36
TOBACCO OUTLET BUSINESS
NOVEMBER/DECEMBER 2012
heard, thanks to very well-publicized
legislation introduced in both the U.S.
House of Representatives (H.R. 1639)
and Senate (S. 1461) that seeks to keep
premium and traditional cigars exempt
from FDA regulation. In support of its
position, cigar manufacturers first drew
legislators’ attention to the fact that kids
are less likely to consider buying $10
(
premium) cigars, meaning regulation
wasn’t as crucial as it was for other tobacco
products that had more attractive price
points for youths.
But thatperspective frommanufacturers
was only the beginning. The backup for
protecting premium cigars is being told
by retailers and consumers, too.According
to Loope, “221,000 consumer emails are
going to Congress regarding the issue; 12
months ago there were 30,000.”
From the retail perspective, “we’ve
had members sign on just because there
was one cigar shop in that congressional
district making a request; they never asked
for anything,and now they are,”maintains
Loope. “Each shop represents thousands
of cigar smokers, and for the first time,
their story is being told. Cigar smokers
can flip an election.”
“
CIGAR GUYS” RECOGNITION
Indeed, the legislation has received
such good press, and Loope and the
CRA have been so vigilant about getting
their point across that “now when we
walk in [to a legislative meeting] we are
instantly met with recognition—they
say, ‘oh, the cigar guys are here’,” relays
Loope.
Since meeting with the FDA at press
time, the CRA and the whole industry
team effort was able to amass 221
members of Congress to co-sponsor
HR 1639, according to Loope, “and
both of the last two were democrats.”
What’s more, “there are now 40 states
represented on this legislation,” he says.
The hope, of course, is to get the
legislation attached to a bill and have
it go through Congress before the
election, but Loope says he recognizes
that “its very existence is serving tangible
political purpose” for the industry.
Preparing for it to not go through is
part of the offensive strategy. Assuming
it doesn’t go through, “within days of
the election we will be scouring to re-
sign-up existing or looking for new
co-sponsors,” Loope says. He advises
retailers and consumers to be at the
ready, too, to call, write or speak to any
new members of Congress and “tell
them you expect them to sign HR 1639.
Or call an old member if they’re not
signed on.”
By now, many in the cigar industry
are aware that the CRA provides all
cigar-related news, legislation and
information, categorized by state, on
its website,
www.cigarrights.org
. It
encourages all interested parties to
sign the petition (it only takes three
minutes), become a member (for less
than $3 a month) and/or to spread the
word (by referring a friend) on its “get
involved” tab.
Loope says it’s important that the
industry stay focused, and not just
on immediate issues, but on what’s
potentially coming up for 2013.
“
The simultaneous opening of 35 state
legislatures in January will undoubtedly
bring incredible ways to pass new smoking
bans and state tax issues,” he offers.
“
They’re always coming up with new and
creative ways to make us miserable, and
the industry has to stay engaged as much
as it can on both state and federal levels.
We keep every state in the country posted
on our website.”
ToB
PHILIP MORRIS VS. AGRICULTURE
In other legislative cigar news, the Cigar Association of America, Inc.
(
CAA) reported that Philip Morris sued the Agriculture Department
in federal court in Richmond, Va. in September, seeking to force
the government to change the formula it used to calculate industry
assessments under the tobacco buyout program, which raises about
$1 billion per year.
In a letter to CAA members, President Craig P. Williamson says
that under the current formula, the cigar industry pays approximately
$100 million per year, yet under the Philip Morris formula, that
amount would increase to at least $250 million per year.
“
Since the government gets a fixed amount of money under the
buyout program, any increase in cigar industry assessments results
in an almost equal decrease in cigarette industry assessments,” he
writes. “In addition, while the buyout expires in 2014, the buyout
formula is also used to calculate FDA user fees, which in FY2013 are
approximately $500 million.”
Williamson asserts that Philip Morris’ long-range objective in the
litigation, therefore, is to shift user fee liability from cigarettes to
cigars for the indefinite future.
Aware of the “enormous financial impact” the case could have on the
cigar industry, CAA hired counsel and joined the case on the side of
the government, according to Williamson. In mid-September, the court
held a hearing on motions filed by the parties. “Counsel for Altria, the
government, and CAA all appeared before the court,” he reports. “The
court is expected to issue its decision by early November.”
Other industry executives are leery to speculate on-record about
the case, expecting there to be appeals and recognizing that “this
could only be the beginning.”