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                Comprehensive Methamphetamine Control Act (MCA)
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                                  Introduction

On October 3, 1996, President Clinton signed into law the Comprehensive
Methamphetamine Control Act of 1996 (MCA). The MCA broadens controls on listed
chemicals used in the production of methamphetamine, increases penalties for the
trafficking and manufacture of methamphetamine and listed chemicals, and expands
controls to include the distribution of lawfully marketed drug products which
contain the listed chemicals ephedrine, pseudoephedrine and phenyl-propanolamine
(PPA).

The following is a brief summary of major provisions of the Comprehensive
Methamphetamine Control Act (MCA):

(1)     The MCA makes the possession of list I chemicals a crime in instances
        where the chemicals were obtained under authority of a registration, if
        that registration has been suspended or revoked. In addition, this
        provision facilitates the forfeiture of such chemicals.

(2)     The MCA extends Federal "long arm" jurisdiction for certain controlled
        substance offenses to include the manufacture and distribution of listed
        chemicals outside of the U.S. with intent to illegally import them into
        the U.S.

Therefore, violations committed outside the territorial jurisdiction of the U.S.
shall be subject to prosecution in the U.S.

(3)     The MCA establishes higher maximum penalties for the manufacture,
        import, export, possession, or distribution of chemicals or equipment
        used in methamphetamine production. This provision increases the maximum
        penalties to 10 years for a first offense and 20 years for a subsequent
        offense. The MCA also directs the sentencing commission to review and
        amend guidelines for sentencing methamphetamine offenses and to enhance
        penalties for offenses involving list I chemicals.

(4)     The MCA imposes a civil fine up to $250,000 for any firm which
        distributes a laboratory supply (defined as a listed chemical or any
        chemical or equipment which the Attorney General publishes on a special
        surveillance list) to a person who uses it in a clandestine laboratory,
        where the distribution is with "reckless disregard" for the intended
        illicit use.

(5)     The MCA enhances injunctive authority; it also establishes new
        injunctive authority relating to various violations of the Controlled
        Substances Act (CSA) including certain violations relating to listed
        chemicals and other chemicals, products and equipment used in the
        illicit manufacture of controlled substances.

(6)     The MCA includes provisions for the restitution of cleanup costs by a
        defendant convicted of offenses involving methamphetamine clandestine
        laboratories.

(7)     The MCA also establishes several advisory panels and task forces to
        evaluate methamphetamine education and prevention programs, to monitor
        methamphetamine abuse within the U.S., and to develop programs to aid
        industry in better identifying suspicious orders.

(8)     The MCA adds iodine as a list II chemical but regulates only domestic
        transactions of this substance. In addition, the MCA effects controls on
        domestic transactions of hydrogen chloride gas.

(9)     The MCA modifies the exemption for legal drug products which contain
        either ephedrine, pseudoephedrine or phenylpropanolamine. Whereas the
        removal of the exemption for ephedrine combination products was
        effective upon signing of the MCA, most transactions involving legal
        drug products containing pseudoephedrine and phenylpropanolamine will
        remain exempt through October 3, 1997.

Therefore, at this time, ephedrine combination products are subject to the
record keeping, reporting, registration and import/export notification
provisions of the CSA, with a single transaction threshold of 24 grams (for
retail sales and for sales by mail order). This new threshold applies only to
ephedrine combination products and the threshold remains zero for ephedrine
products which do not contain another active ingredient.

(10)    Also effective immediately, all transactions of ephedrine,
        pseudoephedrine and phenylpropanolamine to non-regulated parties by
        postal, private or commercial carrier must be reported to DEA on a
        monthly basis (regardless of size).

The following section addresses questions pertaining to general provisions of
the MCA. This section deals predominately with the regulatory provisions such as
record keeping, reporting, registration and import/export notification
requirements.

This publication is intended to serve only as general guidance. For information
on the specific requirements of the MCA consult Public Law P.L. 104-237.

Legal Requirements Pertaining to Licit Drug Products Containing Listed Chemicals

Q.      What legal drug products are controlled under the MCA?

A.      The MCA modifies the exemption for legal drug products which contain
        either ephedrine, pseudoephedrine or phenylpropanolamine. Whereas the
        removal of the exemption for ephedrine combination products was
        effective upon signing of the MCA, most transactions involving legal
        drug products containing pseudoephedrine and phenylpropanolamine will
        remain exempt though October 3, 1997.

