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News: Cigars International’s Next Step Is Florida

2 Aug 2019

Retail giant Cigars International is planning its first venture into the southeast with a new store just north of Tampa.

The move comes months after the retailer’s owner, Scandavanian Tobacco Group (STG), announced plans to shut Tampa operations for Thompson Cigar, which it bought last year for $62 million.

The new Florida store will continue Cigars International’s expansion efforts beyond its Pennsylvania roots. Last year, it opened a 6,000-square-foot shop in the Dallas-Ft. Worth area.

Florida and Pennsylvania are home to many online/catalog cigar retailers like Cigars International because neither state imposes a separate cigar tax.

In recent years, the Tampa area has seen moves by several cigar industry giants. Imperial Brands Casa de Montecristo bought and renamed Tampa Humidor in 2018, and Davidoff partnered with Jeff Borysiewicz, owner of Orlando-based Corona Cigar Co., to open a signature shop near the airport.

STG is a massive player in the tobacco market, especially through manufacturer General Cigar. Other holdings include Cigar.com, Cigars & Pipes online store, and a number of pipe tobacco and machine-made cigar brands.

It is in the process of winding down Thompson’s Tampa operations, where the company has operated since moving from Key West in 1920.

The new Cigars International store is proposed for a retail area north of Tampa near the intersection of interstates 75 and 275, according to an article in the Tampa Bay Times. “It’s not so much a cigar store, but a destination,” company president Craig Reynolds told the newspaper.

Plans call for opening next year.

George E

photo credit: Cigars International

News: Bipartisan Congressional Bill Would Raise Minimum Age for Tobacco to 21

22 May 2019

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If you need a reminder that anti-tobacco efforts are often a bipartisan affair, look no further than legislation introduced by Senate Majority Leader Mitch McConnell (R-KY) and Senator Tim Kaine (D-VA). The bill would raise the nationwide age for purchasing tobacco to 21.

The federal minimum age for purchasing tobacco products is 18, although state and local governments can set the minimum age higher (14 states have set the age at 21, along with 470 municipalities). Obviously, raising the minimum age above 18 raises questions about why adults who can vote and serve in the military cannot choose whether or not to enjoy a cigar.

The issue of members of the military who are under 21, even if they are deployed overseas, being banned from choosing use tobacco products was previously a hold-up in the proposed legislation. While originally McConnell expressed reservations about such a law applying to service members, he seems to have relented.

The largest cigarette company, Altria, has backed legislation raising the minimum age for tobacco purchases to 21. Notably, both McConnell and Kaine ares senators from states traditionally known for growing cigarette tobacco.

Analysis

In a political climate that increasingly purports to respect tolerance of personal choice, the double-standard when it comes to tobacco and adults is glaring. As many have observed before, there is no way to reconcile giving 18-year-olds the right to vote and the right (and, theoretically, through draft registration, the obligation) to serve in the military, but not the ability to choose whether or not to enjoy tobacco products.

Although tobacco companies may back the legislation, there is little reason to think that the “T21” movement was spreading to all 50 states. Further, to the extent T21 was spreading, it wasn’t likely to be extended anytime soon above age 21, which is also when the law limits adults from purchasing alcohol.

Ultimately, given the profile of most purchasers of handmade cigars, raising the minimum age for purchasing tobacco is unlikely to have a significant effect on cigar-specific retailers, despite the obvious aforementioned hypocrisy of simultaneously permitting 18-year-olds to both vote and serve in the military. That said, there is the possibility that raising the age for the purchase of tobacco to 21 could slow down efforts to regulate tobacco by the FDA.

As the Tobacco Control Act (which gives the FDA the authority to regulate premium cigars) specifically refers to limiting tobacco usage by minors under the age of 18, there is an argument that a federal tobacco age changed to 21 should result in a reset of FDA regulations. Specifically, for handmade cigars (which were always less likely to be used by minors) there is even less logic for the FDA to regulate cigars on the grounds that it is necessary to prevent youth usage if all tobacco is illegal for those under 21.

Patrick S

photo credit: Stogie Guys

 

News: Tatuaje Club Partners with Cigar Rights of America

6 May 2019

For the first time since it was launched in 2011, Saints & Sinners—the private, members-only Tatuaje club that annually sends participants exclusive cigars and other branded merchandise—is joining forces with Cigar Rights of America (CRA).

