This is the final part of a three-part series on organized retail crime. The stories examine the claims retailers make about how theft is impacting their business and the actions companies and policymakers are taking in response to the issue. Read the first story here and the second here.

When Walmart’s CEO, Doug McMillon, was asked what will happen if shoplifters aren’t aggressively prosecuted, he warned it would have a massive impact on consumers.

“If that’s not corrected over time, prices will be higher, and/or stores will close,” the top executive of the country’s largest retailer said during a December interview with CNBC. 

The retail industry is the nation’s largest private sector employer, and it contributes $3.9 trillion to the country’s annual gross domestic product, according to the National Retail Federation. Shutting down a store as large as Walmart can deprive communities of both jobs and a place to buy everyday goods – and lawmakers are paying attention. 

Since 2022, at least nine states – six so far this year – have passed laws to impose harsher penalties for organized retail crime offenses. Similar bills are pending before legislatures across the country and in the U.S. Senate. 

Behind the sweep of legislation are retailers and trade associations, which are using their collective power to get the bills written and past the finish line. They have also seized on a moment when lawmakers in many parts of the country, and from both sides of the aisle, see a political benefit from appearing tough on crime.

The new and proposed laws aim to deter brazen retail crime and go after the so-called kingpins who lead organized theft groups. But critics say the measures may not actually reduce organized retail crime, and could disproportionately harm marginalized groups. 

“The organized interest groups, whether they’re business or organized labor or the NGO sector, have an insane amount of influence on our politics, and much of the policy agenda of these organizations is not driven by careful consideration of policy outcomes and whether they’re good for [the public],” said Adrian Hemond, CEO of political consulting firm Grassroots Midwest. “It’s focused on what’s good for the organization.”

The legislative efforts come as more retailers blame rising crime for higher inventory losses, also known as shrink. But they have not shared data that proves how much it is costing them, nor are they required to do so. Experts told CNBC some companies could be overstating theft’s impact on their profits to deflect from internal flaws. More references to retail crime could soon come as a string of major retailers gear up to report second-quarter results starting next week.

Throughout 2021 and 2022, retailers and their trade associations were laser-focused on garnering support for the Inform Act. The law requires online marketplaces to disclose the identities of certain high-volume sellers to deter the sale of stolen goods, and proponents said it would fight organized retail crime by making it harder to anonymously resell stolen merchandise.

In the 1980s and 1990s, Congress enacted sentencing laws that created far stiffer penalties for drug trafficking. But decades later, it hasn’t significantly reduced drug availability or use, research shows.

“If we apply the same drug market lessons, [boosters are] unlikely to be deterred because the probability of being detected or arrested is very low for any given theft,” said Horowitz. “And then when you apply it and sentence people to prison terms, it has almost no incapacitation effect because street-level dealers are instantly replaced. It’s a market. It recruits replacements.” 

Plus, dozens of states already have organized theft laws on the books and the crime is still increasing, according to trade associations.

Many boosters who get caught stealing face misdemeanor charges. They carry less severe penalties and fewer long-term implications than felony charges, which can limit employment and housing opportunities for years after they serve their time.

Retailers and lawmakers say the misdemeanor charges have emboldened theft groups and allowed organized retail crime to spread. They contend the threat of the harsher penalties with felony charges will better deter theft.

While boosters are stealing for their own personal gain, they can come from marginalized groups and many face mental illness, poverty or drug addiction, law enforcement agents previously told CNBC. 

JC Hendrickson, the congressional affairs director for the Justice Action Network, said lawmakers need to consider those factors when proposing policy solutions for organized theft. 

“A police response is only going to get you so far, right? Even if you have the most responsive police department in the country,” said Hendrickson, who advocates for bipartisan criminal justice reform. “When there’s an underlying [drug] misuse problem, you’re still going to have that out there and it’s still going to be something you have to tackle. So in a case like that, a public health response is also really important.” 

Grassley’s office said it is confident CORCA will go a long way in reducing organized retail crime.

While it’s too early to tell how effective the measures will be, the decision to propose aggregating thefts versus lowering the felony theft threshold should help prosecutors weed out petty shoplifters from those involved in organized theft. 

“It seems more like changing laws with a scalpel than with a cleaver,” said Horowitz. “And I think that’s good. We should be more focused, different types of crime are very different, and we shouldn’t use blanket approaches to very different types of crimes.”