Therefore, at this time, ephedrine combination products are subject to the
record keeping, reporting, registration and import/export notification
provisions of the CSA, with a single transaction threshold of 24 grams (for
retail sales and for sales by mail order). This new threshold applies only to
ephedrine combination products and the threshold remains zero for ephedrine
products which do not contain another active ingredient.

Q.      What are thresholds?

A.      A "threshold" is the quantity of a particular chemical, above which
        record keeping requirements and other control provisions of the CSA
        apply. Thresholds differ according to the individual chemical.

                      Requirements for Retail Distributors

Q.      How do I determine whether I am considered a retail distributor?

A.      The MCA defines a retail distributor as a grocery store, general
        merchandise store, drug store, or other entity or person whose
        activities as a distributor of legal drug products containing listed
        chemicals are limited almost exclusively to sales for personal use, both
        in number and volume of sales, either directly to walk-in customers or
        in face-to-face transactions by direct sales. (Personal use is defined
        as sub-threshold sales of less than 24 grams to an individual for
        legitimate personal use.)

Q.      I sell pseudoephedrine, phenylpropanolamine, and combination ephedrine
        products in my convenience store. Am I required to register or keep
        records of the sales?

A.      Requirements with respect to combination ephedrine products went into
        effect on October 3, 1996; the requirements pertaining to
        pseudoephedrine and PPA do not go into effect until October 3, 1997.
        However, the DEA has proposed to exempt retail distributors from the
        registration requirement. If you will engage in any above-threshold
        transactions, then you must maintain a record of each of these
        transactions; however, please read the following question and answer as
        this may make you subject to the registration requirement.

Q.      I operate a convenience store at which I sell pseudoephedrine,
        phenylpropanolamine, and combination ephedrine products to walk-in
        customers. Can I occasionally distribute some of these products to
        another store if they run low without affecting my status as a retail
        distributor?

A.      The MCA definition of 'retail distributor' does allow for a retailer to
        engage in very infrequent and small quantity transactions of this
        nature. However, retailers should be extremely cautious in this regard
        since they are required to limit their sales of these products "almost
        exclusively, both in number of sales and volume of sales" to "walk-in
        customers or in face-to-face transactions by direct sales." Therefore,
        depending upon a retailer's volume of sales, a large quantity sale to
        another store could mean the retailer no longer satisfies the definition
        of 'retail distributor' and would be required to register. In addition,
        even if a retailer is able to complete this transaction without
        affecting its status as a retail distributor, a record of the
        transaction would have to be maintained if it were above threshold.

Q.      Am I required to place pseudoephedrine, phenylpropanolamine and
        ephedrine products behind the counter?

A.      While ephedrine single-entity products must be stored behind the
        counter, there is no such requirement for pseudoephedrine, PPA or
        combination ephedrine products.

Q.      My firm is already registered with DEA to distribute single-entity
        ephedrine products. Will DEA's waiver of registration for retail
        distributors of pseudoephedrine, PPA and combination ephedrine products
        also apply to single entity ephedrine products?

A.      No, it does not. All handlers of single-entity ephedrine products must
        be registered under previous provisions of the law.

Q.      My firm currently has a DEA registration to distribute/dispense
        controlled substances. Will we be required to obtain a separate DEA
        chemical registration to distribute pseudoephedrine, PPA, combination
        ephedrine, and single-entity ephedrine products?

A.      No, the law requires that any person who manufactures and distributes a
        List I chemical must register, however the DEA has provided an exemption
        for CSA registrants in 21 CFR 1309.25; you will not be required to
        obtain a separate DEA chemical registration if you are already a
        controlled substance registrant.

Q.      The new law states that there is a limit of 24 grams on retail sales of
        pseudoephedrine, phenylpropanolamine, and combination ephedrine products
        How much is that and can I sell more in a single transaction without
        getting in trouble?

A.      The limit of 24 grams on retail sales does not pertain to blister packs
        of pseudoephedrine and phenylpropanolamine. The reference to a limit of
        24 grams is actually a threshold and not an absolute cap on the
        quantities which may be sold. You may sell more than 24 grams in a
        single transaction, however, a record will be required to be maintained
        and the fact that you engage in such a transaction(s) may jeopardize
        your status as a 'retail distributor' (see response on previous page on
        this issue). If you no longer qualify as a 'retail distributor', you
        will be required to be registered.

For a listing of the number of dosage units of pseudoephedrine, PPA, and
ephedrine equivalent to 24 grams, see Appendix A, at the end of this discussion.

Q.      In addition to pseudoephedrine, phenylpropanolamine, and combination
        ephedrine products, I also sell single-entity ephedrine products in my
        convenience store. Does the retail distributor exemption from
        registration and record keeping also apply to single-entity ephedrine
        products? How about the 24 gram single transaction limit?

