Trade organizations representing cigar manufacturers and vendors are suing the U.S. Food and Drug Administration (FDA) over a regulatory expansion the agency enacted in 2016.
In July 2017, lawyers for Cigar Rights of America, a nonprofit public advocacy organization representing cigar consumers’ interests, will present their case in the U.S. District Court for the District of Columbia, challenging FDA’s expansion of tobacco regulatory powers in 2016.
In August 2016, FDA declared regulatory powers granted by lawmakers in 2009 to restrict cigarette sales also include products that are not cigarettes, such as e-cigarettes and cigars.
Expanding Power Without Authority
Paul Blair, state government affairs manager for Americans for Tax Reform, says FDA has expanded its power beyond what Congress intended.
“In 2009, Congress passed the Tobacco Control Act,” Blair said. “At the time, it was confined to cigarettes [and] roll-your-own and smokeless tobacco. Cigars were not included. Largely as a result of the growth of e-cigarettes in the industry, the thinking in the FDA was that they had the authority to extend the application of those regulations to include cigars. What that sets the cigar industry up for is the harmful impact of regulations.”
Asking Permission to Exist
Blair says the new rule effectively requires cigar manufacturers to ask FDA for permission to make new products and to continue to sell existing products.
“The worst part is, it’s not just if you are bringing new products to market,” Blair said. “If you already have a product on the market, you might have to get approval to continue to sell it. It’s one thing to pick winners and losers when new products are presented; it’s another thing to set the cigar and vaping industries up for a look-back period to approve their existing products. What cigar makers will have to do is to get permission retroactively for products already on the market. It’s a huge overreach by the FDA.”
Prohibition, Not Regulation
Blair says the regulations are intended to impose difficulties on cigar manufacturers.
“This is prohibition passed under the guise of regulation,” Blair said. “If they wanted to claim that this was regulation aimed at protecting consumers, they would have done things like ensuring safer manufacturing processes. They didn’t do that. All they said is, ‘You have to get permission from us to continue to sell any product introduced since 2007.'”
Lindsey Stroud, a government relations coordinator for The Heartland Institute, which publishes Budget & Tax News, says FDA is bullying legitimate businesses.
“‘Federal thugs’ is an apt description for essentially what the FDA is doing right now,” Stroud said. “There will also be further costs for required warning packaging and displays, as well as costs to businesses in order to comply with the reporting of tax data and advertising plans. A large cost is the imposition of user fees, which have been paid for other tobacco products the FDA regulates.”
Bigger Burden on Consumers
Stroud says the costs of regulation will be passed along to consumers, leaving them with less money in their wallets.
“These fees are determined by the excise taxes paid,” Stroud said. “The FDA is estimating that of the $5.88 billion in excise taxes that were generated by tobacco in 2016, cigars will pay $641.2 million, which will equate to $65.3 million in user fees. Ultimately the cigar industry will have to raise prices of their products in order to remain financially solvent, as the costs of their products are now going up.”