FDA Lawsuit Victory
Nate Simonds
The 7-year, multi-million dollar lawsuit against the FDA has been decided! What does that mean for the average consumer? Not a lot... However, don't be mistaken. This is the biggest thing to happen to the cigar industry in quite some time. Let's look at what happened and what it means for the cigar industry in general.
If you need to be caught up to speed on the lawsuit check out this blog post.
What happened?
Last Thursday Judge Amit. P Mehta issued his decision in the Cigar Association of America et al. v. United States Food and Drug Administration et all. Judge Mehta haschosen to vacate the 2016 deeming rule put in place by the FDA that regulated all tobacco products as it relates to premium cigars. In doing so, Judge Mehta describes premium cigars as having the following qualities:
- is wrapped in whole tobacco leaf;
- contains a 100 percent leaf tobacco binder;
- contains at least 50 percent (of the filler by weight) long filler tobacco (i.e., whole tobacco leaves that run the length of the cigar);
- is handmade or hand rolled (i.e., no machinery was used apart from simple tools, such as scissors to cut the tobacco prior to rolling);
- has no filter, non-tobacco tip, or non-tobacco mouthpiece;
- does not have a characterizing flavor other than tobacco;
- contains only tobacco, water, and vegetable gum with no other ingredients or additives;
- and weighs more than 6 pounds per 1,000 units.
What does it mean?
This definition is extremely important for a few reasons:
1. This ruling does not apply to cigars that have a characterizing flavor other than tobacco. This means that flavored cigars are still subject to the deeming rule.
2. Previously there was no standard definition of what a premium cigar exactly was which made both regulation and research studies more complicated. Now, the industry has both a definition of what a premium cigar is and a precedent that they are different than other tobacco products.
So how does this change the industry as it stands? For the most part & surprisingly enough... It doesn't. All regulations of premium cigars stemming from this deeming rule had not been enforceable during this lawsuit. This lawsuit prevented a major blow to the industry (and potential death of many cigar brands). Not only would the premarket approval process prevented the sale of many new brands & blends, but the proposed regulation of tobacco factories could also have prevented the sale of existing products in the US today.
However, this decision does open the door for conservative manufacturers and investors to produce new brands and blends because premium cigars will not be subject to premarket approval - something that had been a big question mark for a company who are considering making multimillion dollar investments.
What is next?
It is important to note that premium cigars are still subject to some form of regulation - rules put in place before 2016 would still apply. State and federal taxes will still have to be paid. Cigars that do not fit the definition of what a premium cigar is (most notably flavored and small format machine-made cigars) would still be subject to regulation. Despite the FDA stating that premium cigars are the lowest on their priority lists, more regulations will be coming down the road.
A big question mark still remains for manufacturers - what happens to user fees? User fees are an approximately 5c/cigar tax the cigar manufacturers pay to the FDA. While Judge Mehta did not specifically state that the manufacturers will be receiving these fees back, his ruling did imply that the FDA had no right to collect these fees. Exactly when and how much manufacturers can expect back is still up in the air.
Also, we have to wait to see if the FDA will choose to appeal the ruling. If so, the lawsuit will continue onward. The FDA has up to 60 days in which to file an appeal - so let's hold off on declaring this finished
Now is not the time to rest.
While it might be easy to declare victory and act invincible. This is not the time do so - in fact it is crucial not to do so. While there is temporary relief from the FDA, there are still major challenges ahead. Flavored cigars are potentially on the chopping block - a huge hit to revenues for companies such as Drew Estate & Rocky Patel. Local smoking bans are becoming more and more prevalent. The FDA assuredly will come again with proposed regulation.
I believe there are two things that need to happen now:
1. The industry needs to self-regulate.
This means eliminating all marketing that can be viewed as marketed towards children, ETC. There is no reason to give the FDA even more motivation to come after the industry.
2. Fund studies that can show that premium cigars are markedly different.
One of the deciding factors in this lawsuit is the small amount of evidence that the FDA failed to consider when creating the deeming rule. The recent NASEM study that was released pointed out that there seemed to be differences between premium cigars and other tobacco products, but stated there was much evidence to support it and further study was needed. Having recent concrete evidence to substantiate the claims that premium cigars are markedly different than other tobacco products is the holy grailto keeping regulation minimalized. There is still work to be done.
It is time to say thank you.
That being said, it is time to say thank you for those who fought the good fight (and continue to do so). While the CAA and PCA have both contributed to the legal battle against the FDA, the cost of this argument was covered by 10 cigar brands (almost all of which you will find in our humidor). They are as follows
- Alec Bradley
- Arturo Fuente
- Ashton
- J.C. Newman
- La Flor Dominicana
- My Father
- Oliva
- Padrón
- Rocky Patel
- Tatuaje
While the war on cigars certainly is not over, today's battle has been won. Light your favorite cigar by one of the 10 brands above. It is thanks to them that the future is a little bit brighter for the cigar industry.
- Nate Simonds