The Future of the Cigar Industry Part 2: The Regulation of Premium Cigars

Nate Simonds
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Tobacco regulation is a complicated web that creates a lot of confusion and uncertainty about the future of the industry and the creation of new cigars. Imagine being a chef and being told that from now on, you will only be allowed to cook the same dishes you’ve created in the past. Cigars don’t happen overnight. They can take years to create, and if the process is complicated and expensive to complete, it makes it much more difficult in the future to innovate. Some of the best cigars on the market are created by small-batch tobacco grown in limited quantities. If regulations continue down the path they’re going, cigar manufacturers won’t be able to use these types of tobacco. Most if not all of the highly anticipated limited-production and special release cigars like the “year of” releases we all know and love could potentially disappear. And the cost of your cigars will go up. Given, even with higher prices, cigars will still represent a good value for a handmade product that takes years to make. But nobody, not even cigar manufacturers, wants to see prices keep going up.

Premium cigars are a natural, handmade product made from two ingredients: tobacco and water. This is vastly different from other tobacco products that contain chemical additives and are made by machines. Studies have shown that a majority of premium cigar smokers enjoyed their first cigar when they were over eighteen, which again is quite different from other tobacco products. Plus, the majority of cigars are purchased at adult-only locations, which is another distinct difference when compared to other tobacco products more readily available to children.

The FDA became involved in tobacco regulation in June of 2009, having given authority to do so by Congress by the passage of the Tobacco Control Act. This was signed into law by President Obama and covered all forms of tobacco (smokeless, cigarettes, flavored cigars, and premium cigars). The stated goal of this legislation was to reduce the death and disease toll caused by tobacco. Studies have shown that the primary cause of negative health consequences are cigarettes, with little research being done into cigars—and those studies that were completed did not conclusively show the same effects. Doing research into literature put out by the FDA makes two things very clear. One, they will not approve a product they believe raises new concerns for public health. And two, they will not approve products they believe are attractive to young children. This special attention to children is a result of a study that found that 90% of daily smokers started smoking before the age of eighteen.

In 2016, the FDA’s Deeming Regulations for E-Cigarettes, Cigars, and All Other Tobacco Products set in stone a majority of the rules we’re now familiar with. Some of these rules applied to all tobacco products, such as changing the minimum age to purchase tobacco to 21. Other rules applied specifically to certain types of tobacco products. For example, flavored cigarettes were banned, but flavored cigars were still allowed.

As part of these rules, any product brought to market after February 15, 2007, requires a review through one of three possible pathways:

1. Exemption for Substantial Equivalence: This is for tobacco products that were on the market before February 15, 2007. These products were grandfathered in, and manufacturers simply needed to provide evidence that the product was actively sold before that date.

2. Substantial Equivalence: This is for products that were created after February 15, 2007. Manufacturers have to submit a letter stating that their product is the equivalent of a product that was on the market before 2007. This is the pathway most applicable to the cigar industry.

3. Pre-Market Tobacco Application (PTMA): This is for new products brought to market that don’t have a substantial equivalent product marketed prior to 2007. These products are subject to testing to ensure they don’t create further public health hazards.

A couple of things to note about the tobacco deeming regulations as they pertain to new cigars.      

1. The February 15, 2007, date has no scientific basis.
2. The FDA has not clearly defined testing procedures for PTMA.

Again, if this moves forward, it severely limits when manufacturers can put out products. This means no more special releases. No new blends. Entire companies that weren’t around before 2007 could be prevented from operating. In the best case, further regulations would be difficult to navigate and could create costs that would be ultimately passed on to the consumer. Tobacco growers have been creating new tobaccos to create new tastes but also to eliminate pests and diseases that kill their crops. Could you imagine a world where Monsanto was prevented from proactively creating a new kind of corn less susceptible to disease or that generated higher yields?

The good news through all of this is that premium cigars have so far not been a focus of the FDA. They’ve even gone so far as to state that premium cigars are their “lowest priority.” Through successful legal challenges by both the Cigar Rights of America (CRA) and Premium Cigar Association (PCA), courts have also ruled that the FDA has not followed proper procedure as it pertains to premium cigars. Part of the creation of new regulations requires the regulatory body considers public opinion, and an appellate judge found that the FDA didn’t do that where it pertained to premium cigars. Because of these legal challenges, cigar companies aren’t currently required to seek FDA approval before putting a cigar on the market, yet most are still going through the process. Both the CRA and PCA are actively challenging further regulation in court as well as lobbying elected officials to prevent further regulation. However, we’re an artisan industry with small budgets. The industry simply doesn’t have the capital to fund high-powered lobbyists like other industries. The cigar industry is actively working to showcase the difference between premium cigars and other tobacco products. The FDA has even admitted that premium cigars are demonstrably different.

According to a court order a premium cigar is defined by the FDA as a product which:

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, nontobacco tip, or nontobacco mouthpiece;
Does not have a characterizing flavor other than tobacco;
Contains only tobacco, water, and vegetable gum with no other ingredients or additives;
Weighs more than 6 pounds per 1,000 units.

Though premium cigars have enjoyed separation from other tobacco products, flavored cigars are currently facing some challenges. This goes back to appealing to children. Flavored cigars make up a significant portion of the cigar industry, with the ACID line by Drew Estate including some of the best-selling cigars in the world. This is further complicated by the fact that some companies are expanding their distribution network outside of just cigar lounges and into gas stations and liquor stores, which some people feel gives children greater access to these products. It can also be argued that these places also provide the same access to alcohol, which has been found to have health consequences of its own.

At the moment, there’s a lot of buzz over an upcoming report that as of this writing has yet to be released. It’s a report that was commissioned by the FDA to study the issue of premium cigars and regulations before requiring cigar manufacturers to go through the product approval process outlined in the tobacco Deeming Regulations. In short, this is essentially the next step in the creation and enforcement of regulations on premium cigars.

What can you as a consumer do?

It’s great to read about regulations and educate yourself on how they might affect your future enjoyment of cigars. But it’s also very important that you as a consumer do what you can to help. You have a voice! Make it heard by speaking to your local representatives and writing letters to your elected officials. You can also choose to support the lounges and manufacturers that are involved with CRA and PCA. The CRA puts out a yearly sampler to help raise funds to continue its legal battles, and several manufacturers put out cigars that are exclusive to PCA members. Both options are win-wins for you as a consumer. Not only will you support those who are fighting for your rights as a consumer, but you’ll also get some great exclusive cigars out of the deal! Check back next week for our take on the release of the NASEM study—Premium Cigars: Patterns of Use, Marketing and Health Effects.

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