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News: Judge Rules Against Industry Challenge to FDA Cigar Regulations

16 May 2018

Judge Amit P. Mehta of the U.S. District Court for the District of Columbia issued a 70-page decision yesterday in CAA v. FDA, largely ruling against the cigar industry groups that brought the legal challenge to the U.S. Food and Drug Administration’s (FDA) regulation of premium cigars and other tobacco products.

The Cigar Association of America, International Premium Cigar & Pipe Retailers Association, and Cigar Rights of America filed the legal challenge last year claiming the FDA’s move to extend tobacco regulations to cigars and other tobacco products violated the Administrative Procedures Act, as well as the First and Fifth Amendments to the Constitution.

The one win for the industry groups relates to pipe tobacco. The Obama-appointed judge found the FDA was “arbitrary and capricious” when it designated tobacco retailers who blend pipe tobaccos in-store as domestic manufacturers under that Tobacco Control Act. That issue was remanded back to the FDA for further consideration.

The judge rejected claims that the FDA violated the Administrative Procedures Act when enacting the deeming rule, putting cigars under the Tobacco Control Act. He also rejected claims that the large cigar warning labels violate the Constitutional rights of cigar manufacturers who were required by the law to put health warnings on products and advertisements for cigars. (The picture above is of required warning labels in France, which are only slightly larger and more colorful than what is required under the FDA.)

Although the judge noted the “basic unfairness” of enforcing the warning labels and associated costs while the FDA was reconsidering the regulations and may soon change them, he ultimately deferred to the agency’s authority.

Judge Mehta’s decision can (and very likely will) be appealed to the U.S. Court of Appeals for the District of Columbia Circuit. An adverse ruling by a three-judge panel of that court could then be petitioned for review “en banc” by the full court, after which the U.S. Supreme Court could be asked to review that decision.

Analysis

Legal precedent is stacked against those challenging executive agency rules. The “Chevron Doctrine” gives wide deference to executive branch agencies when it comes to interpreting the law. As a result, an agency like the FDA gets the benefit of the doubt in the eyes of federal courts when it comes to interpreting the limits of its authority.

The good news is, in addition to a likely appeal, this isn’t the only legal challenge to the FDA rules. A lawsuit filed by Global Premium Cigars in Florida includes additional claims that the FDA’s actions violate the Regulatory Flexibility Act, designed to protect small businesses from over-burdensome regulations. And an additional lawsuit brought by El Cubano Cigars and the Texas Cigar Merchants Association in Texas challenges the regulations including the warning label requirements.

If any of the various appellate courts split on an issue, it increases the likelihood the U.S. Supreme Court could weigh in on the issue. Although the odds are still long, legal experts believe there is an increasing skepticism on the Supreme Court for the deference afforded executive branch agencies under the Chevron Doctrine.

Ultimately, though, the best hope for stopping FDA regulations of cigars remains outside the courts. Short term, the FDA’s restarted rulemaking process could provide relief for the cigar industry, as the Trump-appointed FDA commissioner has already initiated a new direction for tobacco regulations.

The more fundamental, if difficult, solution is to repeal the FDA’s authority over premium cigars. Once the FDA was granted the power in 2009 to extend its authority over cigars, it was inevitable that eventually the agency would exercise that power.

Back in 2009, some in the cigar industry weren’t particularly worried about the FDA’s new powers over tobacco because the law’s primary target was cigarettes. While it may have been true that cigarettes were the primary target, it was short-sited to think FDA regulation wouldn’t eventually expand to cigars.

Cigar maker Steve Saka provided his reaction to yesterday’s ruling in a Facebook post: “Basically the court is saying that what the FDA is doing is wrong and unjust, but legal… This is a byproduct of an inept Congress that lacks the moral fortitude to fix the colossal mistake they created and bureaucracy run amok. It is beyond frustrating and infuriating.”

In short, if you’re looking for someone to blame for yesterday’s ruling, don’t focus on the judge, but on the Congress that authorized the FDA’s regulation of cigars in the first place. And don’t forget: Today’s Congress still has the power to repeal it.

Patrick S

photo credit: Stogie Guys

News: FDA Again Considers Premium Cigar Exemption

26 Mar 2018

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Handmade cigar industry groups supported President Trump’s appointment of Dr. Scott Gottlieb as the head of the U.S. Food & Drug Administration (FDA). Now they will see if that support was deserved.

On Friday, the agency announced its intent to seek comments about reconsidering existing regulations of premium cigars. The 90-day comment period opens today (Monday, March 26) and runs through June 25.

