Commentary: Random Thoughts from the Humidor (Looking Ahead At 2015)

In this latest segment of Random Thoughts from the Humidor, I think about what the new year will bring for Cuban policy and the FDA, plus the potential impact on the cigar industry of a new Nicaraguan canal construction project.

Watching, Waiting on the FDA

Since passage of the FDA bill in 2009, we have been warning of the danger it poses to the cigar industry. Last year, when the Deeming Document and proposed rule were released, more people finally caught on to the disruptive potential. Now we wait.

This chart explains the nine-step process. It’s important to remember the FDA is currently on step 7, which includes reviewing all the public comments. But that process doesn’t take place in a vacuum. Politics will play a role, along with science, public opinion expressed in the comments, and the legislative mandate.

That’s why continuing the push for legislation to exempt handmade cigars from the FDA remains critical. While having the bill become law would obviously be great, even without passing the legislation it can influence the FDA to think twice about going against the wishes of a significant number of members of Congress. So with a new Congress starting earlier this week, let your representatives hear from you today.

Could the Nicaraguan Canal Impact Cigars?

Here’s a story to keep an eye on. Construction has just begun on a $50 billion construction project to build a canal across Nicaragua. The murky Chinese-funded project is projected to be completed in five years and will allow ships too large to pass through the Panama canal to cross from the Pacific to the Atlantic by traveling through a series of canals connected through Lake Nicaragua.

So what’s the cigar impact? Too early to tell exactly, but it could be significant. The canal could make shipping cigars from Nicaragua to the U.S. even easier, and it could result in more Nicaraguan cigars being exported to other countries, especially China. However, there are potential downsides too. Some have raised concerns about the environmental impact, especially on Lake Nicaragua, which is where the volcanic island of Ometepe is located, also one of the four notable growing regions for Nicaraguan cigar tobacco. Thankfully, no one is proposing using nuclear bombs for construction of the canal this time.

I Heard they Legalized Cuban Cigars

I expect retailers will get questions from occasional cigar smokers asking about Cubans. That’s because the announcement just before Christmas wasn’t particularly clear, nor did the media do a good job reporting what it meant. (We clarified everything here, but the short version is, unless you are visiting Cuba with the explicit permission of the U.S. government, nothing has changed.)

As for more action on the Cuban embargo, I would be shocked to see any in the next two years. Ending the embargo takes an act of Congress and the president’s signature. Plus, as long as Florida remains a key swing state for presidential elections, changing Cuban policy will be a risky play for anyone with national ambitions. So any talk that the recent announcement was the first step towards a quick end to the embargo is unwarranted.

–Patrick S

photo credit: Flickr