“With all the looming regulations that are plaguing our rights to enjoy cigars, we have decided that the only way we are going to make a change is if we, the cigar community, stand up for our rights,” said Sean Casper Johnson, co-founder and co-president of Saints & Sinners, Inc., in a recent email. “That said, Saints & Sinners has decided to partner up with CRA moving forward and will be donating a big portion of our membership dues to CRA so they can continue the fight to protect our rights to enjoy a product that we love.”

Annual membership fees have increased 17% to $175, with presumably the complete $25 increase going to CRA. This marks the first time in the club’s eight-year history that the fees won’t be $150. But it also means the annual smoke kit of exclusive cigars that won’t be commercially available elsewhere will grow from 15 to 17, and that each Saints & Sinners membership will include membership in CRA.

In addition to cigars, Saints & Sinners members are annually shipped Tatuaje-branded merchandise (i.e., hats and shirts) and other ancillary items of interest (i.e., wine openers, poker chips, lighters, ash trays, etc.). Until it arrives, the contents of that year’s shipment is typically a highly anticipated mystery.

Personally, I’ve been a member all eight years and have never been disappointed. The 10 exclusive cigars alone are always worth it; everything else is icing on the cake. And now, if you do the math, and if you value membership in CRA, the club is a better deal. In year’s past, you’d get 15 cigars for $150, or $10 per cigar; now you get 17 cigars for $175, or $10.29 per cigar—plus CRA membership. (The cigars are almost always terrific, even if we don’t write much about them here; I suspect few want to read reviews of cigars that are not commercially available—but let me know if this is an inaccurate assumption!)

Speaking of access to the invitation-only club, if you’re not already a Saints & Sinners member, now is a good time to find someone who is. Membership renewals for 2019 are currently open and will run though June 15. Each member is able to invite one person to join.

Cigar Rights of America is a national advocacy group that works at all levels of government to protect cigar consumers, retailers, manufacturers, and tobacco growers from regulatory threats, including smoking bans and tobacco taxes.

UPDATE: Sean Casper Johnson confirms the entire $25 increase will go towards CRA. And while he prefers to not cite exactly how many Saints & Sinners members there are, he confirms there are over 1,000. Finally, with regards to the 2019 smoke kit, he says, “This year’s kit will be extremely special. Pete [Johnson] and I selected the cigars last week and he is in Nicaragua blend testing them now.”

Patrick A

photo credit: Saints & Sinners

News: FDA Commissioner’s Resignation Could Have Big Implications for Cigar Regulations

6 Mar 2019

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Late yesterday reports broke that U.S. Food & Drug Administration (FDA) Commissioner Scott Gottlieb would be resigning his position next month. The move comes less than two years after Gottlieb was confirmed to the position in May 2017.

According to a Washington Post report, Gottlieb’s resignation didn’t come at the request of the the White House. President Trump tweeted praise of Gottlieb’s job at the FDA. “Scott has helped us to lower drug prices, get a record number of generic drugs approved and onto the market, and so many other things.”

Gottlieb, who had been commuting from Connecticut weekly, told the Post it was a difficult decision. “This is the best job I will ever have. I’m leaving because I need to spend time with my family. I get home late Friday, work on weekends, and come back to Washington on Sunday.”

Gottlieb’s confirmation was supported by cigar industry groups based on his prior writings questioning the logic of FDA tobacco cigar regulations. But his time at the FDA was a mixed bag for cigars. Gottlieb came into the job known for a “harm reduction” approach to tobacco regulations.

One of Gottlieb’s first acts was to delay upcoming deadlines for implementing the FDA’s Deeming Rule, which included new cigars. He later initiated another round of rule-making on whether the FDA should adopt an exemption for premium cigars. Later, Gottlieb pushed for a ban on flavored tobacco products.

Next Commissioner Faces Big Decisions on Cigar Regulations

Gottlieb’s departure leaves the next head of the FDA to make major decisions regarding the FDA’s oversight of premium cigars. A permanent replacement for Gottlieb would need to go through a Senate confirmation process, which would take months given the backlog of other nominees awaiting confirmation votes. An acting commissioner could be named more quickly, but no decisions have been made about who would fill the post.

The FDA could issue a final rule on the premium cigar exemption any day now and, unless it comes in the next month, it may be one of the first big decisions made by the next commissioner. If a final rule isn’t issued before late spring 2020, the rule can be overturned using the Congressional Review Act by a new Congress and president after the 2020 elections.