A.      No, the waiver of registration will only apply to pseudoephedrine, PPA,
        and combination ephedrine products. All distributors of single entity
        ephedrine products must obtain a registration. In addition, the
        threshold for single-entity ephedrine products is zero. Therefore, all
        transactions of single-entity ephedrine products are regulated
        transactions which require a record to be maintained.

Q.      As a retail distributor, I ensure that my sales of pseudoephedrine,
        phenylpropanolamine, and combination ephedrine products remain
        consistent with the requirements for exemption from registration and
        record keeping (i.e. sales to walk-in customers only and not more than
        24 grams in a single transaction). Are there any other requirements or
        concerns that I should be aware of?

A.      The MCA provides for the publication of a surveillance list which
        contains chemicals, products, materials, or equipment used in the
        manufacture of controlled substances and listed chemicals. These items
        and all listed chemicals are referred to as "laboratory supply". (Note
        that the phrase "listed chemicals" includes legal drug products
        containing listed chemicals and chemical mixtures.)

The DEA is currently preparing this surveillance list. The MCA provides for a
civil penalty of up to $250,000 for the distribution of a laboratory supply to a
person who uses, or attempts to use the laboratory supply to manufacture a
controlled substance or a listed chemical, if that distribution was made with
"reckless disregard" for the illegal uses to which such a laboratory supply will
be put. In addition, any person who distributes a listed chemical or any other
chemical, product or equipment knowing, or having reasonable cause to believe,
that it will be used in the illegal manufacture of a controlled substance is
subject to criminal prosecution.

Also, firms which distribute a pseudoephedrine, PPA or ephedrine product via
Postal, private or commercial carrier to non-regulated parties, must report all
such transactions to DEA on a monthly basis.

Q.      What is the difference between the ephedrine products that were already
        regulated by DEA prior to MCA and combination ephedrine products that
        the new law regulates?

A.      Single-entity ephedrine products are those ephedrine products which do
        not contain another active medicinal ingredient in therapeutically
        significant quantities. Therefore ephedrine is the sole active medicinal
        ingredient in these products. All such products must be stored behind
        the counter, are subject to a zero threshold which requires records to
        be maintained of all transactions, and all distributors are required to
        obtain a registration.

Combination ephedrine products contain another active medicinal ingredient in
therapeutically significant amounts. These products do not need to be stored
behind the counter, are subject to a 24 gram single transaction threshold, and
are afforded a waiver from registration for retail distributors.

                    Requirements for Wholesale Distributors:

Q.      I am a wholesale distributor of combination ephedrine products (i.e. I
        distribute these products and do not qualify as a retail distributor).
        Do I have to get a registration now for those activities?

A.      Yes, requirements for distribution of combination ephedrine products are
        currently in effect. The DEA has issued a Federal Register Notice
        providing guidance on how to obtain a registration. Firms distributing
        combination ephedrine products may continue to conduct legitimate
        business if they had submitted an application for registration by July
        12, 1997.

Q.      How about pseudoephedrine and phenylpropanolamine products?

A.      There currently is no registration requirement for legal drug products
        containing pseudoephedrine or phenylpropanolamine. The registration and
        record keeping requirements pertaining to those products will become
        effective on October 3, 1997.

Q.      The new law states that for distributors who are not retail distributors
        or distributors required to report to DEA on a monthly basis, there is a
        transaction limit of one kilogram for combination ephedrine products. If
        I am one of these distributors, can I sell more than one kilogram in a
        transaction?

A.      Yes, the one kilogram amount is a threshold, above which records must be
        maintained. It is not an absolute cap on quantities which may be
        distributed. Please note, however, that the cumulative threshold
        provisions apply to these transactions.

Therefore, records must be maintained if the cumulative amount for multiple
transactions to a person within a calendar month exceeds the threshold of one
kilogram.

Q.      I am a distributor who is registered with DEA for controlled substance
        activities. Do I have to obtain a separate chemical registration to
        distribute pseudoephedrine, phenylpropanolamine, and combination
        ephedrine products? Do I have to keep records?

A.      No, you do not have to obtain a separate registration. However, if you
        engage in an above threshold transaction, or in cumulative transactions
        to a person greater than the threshold quantity within a calendar month,
        you must maintain a record of the transaction.

Q.      I am registered with DEA to distribute single-entity ephedrine products.
        I also distribute combination ephedrine products. Do I have to change my
        registration to reflect my combination ephedrine activities? What if I
        also handle pseudoephedrine and phenylpropanolamine products?

