An Historic Decision: The Premium Cigar Industry vs. the FDA

On Wednesday, August 9th, we learned of an historic decision regarding the premium cigar industry vs. the FDA.  Judge Amit Mehta from the United States District Court for the District of Columbia vacated the FDA’s Deeming Rule as it pertains to handmade premium cigars, ending the FDA’s ability to regulate premium cigars in its entirety.

Since it was first proposed in 2014, the FDA’s Deeming Rule has been looming over the heads of every retail tobacconist and cigar manufacturer, creating grave concern for the future of the industry and costing manufacturers tens of millions of dollars in user fees.

“It’s wonderful news. I haven’t exhaled yet,” said Georgetown Tobacco Founder and President, David Berkebile. “My appreciation certainly goes to the Premium Cigar Association, Cigar Rights of America and the many manufacturers who contributed immensely to this fight.”

To really understand “this fight” and what was at risk, let’s take a brief look at the history and put this historic decision into context:

• In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act, from which the FDA derived its authority to deem new tobacco products
• In 2014, the FDA first proposed the Deeming Rule, which lumped handmade premium cigars in with all other tobacco products including cigarettes and vapes
• In response to the proposed Deeming Rule, the major industry associations (PCA, CRA, CAA) collaborated to officially comment, provide evidence, and proposed “Option Two” which provided a detailed definition of a premium cigar and would exempt handmade premium cigars from regulation based primarily on the facts that kids do not smoke premium handmade cigars and the pattern of usage is very different from that of other tobacco products.
• In 2016, the FDA finalized the Deeming Rule, and essentially ignored Option 2 in favor of Option 1, which provided zero differentiation between handmade premium cigars and any other machine made, mass market tobacco products.

So what was really at risk? For retailers like Georgetown Tobacco and lovers of handmade premium cigars, everything.

The proposed rule was more than 500 pages long, but two of the scariest provisions included:

1. Pre-Market Review: Just like a new pharmaceutical, every new cigar (think new blends or sizes) introduced after February 15, 2007 would have to go through an FDA review process.  The cost of doing so would put all but a few of the very biggest cigar makers out of business and change the face of the industry forever.
2. Warning Labels: With government warning labels covering 30% of every cigar box, the beautiful imagery and colors used to create cigar boxes would be a thing of the past.  Cigar stores would never look the same.

One of the beautiful things about cigar culture is how we look forward to and appreciate the artistry and craftsmanship that goes into “what’s new,” while at the same time respecting and appreciating the centuries of history that have brought us to today. As Scott Pearce, Executive Director of the PCA stated, that all could have gone away with “the stroke of a bureaucrat’s pen.”

Thankfully, the industry’s three big associations, the Premium Cigar Association, Cigar Rights of America and the Cigar Association of America joined suit against the FDA and Wednesday’s ruling was the result of a seven year legal battle led by Michael Edney, Partner at Hunton Andrews Kurth.

In a recent Facebook Live interview hosted by the PCA, Mr. Edney reflected on the victory and how “the FDA’s regulation posed an existential threat to the premium cigar industry, its retailers and manufacturers… There’s no question that Wednesday was a great day for handmade premium cigars. It was a great day for the mom and pop corner store tobacconists that have educated consumers for generations… It was a great day for the family owned businesses that have practiced the art of making these cigars for decades and centuries, and it could have been very different if this FDA regulation was allowed to come into effect and to stand.”

According to Mr. Edney, we would not have won were it not for the efforts of the PCA and others to propose Option 2 and provide substantial evidence refuting the FDA’s assertion that handmade premium cigars are used by minors and have a similar use pattern to cigarettes. Our industry is a responsible one… we do not sell or market to kids, and the overwhelming majority of people who enjoy handmade cigars do so in moderation.

Wednesday’s ruling also means premium cigars will be exempt from the Manufacturing Proposed Rule we wrote about in last week’s Brief. The only real gray area is if a manufacturer produces both premium and non-premium cigars if they will have to comply.

While we should all take a moment to celebrate this historic victory (and smoke a premium handmade cigar, of course) we can’t take our eye off the ball.  The premium cigar industry remains regulated by several other federal agencies, as well as state laws. The FDA has the right to appeal Judge Mehta’s decision within 60 days to a higher court, or could choose to start from scratch and create regulations specific to premium cigars.

If you haven’t already, you can visit CigarAction.org to stay apprised of regulations in your state and get involved.  Now let’s get back to celebrating!