The cigar industry has been challenging onerous regulation in court and through congressional lobbying, but to what effect? Tobacco Business spoke with Henry Roemer of the law firm Finger, Roemer, Brown & Mariani LLC for a progress report on how efforts
toward regulatory relief are playing out.
Tobacco Business: Can you briefly outline the status of the legislative efforts underway (i.e., H.R. 564 and S. 294) to protect the premium cigar industry from overzealous regulation? How likely do you feel it is that there will be progress made on the legislative front?
Henry Roemer: The industry made a strong effort in March to have the premium cigar exemption and the predicate date change language included in the omnibus spending bill. Although by some accounts it was close to succeeding, the effort failed. The industry remains ready to pursue the legislative solution to regulatory overreach; it is unclear, however, whether any further legislative action will take place on this issue until after the November midterm elections later this year. From now until the midterm elections, due to a number of factors, the issue may simply not come up for a vote.
Under the present circumstances, the industry needs to continue to work for the best but also to prepare for the worst. Specifically, under the present circumstances, while a hoped-for premium exemption and predicate date change might still be possible, the industry needs to focus on compliance with the various regulations.
Some of these efforts hang on singling out the premium cigar category for protection. What are the potential consequences of doing that for the broader industry? If premium cigars were exempted from the regulation, it would, of course, have benefits to the premium cigar industry. For example, not being encumbered by the sales and marketing restrictions or the burden of affixing health warnings would have a differential impact on those unregulated products. Not having to go through any premarket review process for “new” cigars would help maintain the variety so important to the industry. Premium cigars would also benefit if they are not required to pay user fees. The approximately $12 million to $14 million in user fees currently paid by the premium industry would, however, be spread over the other cigar companies that are paying user fees. Finally, exemption would benefit the retailers who sell premium cigars by allowing them to sell a wide variety of cigars and market them to adult consumers.
Multiple challenges have been filed in court against the U.S. Food and Drug Administration (FDA) by industry associations, as well as by retailers and manufacturers, charging the agency with violating the First Amendment and various acts. Where do those efforts stand? What’s your view of the likelihood of those efforts proceeding successfully? The primary challenge to the deeming regulations was the lawsuit filed on behalf of [the Cigar Association of America, Cigar Rights of America and the International Premium Cigar & Pipe Retailers Association] in July 2016 in Washington, D.C. While the lawsuit challenges the entire final rule deeming cigars to be subject to the Tobacco Control Act—including the premarket approval process, health warnings, user fees and many other provisions of the final rule—certain parts of the lawsuit have been deferred pending further FDA action.
During the course of the litigation, the FDA extended the premarket review deadlines and said that it would come out with a rule on content and format of premarket approval applications, and, as a result, the industry agreed to temporarily suspend that aspect of its legal challenge. The industry reserved the right to renew that challenge if the FDA’s purported clarity on premarket approval requirements and resulting decisions on the applications are not acceptable.