A.      No, if you are already registered to distribute ephedrine products you
        do not need to modify your registration to handle combination ephedrine
        products. However, if you distribute pseudoephedrine and PPA products,
        in October of 1997, you must request that your registration be modified
        to add these products. This application may be accomplished through a
        letter to DEA. Please note that there will not be any additional fees
        required.

Q.      I am a distributor of prescription pseudoephedrine, phenylpropanolamine,
        and combination ephedrine products only. Do I have to register and keep
        records of such distributions?

A.      DEA has an existing exemption for prescription drug products; therefore,
        normal prescription records or records required under part 205 of the
        Food, Drug and Cosmetic Act, are considered adequate to satisfy the
        record keeping requirements.

Q.      I have heard that the new law does not go into effect for
        pseudoephedrine and phenyl-propanolamine products until October 3, 1997,
        and that I don't have to worry about any requirements under DEA's laws
        until then. Is this true?

A.      No, firms which distribute these products via Postal, private or
        commercial carrier to non-regulated parties must report all such
        transactions to DEA on a monthly basis. In addition, since these
        products contain a listed chemical, the firm may be held criminally
        responsible for transactions which they have a reasonable cause to
        believe would be used for the illicit manufacture of controlled
        substances. In addition to the criminal penalties, the new law contains
        provisions pertaining to distribution with "reckless disregard" of
        illicit use. Violations can carry a civil penalty up to $250,000.

Q.      When the requirements of the new law go into effect for pseudoephedrine
        and phenylpropanolamine products in October of 1997, will I be exempt
        from registration and record keeping if I only distribute ordinary
        over-the-counter pseudoephedrine and phenylpropanolamine products
        (blister packs with less than 3 grams per package)?

A.      No, only retail distributors are exempted from registration for the
        distribution of these products. However, existing CSA registrants are
        not required to obtain a separate registration.

Q.      How many dosage units are there in the thresholds for pseudoephedrine,
        phenylpropanolamine, and combination ephedrine products?

A.      See Appendix A, at the end of this discussion.

Q.      What is the difference between the ephedrine products that were already
        regulated by DEA and the combination ephedrine products that the new law
        controls?

A.      Single-entity ephedrine products are those ephedrine products which do
        not contain another active medicinal ingredient in therapeutically
        significant quantities. Therefore ephedrine is the sole active medicinal
        ingredient in these products. All such products are subject to a zero
        threshold which requires records to be maintained of all transactions.
        In addition, all these distributors must obtain a registration.

Combination ephedrine products contain another active medicinal ingredient in
therapeutically significant amounts. These products are subject to a one
kilogram threshold for non-retail distribution. Distributors not considered
retail distributors who distribute via Postal, private or commercial carrier to
non-regulated parties (and thus required to report to DEA on a monthly basis)
are subject to a threshold of 24 grams for record keeping purposes.

Q.      I understand that if a distribution of pseudoephedrine,
        phenylpropanolamine, and combination ephedrine products is less than the
        threshold for the product, then it is not a regulated transaction. If I
        always distribute less than the threshold in all my transactions, am I
        exempt from DEA's regulations?

A.      No, there is currently a registration requirement for non-retail
        combination ephedrine product distributors regardless of whether their
        sales are above or below the threshold. In addition, there will be the
        same registration requirement for non-retail pseudoephedrine and PPA
        product distributors beginning October of 1997. Certain firms which
        distribute an ephedrine, pseudoephedrine, or PPA product via Postal,
        private or commercial carrier to non-regulated parties are currently
        required to report all such transactions to DEA on a monthly basis. Also
        suspicious reporting requirements and reckless disregard provisions of
        the law pertain to all regulated transactions involving such products.

                       New Monthly Reporting Requirement

Q.      I distribute by mail and/or delivery to non-regulated persons (i.e.
        consumer or end user). When must my firm begin to report sales of
        pseudoephedrine, phenylpropanolamine and combination ephedrine products?
        Do I have to report all of my sales? What information should be included
        and to whom do I send these reports?

A.      Yes, the requirement to report all such distributions is currently in
        effect. Therefore, on a monthly basis, reports should be filed with:

        The Chemical Operations Section
        Office of Diversion Control
        U.S. Drug Enforcement Administration Washington D.C. 20537.

        The DEA has issued a Federal Register Notice to provide further guidance
        on how to report to DEA. This Notice provides guidance on what
        information should be included in these reports.

