An Update on The Cigar Industry's Fight Against Regulation
Nate SimondsRecently, there has been an update on a recent U.S. Court of Appeals hearing that has important implications for the premium cigar industry.
The hearing involved the ongoing lawsuit filed by the Cigar Association of America against the FDA which was initially filed in 2016. The case challenges the FDA’s authority to regulate premium cigars under the 2016 “deeming rule,” which imposed various restrictions on cigar manufacturers.
Last time we updated you, the U.S. District Court ruled that the FDA had not adequately considered public comments and vacated the regulation for premium cigars, particularly those large, handmade cigars that are not flavored. As a result, the FDA’s regulatory controls, such as testing requirements and bans on free product samples etc. were no longer applicable to premium cigars. This also allowed for more companies and new cigars to come to market.
The Department of Justice, representing the FDA has appealed that decision, leading to this latest hearing that happened on September 13th. During the oral arguments for the appeal, the three-judge panel raised significant concerns about the FDA’s handling of the rule-making process. They questioned whether the FDA had properly considered the data and comments provided, which indicated that premium cigar smokers generally use these products infrequently, and that there is no evidence suggesting higher health risks from moderate premium cigar use. This has been the CAA’s argument the entire time.
Importantly, one of the judges noted that even if the current regulations are vacated, the FDA is not permanently barred from creating new regulations. They still have the option to do so. The FDA would need to restart the process, this time addressing the concerns raised by the court in order to propose new regulation. These statements, along with the line of questioning lead many to believe indicates that while the cigar industry might win this particular appeal, the FDA could still attempt to regulate premium cigars in the future.
Another point of discussion was the user fees that cigar manufacturers have already paid as part of the FDA's regulation process - which total over $100 million dollars. The question of whether these fees might be refunded remains open and could be decided in a future court case. This would be another huge win for cigar manufacturers, providing capital for the continued fight against regulation.
While we await the court’s decision, the general tone of the hearing suggests that the premium cigar industry has a strong case. The judges seemed to agree that the FDA should reevaluate its regulatory approach to premium cigars, using a more thorough review of the data and comments submitted. This is a win for the premium cigar industry, delaying future regulation and supporting the cigar industry's position that cigars are different and should be regulated different than other tobacco products, especially cigarettes.
Stay tuned for further updates as we monitor this important case.