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The marijuana industry will “keep growing,” said a federal economic committee in a new series of recommendations, and that means steps must be taken to ensure that it is in a system that allows analysts to track markets and provide statistical data to publish is followed up more carefully.

In a proposal posted on the Federal Register last week, the White House’s 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 and compile businesses of market data is used in the United States, Mexico, and Canada.

The proposals include a proposal to take cannabis retailers out of a “miscellaneous” category and separate them into a new category grouping them by tobacco, e-cigarette and smoking stores. There were other recommendations for indexing cannabis, hemp, and CBD agricultural and wholesale companies into specific NAICS categories.

This may seem like nominal moves – and they don’t represent the broader change that industry advocates wanted to see – but it shows that the federal committee behind these recommendations recognizes the growing legitimacy of the marijuana sector and wants to make it easier for economists to get around research it like any other business category.

The U.S. Economic Classification Policy Committee (ECPC), composed of OMB, the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics, considered several previous public comments calling for NAICS to restructure NAICS regarding cannabis retailers .

A comment filed by the Census Bureau itself suggested that marijuana retailers and vape shops could be broken down into two different categories. However, it left open the possibility of combining cannabis shops and vape dealers, as ECPC ultimately recommended.

“The ECPC notes that there is ample evidence 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 both the federal and state levels.” the committee said in response to the Census comment.

“By and large, vape shops and marijuana shops are mainly active in retailing smoking accessories,” it said. “Given the similarities in the manufacturing process and continued market growth, the ECPC recommends creating a new industry called ‘Tobacco, Electronic Cigarette and Other Smoking Supplies Stores’ by combining NAICS Industry 453991 with electronic cigarette and marijuana stores that are currently in NAICS Industry 453998, All other miscellaneous retailers (except tobacco shops). “

A representative from the Census Bureau summarized the key changes, telling Marijuana Moment that “Marijuana stores were not identified in a separate branch in previous versions of NAICS, and it is not recommended that they be grouped in a separate branch in 2022 NAICS, but rather with tobacco and other shops for smoking needs. “

Therefore, this category update would not mean that researchers could pull specific, nuanced data on marijuana companies as they would still be placed in the broader classification of the e-cigarette industry. Still, it would limit the amount of data currently available, which could prove useful for future analysis.

Each NAICS code has corresponding industry index entries – essentially detailed descriptions of the types of companies that fall under that category.

While cannabis retailers were not listed as a standalone NAICS industry when the system was last updated in 2017, marijuana is currently listed as an index entry for other categories dealing with commercial wholesalers and plants that are “below deck” and “in the open field “To be grown”, in addition to the Miscellaneous category for retailers.

At least from the proponents’ point of view, this recommended update would be a symbolic step in the right direction, especially with the ECPC’s advice that the cannabis sector “will continue to grow”. However, industry experts had hoped that ECPC would have taken a different path and separated the cannabis market from tobacco or any other industry as a whole.

That was the recommendation of economist Beau Whitney, who said in a commentary on the subject in 2020 that “given the size of the legal marijuana market and its current impact on the US economy, it is appropriate and justified to create your own NAICS”. so that federal, state and local authorities as well as university, research and economic institutions have the specific data they need to make well-founded, data-driven decisions. “

In addition to marijuana, the ECPC also recommends updating the NAICS agriculture and wholesale categories to include “cannabis and hemp” as appropriate index entries. These classifications include “Other food crops grown under cover, 111998, All other miscellaneous crops and 424590, Other wholesalers in raw materials for agricultural products,” the explanatory memorandum reads.

The committee also recommended adding CBD index entries to the NAICS categories, “325998, All Other Miscellaneous Chemical Product and Preparation Manufacturing, 424690, Other Chemical and Allied Products Merchant Wholesalers, and 459999, All Other Miscellaneous Retailers.”

The panel also wants to change the separate North American product classification system to include CBD.

None of these changes have been codified yet and there is now a 45 day public comment period to evaluate the proposals.

Meanwhile, the Census Bureau is taking its own steps to improve federal data on the marijuana industry in other ways. In February, for example, it announced that it would add a cannabis tax question to the annual and quarterly reports submitted by states in order to “modernize the content of the survey to maintain the relevance and sustainability of this data”.

It will urge states to share information on sales tax revenues generated by legal marijuana markets, as well as data on industry-derived royalties.

Aside from modernizing the data, reporting on state cannabis tax revenue while marijuana remains federally illegal could show lawmakers the economic opportunities that regulating the plant offers.

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