Q.      Who is required to submit reports on a monthly basis of each transaction
        conducted during the previous month involving ephedrine, pseudoephedrine
        and phenylpropanolamine products?

A.      Any distributor who engages in a transaction with a non-regulated party
        (i.e. consumer or end user) via Postal, private or commercial carrier,
        is required to submit a monthly report of all such transactions to DEA.

Q.      What threshold applies to such transactions for reporting purposes?

A.      All such transactions must reported regardless of size

Q.      What threshold applies for record keeping purposes?

A.      The record keeping threshold for the distributors required to report
        transactions to DEA on a monthly basis is 24 grams for combination
        ephedrine products. This is a non-cumulative threshold.

The record keeping threshold for non-retail distribution (by persons not
required to report to DEA on a monthly basis) of combination ephedrine products
is 1 kilogram. (Cumulative threshold provisions of the CSA apply to this 1
kilogram threshold.) Please note, however, that the record keeping threshold for
single entity ephedrine products is zero.

Record keeping requirements for pseudoephedrine products and PPA products do not
become effective until October 3, 1997. At that time, the record keeping
threshold will be 24 grams for these distributors.

Requirements Pertaining to All Listed Chemical Products including Legal Drug
Products:

Q.      How long are records required to be kept for List I and List II
        chemicals?

A.      The MCA reduced the record retention requirement from four years to two
        years for List I chemicals. Therefore, all chemical records are subject
        to a two year retention period.

Q.      When can my firm begin to keep only two years of sales records for
        listed chemicals?

A.      Immediately. Effective October 3, 1996, regulated persons need not
        maintain records for more than two years.

Q.      What types of identification am I required to obtain from my customers?

A.      For sales to individuals, the type of documents and other evidence of
        proof must consist of at least the signature of the purchaser, a copy of
        a driver's license and one other form of identification. (For specific
        guidance, see 21 U.S.C. Section 1310.07)

Q.      If I supply a threshold amount of a List I chemical to a customer who
        also sells the List I chemical over threshold amounts, do my records
        have to have my customer's DEA registration number?

A.      Yes, your records should include your customer's registration number. If
        the customer has applied for a DEA registration and has not yet received
        that registration, you should obtain confirmation that the customer has
        applied for that registration. In such instances, a copy of the
        application for registration will suffice.

Q.      What is the Special Surveillance List? When will the Special
        Surveillance List be published?

A.      The MCA provides for the publication of a surveillance list which
        contains chemicals, products, materials, or equipment used in the
        manufacture of controlled substances and listed chemicals. These items
        are referred to as "laboratory supply". The DEA is currently preparing
        this surveillance list.

Q.      If I sell Iodine or HCl gas, what records am I required to keep?

A.      While certain export transactions of hydrochloric acid and HCl gas were
        already regulated under the CSA, the MCA added regulatory controls on
        domestic transactions of iodine and HCl gas. The DEA will soon publish a
        Federal Register Notice which establishes a threshold for these domestic
        transactions. For each regulated transaction the record should include
        (1) the name, address and (if required) DEA registration number of each
            party involved in the transaction,
        (2) the date of the transaction,
        (3) the name quantity and form of packaging of the listed chemical,
        (4) the method of transfer,
        (5) the type of identification used by the purchaser and any unique
            number on that identification.


                                   Appendix A
                              Threshold Quantities
                 (Number of Dosage Units of Marketed Products)


 Ephedrine
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 Threshold                # 25 mg                  # 25 mg
                          Tabs HCl                 Tabs Sulfate
--------------------------------------------------------------------------
 1000 grams               48,826                   51,870
 24 grams                 1,172                    1,245
==========================================================================


 Pseudoephedrine
--------------------------------------------------------------------------
 Threshold  # 120 mg  # 120 mg   # 60 mg    # 60 mg    # 30 mg   # 30 mg
            Tabs HCl  Tabs       Tabs HCl   Tabs       Tabs HCl  Tabs
                      Sulfate               Sulfate              Sulfate
--------------------------------------------------------------------------
 1000 grams 10,172    10,806     20,344     21,613     40,688    43,225
 24 grams   244       259        488        519        976       1,037
==========================================================================


 Phenylpropanolamine
--------------------------------------------------------------------------
 Threshold      # 75 mg Tabs  # 25 mg Tabs    # 12.5 mg Tabs # 6.25 mg Tabs
                HCl           HCl             HCl            HCl
--------------------------------------------------------------------------
 2500 grams     41,371        124,112         248,224        496,449
 24 grams       397           1,191           2,383          4,766
==========================================================================

