Breaking News: The FDA Just Issued the Final Rule Regulating Handmade Cigars, and It’s as Bad as We Feared
5 May 2016
Today the Food and Drug Administration (FDA) announced the final rule regulating cigars. We will have more coverage in tomorrow’s Friday Sampler and in the coming weeks but, for now, here are some key points about the impact of the 499-page rule on handmade cigars.
The FDA Rejected Pleas for an Exemption for Premium Cigars
In its initial proposed rule, the FDA offered two options for regulating cigars: option one (which covers all cigars), and option two (which exempts handmade cigars over $10). In its final rule, the FDA rejected option two, meaning a $12 handmade premium cigar will be treated exactly the same under the rule as “little cigars” that are manufactured on the same machines that produce cigarettes.
Date for Grandfathered Products Remains Unchanged
While the so-called Family Smoking Prevention and Tobacco Control Act (FSPTC)—the bill giving the FDA the power to regulate cigars—didn’t pass until June 2009, the legislation sets February 15, 2007 as the cutoff date for tobacco products to be grandfathered in as exempt from needing FDA approval before being sold or marketed in the United States. There were hopes that the FDA would modify that date, but they did not. As a result, products introduced past that date will be subjected to the FDA approval process. Cigars currently on the market will be treated differently from those introduced after the regulation officially takes effect.
Regulations Take Effect August 8
While the text of the rule was released today, it will not be officially published to the Federal Register until May 10, at which point a 60-day clock will start until the regulation officially goes into effect. Cigars introduced after August 8 will have to get FDA pre-approval before being marketed or distributed. Non-grandfathered (post-February 15, 2007) cigars on the market before August 8 can be sold until August 8, 2018, after which they must apply for FDA approval to remain on the market. Notably, the 2016 IPCPR Trade Show is set to take place in Las Vegas at the end of July, meaning it will effectively be the last chance cigar makers have to introduce new cigars before the August 8 date for pre-approval is required.
FDA Approval Process Still Murky
The need for FDA approval of new cigars is the biggest reason why industry experts predict the rule will devastate the handmade cigar industry, including 30,000 Americans who work in the industry and over 300,000 employees abroad. While subjecting all cigars to a pre-approval process where they must prove the new product is “substantially equivalent” to a grandfathered or approved product, the exact standards the FDA will use to make this determination, or exactly what scientific data would need to be included with the application, is far from clear. The FDA also doesn’t seem to address if it has the capacity to deal with new applications in a timely manner.
Rule Enacts Sample Ban, Mandated Warning Labels
Starting on August 8, distribution of samples will be prohibited, meaning cigar shop events where attendees get to try a new product free of charge will be prohibited. Full implementation of warning labels on cigars has also been mandated, with warnings “to appear on at least 30 percent of the two principal display panels of the package, and at least 20 percent of the area of advertisements.”
FDA Intends to Ban Flavored Cigars Next
In the finalized rule, the FDA states the following regarding demands by anti-tobacco lobbyists that it include a ban on flavored tobacco products: “To address concerns with the growing flavored cigar market and its impact on youth and young adult initiation with tobacco products, FDA is announcing here that it intends to issue in the future a proposed product standard that would prohibit characterizing flavors in all cigars, including cigarillos and little cigars.” To date the exact definition of a flavored cigar is unknown, and depending on the definition such a ban could include many premium handmade cigars not commonly identified as flavored.
Legal Challenges Are Inevitable
Barring an Act of Congress, only a federal court case can stop enforcement of this rule. Legal actions to executive orders generally come in the form of either a facial challenge to the rule, or an as applied challenge. A facial challenge could ask for an injunction to stop implementation of part of the rule or the entire rule, although the standard for getting one is very high. An “as applied” legal challenge would allege that the FDA violated either a federal law or the Constitution in how it applied the regulations to a specific party. With such a major expected impact, multiple federal lawsuits are likely.
The entire text of the 499-page rule can be found here.
photo credits: Stogie Guys