Here is the FDA’s summary of its action:

The Food and Drug Administration (FDA) is issuing this advance notice of proposed rulemaking (ANPRM) to obtain information related to the regulation of premium cigars under the Federal Food, Drug, and Cosmetic Act (FD&C Act), as amended by the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act), and regulations regarding the sale and distribution of tobacco products. Specifically, this ANPRM is seeking comments, data, research results, or other information that may inform regulatory actions FDA might take with respect to premium cigars.

In the notice, the FDA asks for “comments, data, research results, and other information related to the following topics: (1) definition of premium cigars, (2) use patterns of premium cigars, and (3) public health considerations associated with premium cigars.”

The request for comments also zeros in on an issue regarding the definition of youth (something we raised about the original 499-page deeming document): “Please provide any evidence or other information supporting your comments. Also, provide the definition of ‘premium cigar,’ ‘youth,’ and ‘young adult’ used for the studies, information, or views provided in your responses.”

The document specifically asks for additional research that might not have been considered when the FDA made the decision to not exempt premium cigars from their deeming rules in 2016. It specifically notes the PATH study published last September that reinforced the idea that different types of cigars have vastly different usage patterns.

Simply considering a premium cigar exemption, of course, doesn’t guarantee that the FDA will ultimately adopt one. The FDA notably considered and rejected such an exemption in its original regulation of cigars.

However, the willingness of the new FDA leadership to spend time and resources considering rolling back its regulations is a good sign for those who make, sell, and enjoy handmade cigars. Over the next 90 days, expect a big push from the handmade cigar industry for comments urging the agency to adopt a premium cigar exemption.

Patrick S

photo credits: Stogie Guys

Quick Smoke: Partagas Ramon y Ramon Robusto

17 Dec 2017

Each Saturday and Sunday we’ll post a Quick Smoke: not quite a full review, just our brief verdict on a single cigar of “buy,” “hold,” or “sell.”

About a year ago, both of my colleagues praised the Robusto (5.5 x 50) from the new (at the time) Partagas Ramon y Ramon line. This cigar sports a Cameroon wrapper around a Dominican binder and filler tobaccos from Nicaragua (Jalapa) and the Dominican Republic (Piloto Cubano). The profile starts mild and ramps up to medium-bodied with flavors of sweet cream, cedar, oak, toast, and melon. Construction is solid. This is an easy recommendation at about $8.

Verdict = Buy.

Patrick A

photo credit: Stogie Guys

Quick Smoke: Paul Garmirian Soiree Belicoso

24 Sep 2017

Each Saturday and Sunday we’ll post a Quick Smoke: not quite a full review, just our brief verdict on a single cigar of “buy,” “hold,” or “sell.”

It’s not widely known, but when PG was creating a cigar to celebrate its 15th Anniversary, the decision came down to two final blends. The runner-up became the PG Soiree. Although I think they made the correct decision, the Soiree is also a very fine cigar. It starts out with intense black pepper and wood spice and soon develops an almost maple sweetness to go along with dry oak, hay, and some mushroom-y funk. Not as balanced as the the PG 15th Anniversary cigar, but a blast of enjoyable medium- to full-bodied flavors with flawless combustion.

Verdict = Buy.

Patrick S

photo credit: Stogie Guys

News: 2017 IPCPR Cigar Trade Show Ushers in New Era

28 Jun 2017

In two weeks the annual International Premium Cigar and Pipe Retailers (IPCPR) Trade Show will be in full swing. In more than one ways, this year’s show represents a new era. Here’s why:

New Venue

Although the Trade Show isn’t held every year in Las Vegas, there is little question the Las Vegas Sands Expo Center has been its de facto home for the past decade. The convention was originally set to return there again this year. However, late last year IPCPR announced not only was the show being moved up five days, it was moving up The Strip (and a block off it) to the Las Vegas Convention Center (LVCC).

While the LVCC is larger than Sands Expo, it is also off The Strip, meaning transportation to and from the venue is more challenging. The Sands Expo is attached to both the Venetian and Palazzo hotels. While the LVCC isn’t attached to a hotel, it is across from the Westgate Resort and Casino (formerly called the Las Vegas Hilton), which is the primary hotel for this year’s event and host to most of the opening day seminars and the breakfast featuring former New York mayor and presidential candidate Rudy Giuliani. If the new location goes off without a hitch, it could be a win in the long run for IPCPR since they would have two proven locations in Las Vegas.

New Regulations

Last year’s Trade Show took place weeks before the FDA regulations went into effect. Now, even though some enforcement has been delayed, the rules are in effect. The IPCPR has announced that the FDA’s ban on samples for consumers doesn’t effect samples at the convention since the show is only open to the industry and not to the public.