The next commissioner would also be primed to make final rulings on flavored tobacco products and on an FDA initiative for reduced nicotine tobacco products. Cigar industry groups would do well to lobby the White House for a nominee who is likely to issue premium cigars a long sought-after exemption from FDA rules.

Patrick S

photo credits: Stogie Guys

News: Tampa Looks at Protecting Historic Cigar Factories

14 Jan 2019

Tampa, which calls itself “Cigar City” for its long-ago role as the hub of the industry in the U.S., may again consider officially protecting the historic factories that remain.

Designating the old facilities as historic landmarks, which restricts some changes, was rejected a few years ago. Many of the two-dozen or so remaining buildings still dot Tampa’s Ybor City neighborhood, which is also home to numerous cigar shops, small rolling operations, and a giant annual cigar festival.

The only full-fledged factory still operating is J.C. Newman’s (pictured above). Others sit empty or have been converted to different uses. Some already have the historic designation.

New interest in the factories was spurred recently when the city said it had ordered a halt to remodeling work on the Santaella Cigar Factory building because of permit issues. One city councilman told the Tampa Bay Times that it was important to protect the old factories: “They are the castles of our neighborhood.”

According to the Times, Tampa council members considered the historic landmark designation in 2006 but were dissuaded by owners who viewed it as a potential restriction of their property rights.

The Santaella is a three-story building constructed in 1904, one of more than 200 cigar factories that operated at one time in Ybor City. Babe Ruth was said to stop by Santaella for cigars when the Yankees held spring training in the area.

In recent years, the building has been home to local artists. It was sold last year, and the permit flap flared as the new owner was renovating.

We’ve written about Tampa’s cigar history in the past, including a 2015 piece that included a reference to a terrific resource, Tom Ufer’s seminal guide to the factories in Ybor City. If you don’t find live links at Tom’s site, be sure to check back; he recently told me he’s working to restore much of the great information he compiled.

George E

photo credit: J.C. Newman

News: New Congress Means Renewed Effort to Exempt Cigars from FDA Regulations

9 Jan 2019

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Every two years, a flurry of new bills are introduced in Congress and, as has been the case every two years since 2011, a bill was again introduced in the Senate to protect handmade cigars from damaging Food and Drug Administration (FDA) regulations.

Senate Bill 9, the “Traditional Cigar Manufacturing and Small Business Jobs Preservation Act of 2019,” was introduced January 3, 2019, by Florida Senator Marco Rubio. Five Senators signed on as original co-sponsors: Cory Gardner (R-CO), Joe Manchin (D-WV), Tom Cotton (R-AR), Robert Menendez (D-NJ), and Joni Ernst (R-IA).

In the previous Congress, Florida Senator Bill Nelson introduced the legislation, while longtime-supporter Rubio had been an original co-sponsor who supported the bill from its initial introduction. The change takes place after Nelson, a Democrat, was defeated in November by then Republican Governor Rick Scott.

Although Scott is not one of the original co-sponsors, as governor he did send a letter to the FDA Commissioner opposing FDA regulation of handmade cigars. A later report claimed Scott personally lobbied Vice President Mike Pence about the issue of how FDA regulations would be applied to cigars already on the market. The discussion was revealed in a report that noted that Swisher, which now owns Drew Estate, had made significant contributions to Scott’s campaign.

Other past supporters who were defeated in November include Senator Dean Heller (R-NV) and Joe Donnelly (D-IN), though many others were re-elected. Cigar industry groups will now have to build support for the legislation in both the Senate and House.

According to Congress.gov, a companion House bill has not yet been introduced to protect handmade cigars from the FDA. Florida Republican Bill Posey, who easily won re-election in November, has traditionally introduced that bill.

Despite the House changing hands in the 2018 elections, most previous supporters of the bill survived re-election. The cigar industry did lose some champions, including Florida Representative Ileana Ros-Lehtinen, who retired after being a longtime advocate for cigar rights.

Trump-appointed FDA Commissioner Scott Gottlieb was initially seen by many as a positive change when it came to FDA policies towards cigars compared to the Obama FDA. However, despite delaying the implementation of some cigar regulations, some experts worry his subsequent actions are step towards a stealth ban on tobacco products, including cigars.

Patrick S

photo credits: Stogie Guys

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