The U.S. House of Representatives passed a bill last Friday that aspires to curtail youth use of tobacco products with strict new regulations, including banning all flavored tobacco products as well as Internet and catalog sales of all tobacco products. One tobacco segment, however, is exempt from the new rules: premium cigars.
For the first time ever, the House officially recognized that premium cigars are a unique tobacco category as they passed H.R. 2339, the Reversing the Youth Tobacco Epidemic Act, by a vote of 213 to 195, with 22 members abstaining. Rep. Frank Pallone Jr. (D-NJ) first filed the bill last April, and then in November an exemption for premium cigars was added.
“Although it is not perfect, this is a historic bill and a huge step forward for the premium cigar industry,” said Drew Newman, general counsel of J.C. Newman Cigar Co., America’s oldest family-owned premium cigar company. “For the first time, the U.S. House of Representatives has recognized that premium cigars are unique, are not used by children and should be exempt from unnecessary regulation.”
The bill carves out an exemption for premium cigars from not only the online tobacco sales ban, but also the costly premarket review process known as Substantial Equivalence.
Substantial Equivalence is one of the three pathways to product approval that the FDA established when it published its Final Deeming Rule in May 2016. According to the FDA, a cigar manufacturer must file an SE report to show that a new tobacco product has similar characteristics to a grandfathered (predicate) tobacco product, or has different characteristics, but doesn't raise any new questions of public health. A predicate tobacco product is one that was on the market on February 15, 2007.
The bill, however, is not a complete win for the premium, handmade cigar industry. Included in H.R. 2339 is a federal definition of premium cigar that includes a minimum retail price of $12 per cigar. According to the FDA’s own data, fewer than 25 percent of all handmade cigars would fall into this price.
A quick search of the Cigar Aficionado and Cigar Insider ratings database corroborates the FDA’s data. From March 2015 to the present, we rated 3,871 cigars in total. Of that amount, 2,579 cigars carry a suggested retail price of $12 or less, or roughly 67 percent.
“This bill facilitates the recognition that there is, in fact, a class of cigars recognized as ‘premium,’ ” said Glynn Loope, executive director of Cigar Rights of America. “However, an arbitrary price point does nothing to highlight these unique differences and only serves to cause confusion, which ultimately will lead to economic harm to the premium cigar industry."
In addition, H.R. 2339 does not exempt premium cigars from existing rules on cigarette advertising and marketing, meaning branded ashtrays, lighters and shirts, as well as sponsored events and cigar festivals, would be illegal.
“The bill’s minimum price and advertising and marketing restrictions would severely harm the premium cigar industry,” said Newman.
“It is important for the association to send a loud and clear message that we appreciate efforts made to distinguish premium cigars from other tobacco products, but we cannot support or remain neutral to provisions that will cripple the industry and eliminate significant lines of business for our member,” said Scott Pearce, Premium Cigar Association executive director.
The bill will now move on to the Senate, however, according to industry members, it is highly doubtful that it will pass that chamber.