The biggest part of the rules, however, will have a large impact on the event. Usually, numerous new cigars are announced or debuted at the Trade Show, but the FDA rules mean cigars introduced after August 8, 2016, need to go through an FDA approval process before they can legally be sold. It also means cigars introduced since early 2007 will eventually need to either win FDA approval or be removed from the market. One of the interesting things to watch for is how many post-2007 cigars are removed from manufacturers’ offer sheets, especially in light of some hope in the industry that the regulations could be scaled back by the new administration or through litigation.

New Releases

Since any new cigars will need to go through a yet-to-be-defined FDA approval process, there won’t be any new cigars at the Trade Show, right? Not exactly. Since last August, and especially in the past few months, we’ve seen a steady number of “new” cigars announced, with many scheduled to debut at the upcoming show.

Cigar manufacturers knew the regulations were coming and they’ve planned to mitigate the regulations as best they can. One of the ways they’ve done this is though stealth cigar releases prior to the August 2016 deadline. While these cigars may have been sold to a friendly retailer to establish they were on the market in advance of the cutoff date, they haven’t been formally or widely released. This will account for many of the “new” cigars that will be available for the first time at the Trade Show. That said, the number of new releases compared to previous years will be something many observers will be watching closely.

Patrick S

photo credit: IPCPR

News: Thirteen Premium Cigars Gain FDA Grandfather Status, Study Shows Youth Aren’t Smoking Handmade Cigars

26 Apr 2017

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Although no one knew it at the time, one of most important dates for cigars sold within the United States would be February 15, 2007. Under the Tobacco Control Act and subsequent rulemaking, cigars marketed before that date are grandfathered in as exempt from FDA regulations, while those introduced afterwards will eventually need FDA approval to be legally sold and marketed within the U.S.

Although a determination of grandfather status isn’t yet needed for a cigar to be sold without going through one of the FDA approval tracks, the FDA has begun accepting submissions requesting a grandfathered status review of a tobacco product regulated under the deeming regulations that went into effect last year. Earlier this month, the FDA issued the first such determinations for 13 handmade cigars.

Two companies had cigar products established as grandfathered and thus exempt from FDA approval rules: Altadis USA, one of the largest sellers of handmade cigars in the United States, and Ortega Premium Cigars, a boutique company.

Altadis submitted five cigars from five different brands, each in a corona format: Montecristo Classic Collection Especial No. 1, Romeo y Julieta 1875 Exhibicion No. 1, H. Upmann Vintage Cameroon Corona, Saint Luis Rey Corona, and Don Mateo Natural No. 5 (a bundle cigar). The approach of establishing one size first may be a legal strategy, with the company likely to next seek to expand grandfather determinations to other formats.

Ortega Premium Cigars received grandfather determinations for four sizes in each of two brands: VIBE and REO. In 2007, VIBE and REO were under EO Brands, then co-owned by current VIBE and REO owner Eddie Ortega with his former business partner Erik Espinoza. Both cigars were collaborations between EO and Rocky Patel.

The Ortega determinations were shepherded through by attorney Frank Herrera, whose boutique law firm specializes in cigar trademark and FDA compliance issues. Ninety-eight other cigars have also received grandfather determinations, but those cigars would not be considered handmade or premium cigars.

FDA-Funded Study Confirms Minors Not Smoking Premium Cigars

One of the main arguments against the deeming rules that regulate premium cigars in a similar manner as cigarettes is that youth smoking of premium cigars is not an issue. This is also a reason frequently cited for the need for legislation exempting handmade cigars from FDA regulations.

Even the studies cited by the FDA when they rejected a proposed exemption for premium cigars over a certain price did not point to handmade cigar usage by minors, but relied on a more nebulous “youth and young adults.” As we noted at the time, that included usage rates for adults as old as 29.

A recent study published in the prestigious New England Journal of Medicine buoys the arguments made by opponents of FDA regulation of traditional cigars. The study was funded by the National Institute on Drug Abuse and the Food and Drug Administration and conducted by the Department of Health Behavior of the Roswell Park Cancer Institute in Buffalo, New York.

As reported elsewhere, the study shows extremely low usage rates (2.3%) among those aged between 12 and 18, even with  extremely broad definitions of usage (even just “one or two puffs” ever). Fewer than one percent of the 13,651 youth surveyed said they used a cigar once (even “just one or two puffs”) in the 30 days prior to being surveyed.

