheduled listed chemical in violation of the 3.6

grams daily maximum, ¡§knowing at the time of the transaction (independent of

consulting the logbook) that the transaction is a violation;¡¨

(2) knowingly or recklessly sell at retail a non-liquid form of a

scheduled listed chemical that is not in blister packs or unit dose packets;

(3) knowingly or recklessly sell at retail a scheduled listed chemical

in violation of the requirements in Section 310(e) (e.g., behind-the-counter

placement, logbooks, and training/ certifications).

It is also unlawful for a regulated seller or an employee or agent to

disclose information in transaction logbooks for any purpose other than to ensure

compliance with the statute or to facilitate a product recall to protect public health

and safety. Retailers will be required to provide the logbook information to law

enforcement authorities under certain circumstances.

The statute does not define knowingly or recklessly.

Because all of these restrictions are inserted as unlawful acts in

Section 402(a) of the Controlled Substances Act, 21 U.S.C. 842(a), the penalties

provided in Section 402 apply to the Combat Meth Act restrictions on retailers.

Violations of any of these provisions are subject to a civil penalty of up to $25,000.

See 21 U.S.C. 842(c). If a trier of fact finds that a violation was knowingly

committed, the penalty is increased to imprisonment of up to one year, a fine of up

to $25,000, or both. Id. Repeat offenses can be subject to a prison term of up to two

years, a $50,000 fine, or both. Id.

B. Prohibition on Sales

In addition, the Combat Meth Act amendments allow the Attorney

General to issue an order prohibiting a retailer from selling any scheduled listed

chemical products if the retailer violates the retail sales restrictions (e.g., 3.6 grams

daily quantity or blister pack requirement for non-liquid forms) or the attendant

requirements regarding retail transactions (e.g., behind-the-counter, logbooks,

identification, training/certifications). 21 U.S.C. 842(c)(4)(A).

Deborah R. White

March 30, 2006

Page 5

\\\DC - 61540/0001 - 2283068 v1

C. Consumer Purchase Restrictions

Section 711(e) of the Combat Meth Act amends the unlawful acts listed

under the ¡§Penalties for simple possession¡¨ in Section 404(a) of the Controlled

Substances Act. 21 U.S.C. 844(a). Under the Controlled Substances Act as

amended, it is now unlawful for a person to knowingly or intentionally purchase

more than 9 grams of a scheduled listed chemical with a base of ephedrine,

pseudoephedrine, or phenylpropanolamine during a 30-day period.

The penalties for violation of this subsection¡Xapplicable only to the

consumer purchaser¡Xinclude a minimum fine of $1,000, a prison sentence of up to

one year, or both. See 21 U.S.C. 844(a). A repeat conviction is subject to

imprisonment for not less than fifteen days and up to two years, and a minimum

fine of $2,500. Id. Penalties escalate for a third conviction and carry a prison term

of 90 days to three years and a minimum fine of $5,000. Id.

V. Analysis

It is our interpretation that the individual purchaser liability section

at 711(e) of the Combat Meth Act is separate and distinct from the sections that

apply to retailer responsibilities and penalties (711(b) and 711(f)). The statute does

not require retailers to take actions to limit 30-day purchases to less than 9 grams,

nor does it impose any liability on the retailer if an individual violates the monthly

purchase limit. The Combat Meth Act applies the monthly quantity restrictions to

individual purchasers (any person who knowingly or intentionally purchases at

retail during a 30 day period more than 9 grams) rather than to retail sellers. This

provision amends the section of the Controlled Substances Act for simple possession

penalties, and drug possession liability falls upon the purchaser, not the seller.

A different section of the Combat Meth Act entitled, Enforcement of

Requirements for Retail Sales ¡V Civil and Criminal Penalties, addresses all of the

retailer restrictions and the penalties, which are listed in a different section of the

Controlled Substances Act for prohibited acts and applicable penalties. There are

no cross-references in the retailer-related sections to the monthly purchase limits.

Retailers are prohibited from selling more than 3.6 grams per day per

purchaser as of April 8, 2006. The Combat Meth Act does not identify specific

actions or minimum standards necessary to limit daily sales to this amount.

However, for retail sellers, it is only a violation to sell greater than 3.6 grams of

scheduled listed chemical products ¡§knowing at the time of the transaction involved

(independent of consulting the logbook . . .) that the transaction is a violation.¡¨ A

Deborah R. White

March 30, 2006

Page 6

\\\DC - 61540/0001 - 2283068 v1

mistake made in good faith would not impose liability because of the ¡§knowing¡¨

requirement. The statute specifically says that retailers do not have to check a

logbook to meet this obligation.1

* * * * *

We hope you find this information useful. Please contact us if we can

be of further assistance.

1 This conclusion is further supported by the timing of the effective dates. Retailers need not have

transactional logbooks in place until September 30, 2006, and the daily quantity limit takes effect on

April 8, 2006; therefore, the statute clearly does not contemplate a retailer consulting a logbook

immediately following the April implementation date, when the 3.6 gram daily sales limitation takes



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