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Commentary: FDA Still a Major Threat to the Premium Cigar Industry

15 Feb 2016

FDA-cigars-large

One of my 2016 resolutions is to ensure we update our Question of the Month (found in our right-hand sidebar) monthly. Last year, far too often our reader poll got neglected. So I recently took down January’s question and, as I updated it, noted the results of the voting, which I present to you below:

What do you think is the most likely impact of forthcoming FDA regulations on premium cigars?

A. Large manufacturers will adapt, but boutiques will close down.
B. Blends introduced after 2007 will be recalled.
C. The floor price for a premium cigar will rise to $10.
D. All of the above.
E. The industry will see few impacts.

“All of the above” led the voting with close to 40% followed by—and this was shocking to me—“the industry will see few impacts,” which got a whopping 22% of the vote. I was so struck by the realization that so many of our readers don’t see the FDA as a major threat to premium cigars that I felt compelled to address the topic today.

As you probably know, StogieGuys.com has written about the FDA extensively since at least 2007. Currently, we’re right on the cusp of learning how this will impact the industry. To bring you up to speed:

  • FDA regulations would be devastating to the thriving handmade premium cigar industry, even though there is no indication that such regulations would have any impact on youth smoking or public health.
  • Currently, the FDA has officially sent the latest version of its deeming rule on cigars to the Office of Management and Budget (OMB) at the White House for economic review. Now, the OMB is conducting its review of the FDA rule, and will then hand down the final regulations for implementation. This could happen any day, and it’s almost guaranteed to occur before the end of the Obama Administration.
  • Cigar Rights of America (CRA) and the International Premium Cigar & Pipe Retailers Association (IPCPR) have directed their lobbying efforts to OMB, which is charged with examining the economic impact of proposed FDA rules. The groups will attempt to show the potentially devastating economic impact the proposed regulations would have on cigars, including costing jobs both in the U.S. and abroad.
  • In its initial proposed rule, the FDA offered two options for regulating cigars: option 1 (which covers all cigars) and option 2 (which exempts handmade cigars over $10). Although the proposed rules transmitted to the OMB presumably include the agency’s decision on that important issue, it is unlikely the OMB will make public the agency’s intentions on the issue of a possible exemption.
  • While the OMB review may seem like a formality, those familiar with the creation of the initial proposed rule say the OMB was critical in advancing the option of an exemption for some cigars. If the OMB feels the FDA’s final version insufficiently addressed its previous concerns, it could request further revisions.

Now, I’ll be the first to admit the whole process is convoluted, drawn-out, and rife with complexities and other undesirables that render this story a difficult (and sad) one to follow. But I’m quite surprised 22% of our readers—folks who, by and large, regularly smoke cigars and love tobacco enough to read industry blogs and online reviews—could think the forthcoming FDA regulations will have few impacts.

Have they forgotten the FDA might wipe out every cigar introduced after February 15, 2007? Or that cigar innovation would likely come to a screeching halt? Or that cigar prices might rise considerably, as cigar options become exponentially more limited?

As far as cigars are concerned, the FDA is the defining issue of our era. Let’s try to keep in mind how important this is. And let’s not lose sight of what’s at stake: a thriving industry that caters exclusively to consenting adults and provides thousands of American jobs.

Patrick A

photo credit: Stogie Guys

Drew Estate

9 Responses to “Commentary: FDA Still a Major Threat to the Premium Cigar Industry”

  1. Mike Monday, February 15, 2016 at 2:43 pm #

    Count me among the 22 percent. While it’s possible the worst-case scenario could happen, I still doubt it. The FDA is not set up to oversee the removal of every new cigar going back 9 years. I expect lawsuits will stall many of the most onerous rules if enacted and many of them will prove unworkable, forcing the government to rewrite them.

  2. John walsh Tuesday, February 16, 2016 at 3:47 am #

    Amen to that

  3. Frank Reynolds Tuesday, February 16, 2016 at 9:32 am #

    “The FDA is not set up to oversee the removal of every new cigar going back 9 years.” Nor are they in a position to address all the approvals for future blends they’ll be bombarded with. But this is exactly what FDA officials want: a shutdown of innovation and industry stagnation leading to decreased consumption of cigars among consenting adults.

    Lawsuits may very well delay the implementation of the regulations but, at the end of the day, the regulations are coming, and unless the OMB curtails the FDA proposal, the result could be disastrous.

  4. George e Wednesday, February 17, 2016 at 4:06 pm #

    Mike –
    I hope you’re right, but I believe history sadly indicates otherwise. While the vastly larger and wealthier cigarette industry has had some legal success against the FDA regulations, my understanding is that the victories have mostly been around the edges. The basic regulations and restrictions stand. It’s difficult for me to see the premium cigar industry, which also lacks virtually all of the ancillary support that cigarettes enjoy — convenience stores, wholesalers, U.S.-based manufacturing plants, etc. — faring better. The greatest irony might be that when the Cuban embargo is finally lifted one of these days, Cuban cigars would still be barred from the U.S. because they weren’t on the U.S. market before the grandfather date and would have to first be submitted for FDA approval.

    • Mike Wednesday, February 17, 2016 at 4:44 pm #

      We’ll see. There will eventually be a framework for new cigars to come to market. And many Cuban brands date to the 1930s, so a case could be made they should be grandfathered.

  5. george e. Wednesday, February 17, 2016 at 5:33 pm #

    Mike – Again, I hope you’re right. As for the Cuban cigars, it will, of course, depend on how the regulations are written. But if it is what’s dictated for cigarettes, the FDA’s interpretation of “substantial equivalence” would likely mean that FDA approval could be needed for any size or shape, not to mention any produced with different curing, fermenting or aging processes, that wasn’t on the market at the time of the grandfather date. That would mean few Cubans, regardless of the brand heritage, could make the claim to being on the market before the embargo. Of the several thousand cigarette submissions, I think a couple have been approved.

    • Mike Thursday, February 18, 2016 at 12:20 pm #

      I know. But the fact OMB has sat on the regs this long says at least someone over there sees a need for different rules. The FDA has acknowledged the approvals process for new products needs to be fixed. My point remains the industry will adapt and I still discount the hyperbole going around the internet.

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