A deeper look at the study’s numbers shows even less cause for concern for youth smoking of cigars. Of the tiny percentage of those who claim to use traditional cigars virtually all used other tobacco products too, while the number who exclusively used traditional cigars was so small that “estimates were suppressed” because the number was not statistically significant.

Though the conclusion that youth smoking of traditional cigars is virtually zero came as no surprise to those in the handmade cigar community, having FDA-funded research to back up these claims may prove useful in lobbying for the FDA to ease regulations on handmade cigars and for pushing Congress to pass an exemption.

Patrick S

photo credits: Stogie Guys

Cigar News: Cigar Trade Groups Back Trump’s Pick to Head FDA

15 Mar 2017

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On Friday, numerous news reports indicated President Trump intends to nominate Scott Gottlieb to head the FDA. Gottlieb, a doctor, worked at the FDA during President George W. Bush’s administration in deputy roles and is a fellow with the conservative American Enterprise Institute.

Since the FDA was granted authority to regulate tobacco in 2009, and in 2014 moved to exercise its authority to regulate cigars, the position of FDA commissioner has taken increasing importance to the handmade cigar industry. Opponents of Gottlieb are expected to highlight his ties to the the pharmaceutical industry, though his criticisms of the FDA’s oversight of tobacco are also likely to become an issue during his confirmation hearings.

Gottlieb has been critical of the FDA’s authority to regulate tobacco products. In a Forbes.com article, he wrote the following regarding the “faustian” bargain behind FDA cigar regulation:

It always seemed a naïve aspiration—that FDA would ever sanction such products—and even more uncertain that the anti-tobacco crowd would let this paradigm advance. Now, each side’s ambitions (and the law’s spirit) are being tested.

The tobacco industry’s critics are trying to impede a critical first step that FDA must take in creating that new regulatory architecture. The ability to fulfill all of the law’s goals is on the line.

Proponents of the legislation, after all, admittedly supported it as a vehicle to squeeze tobacco firms under the weight of FDA regulation. Their stated aim was always the dismantling these firms.

In an Associated Press article about the bill that authorized the FDA to regulate tobacco products, Gottlieb was quoted criticizing the bill as undermining the FDA’s primary mission: “I believe it’s going to gut the agency’s resources and distract it from its core mission.”

Specifically on cigars, a New York Post op-ed by Gottlieb regarding FDA cigar regulation and its potential impact on the 2012 election has recieved much attention. In it, he wrote:

About 85,000 Americans work in the premium-cigar business, according to the industry’s main trade group. Many of these jobs would be in jeopardy if the FDA’s regulations went forward. About 75 percent of the domestic importers and producers of cigars are located in Florida, where it’s a $2 billion-a-year industry…

Whatever the FDA does, the fight reveals a broader trend of expanding the scope of regulation to cover areas never envisioned by Congress.

Regulators often prefer to enlarge their jurisdiction rather than tend to their chief obligations. Agencies like the FDA thus divert their attention from important but basic duties.

For example, that 2009 tobacco law was crafted as a way to cut down on underage use of cigarettes. It was, in many respects, a forward-looking measure—envisioning that traditional cigarette makers would gradually transition to developing and marketing smokeless-tobacco products that don’t pose the same health hazards as cigarettes.

But the FDA has been loath to accept that alternative tobacco products could pose a lower health risk than cigarettes. Under the law, it should be examining the relative hazards, rather than spending its energies seeking to expand its powers.

In part because of his writings on FDA tobacco regulations, cigar industry groups have already come out in support of Gottlieb. “We think it’s a very good choice that the president made,” said Craig Williamson, president of the Cigar Association of America, which represents cigar manufacturers.

An IPCPR spokesman praised the pick: “We’re very encouraged by the nomination of Dr. Gottlieb. His past statements and articles show he recognizes the difference between premium cigars and other cigar products, and we’re looking forward to having a productive dialogue with him… should he be approved.”

Glynn Loope, executive director of the Cigar Rights of America, also praised the nomination: “CRA is certainly pleased that the president’s administration is moving swiftly to place new management at the FDA. We hope Dr. Gottlieb brings an air of objectivity and balance to the agency. His previous op-ed piece that addressed the role of premium and large cigars in the regulatory process clearly indicates that he has a working knowledge of our issues, and as to why they should be treated differently.”

“2017 is a critical turning point with Congress and the administration, and these new appointments present a unique opportunity to have discussions and to facilitate actions that can work toward protecting the premium cigar industry from the proposed regulations that can clearly have a detrimental impact on this artisan industry that does not deserve the treatment that has been advanced by the FDA,” Loope continued.

Patrick S

photo credits: Scott-Gottlieb.com