Cigar Organizations File For FDA Relief

Cigar Organizations File For FDA Relief
“Our industry is known for its beautiful artwork that has been unchanged, in some cases, for generations. To take 30 percent of that space for a warning label would destroy the beauty of the product.” - Craig Cass

The three leading cigar industry lobbying organizations have filed legal motions seeking preliminary relief from upcoming FDA restrictions on selling cigars, particularly user fees as well as those that call for large warning labels to be placed on cigar boxes, advertisements, even, in some cases, the cigars themselves.

The Cigar Association of America, International Premium Cigar & Pipe Retailers association and the Cigar Rights of America have filed a motion for preliminary injunction and a motion for partial summary judgment against the U.S. Food and Drug Administration, including its head Dr. Scott Gottlieb. The motions were filed on October 3 in the U.S. District Court for the District of Columbia. 

In the motion for partial summary judgment, the cigar industry is asking for, among other things, the FDA to vacate costly user fees and set aside the warning requirements scheduled to go into effect on August 10, 2018.

The government’s response is due by October 24.

While many aspects to the FDA regulations on cigars have been pushed back, the ones calling for extensive warning labels—labels that cover 30 percent of a cigar box, and 20 percent of an advertisement—have not. They are scheduled to take effect roughly 10 months from today. 

Those warning labels, if left unchecked, will be large, far larger than what appears now on cigarette packaging. 

The FDA has called for a “substantially more onerous health warnings regime on cigars and pipe tobacco than what currently applies to cigarettes,” said the Motion for Preliminary Injunction, which points out that current cigarette warnings call for only one warning label on the side panel of a cigarette package, covering around 4.8 percent of the package. The new FDA warnings for cigars will cover at least 30 percent of the two principal display panels of a cigar box. (For more, read New FDA Warnings Labels Explained.)

In addition to calling the larger cigar warning labels a “violation of the First Amendment,” the injunction states that the warning scheme “imposes greater burdens on cigars and pipe tobacco than cigarettes, despite the fact that the agency recognizes that cigarettes carry a greater public health risk.” 

From a business standpoint, changing packaging on a cigar is an arduous, expensive and time-consuming process. 

“There’s a variety of business reasons why this is pertinent,” says Craig Cass, an IPCPR executive committee member and the owner of the Tinderbox of The Carolinas chain of cigar stores. “Manufacturers have to order boxes, bands, etcetera,  well in advance of that 2018 date, and, in fact, it has been quoted to be a nine month or longer lead time.  That is why this is timely.”

In addition to the cost and time involved, the final look of the product will be severely impacted.

“Our industry is known for its beautiful artwork that has been unchanged, in some cases, for generations. To take 30 percent of that space for a warning label would destroy the beauty of the product,” says Cass.

While the Motion for Partial Summary Judgment filed today furthers the cigar industry’s argument for the warning requirements on cigars to be vacated, it also asks the court to set aside the controversial User Fee Rule outlined in the FDA’s Final Deeming Rule. 

Since October 2016, cigar manufacturers and importers, in accordance with the FDA’s controversial Final Deeming Rule, have been required to submit federal excise tax information to the FDA on a monthly basis. The FDA, in turn, analyzes this data to calculate user fees for cigar companies, which are paid on a quarterly basis. Cigar companies pay the user fees directly to the FDA, and those payments are the sole source of funding for the Center of Tobacco Products, the branch of the FDA responsible for carrying out tobacco regulation activities. (For more on how user fees work, see FDA User Fees Mean More Costs For Cigar Companies.)

User fees are also collected from manufacturers and importers of cigarettes, snuff, roll-your-own tobacco, and pipe tobacco, but not e-cigarette manufacturers. The Partial Summary Judgment filed today argues that “charging only some regulated products turns what Congress designated as a ‘user fee’ into a ‘tax,’ which the FDA lacks the authority to do.”

“[E-cigarettes] are getting regulated, but they don’t have to pay for it,” says Michael Edney, a partner at Norton Rose Fulbright, the law firm representing the cigar lobbying groups. “If you look to the future, this will become a big deal because the e-cigarette market is booming.”

In other words, the user fees that the FDA collects from other tobacco products will not be enough to cover the regulation costs for e-cigarettes, which has grown into a multibillion dollar market.

“It’s not only unfair, it’s unstable,” says Edney. “It’s likely to upend the entire regulatory system.”

The documents filed also included moves to ease the restrictions on selling pipes and blended pipe tobacco.