Yesterday, the U.S. District Court for the District of Columbia ruled that the U.S. Food & Drug Administration’s premarket approval deadline of Sept. 9, 2020 did not apply for “premium cigars.” The ruling is the latest development in the cigar industry’s fight against FDA and its 2016 deeming regulations.
Judge Amit P. Mehta granted relief for the cigar industry in Cigar Association of America et al. v. United States Food and Drug Administration et al. and is forcing FDA to reevaluate whether it should create a more streamlined process for premium cigars to apply for substantial equivalence.
For more on the details of what happened, click here. But as is customary, here are some thoughts about yesterday’s decision.
1. THIS IS TEMPORARY
The first thing that you must know is that the effect of yesterday’s news is temporary.
Mehta only ruled that FDA can’t enforce the premarket approval regulations for premium cigars until after it further evaluates the issue. It is not permanent relief saying FDA can’t require premarket approval.
The obvious question is then: how long will this temporary reprieve last?
And for those of you that have read one of these post-FDA news editorials before, the predictable answer is: who knows.
Given the rate at which FDA typically works, the agency’s approach to premium cigars and the immediate focus on e-cigarette and vaping products—whose premarket approval applications are now starting to be submitted to the agency—I suspect at least a couple of years.
It would be a very surprising turn event to see FDA announcing, let alone enforcing, the premarket approval regulations for premium cigars within a year.
2. THIS IS GOOD NEWS, NOT GREAT NEWS
Some of the celebrations, particularly from some people, seem really weird to me.
It’s not that this isn’t good news. It absolutely is.
The weird part is that many people were pushing for an exemption from all regulations up until August 2016. Once the regulations hit, those same people were now advocating for modified regulations. Then FDA announced its ANPRMs to further study the issues and people were back to exemption or bust. Earlier this month, FDA announced that it was going to do deferment and those people were pissed. And now those same people are celebrating?
This is good news for a variety of reasons, but this is just another instance—with some caveats—where the regulations get delayed.
It is not an exemption from the regulations as a whole, it is not an exemption from the premarket approval process; it may not even be an exemption from the existing substantial equivalence process. It could end up being just a delay.
The major difference between this delay and others before it is that Mehta ruled that FDA didn’t effectively consider whether premium cigars were different, though once again, he’s not requiring FDA to come to that conclusion. Furthermore, there is now a working definition from FDA about what is a “premium cigar,” though, that could all be moot if FDA decides, once again, to regulate premium cigars the same as all cigars.
3. THIS ONLY AFFECTS PRODUCT APPROVAL, PREMIUM CIGARS ARE STILL REGULATED
Yesterday’s decision only dealt with the timeline, and potentially the process, of product approval for cigars. It does not mean cigars are no longer regulated.
This means that companies are still required to pay user fees to FDA’s Center for Tobacco Products, age restrictions are still into effect and stores can still be visited by FDA inspectors to ensure that retailers are in compliance with age restrictions. Domestic manufacturers and importers are also still subject to visits by FDA inspectors.
4. THE ELECTION OUTCOME WILL LIKELY INFLUENCE THE TIMELINE, THOUGH WE WILL NEVER KNOW
If Trump wins, I suspect the cigar industry will not only get more time, but more room to negotiate with FDA if that’s what it chooses to do. The pessimist in me says that if Trump wins we will once again see lots of time and money by some poured into lobbying for a full exemption. An exemption is an admirable cause but it should not be something the industry expects to be granted given the first 3 1/2 years of the Trump administration has resulted in no exemption.
If Joe Biden were to win, I imagine that would mean FDA would likely want to speed up the process before the next anti-regulation president takes office.
How much faster it goes is something that no one, including FDA, will probably ever know. That is, unless you have access to a machine that lets you see into alternate universes, in which case: please leave a comment because I’d like to at least see an alternate 2020.
But if the only thing that matters to you is the regulation of premium cigars in America, you almost certainly want Donald Trump to remain president.
5. IF YOU ARE A CONSUMER THIS HAD LITTLE EFFECT ON YOUR CIGAR WORLD
Unlike the courts’ decisions to prohibit FDA from requiring warning labels on cigar packaging and advertising—something that if it had gone into effect would have been very noticeable to consumers—yesterday’s decision is unlikely to make a difference in the world of most consumers.
The reality is FDA’s regulations haven’t really affected the ability of cigar companies to put out new products.
It’s also the case that FDA regulations have had little effect in the doomsday scenario that was described as thousands of cigars being forcefully removed from the market. And for some savy consumers, a chance to buy lots of cigars at big discounts due to a firesale.
That scenario, I suppose, was on the table and could have begun as early as September 2021, though even that seems somewhat dubious given both FDA’s actions up until this point and the Department of Justice attorney’s descriptions of how FDA is regulating in the status quo.
And despite claims to the contrary, the costliest part of the regulations—testing for harmful and potentially harmful constituents (HPHCs)—was not really affected by yesterday’s ruling. I would imagine that yesterday’s ruling only further delays something that is already indefinitely delayed.
But if you are consumer wondering if your local store’s humidor was going to look different on Sept. 9 without this ruling, the answer is very clear: no. Just like the humidor didn’t really look any different between Aug. 7, 2016 and Aug. 9, 2016.
6. IS IT LEGAL TO COME OUT WITH NEW CIGARS NOW?
I’m not sure, but I also don’t think it matters.
FDA isn’t really trying to stop companies from putting out new products. It’s not completely ignoring cigars—many companies have complained about boxes and cigars opened by FDA inspectors on import—but it’s also not asking why a cigar company is putting out something with the words “Limited Edition 2020” on it. And it seems very unlikely it’s going to start doing that anytime soon.
I do think that there is a legal pathway where someone could argue that Mehta’s order to prohibit FDA from enforcing the premarket approval for “premium cigars” could open the door for any new cigar to be introduced without FDA approval so long as it meant that definition. Basically, that FDA created an unintentional loophole where “premium cigars” are not subject to the premarket approval requirement of any kind at the moment. I would imagine that FDA’s position on this is that Mehta’s ruling didn’t do that and just meant that the grace period for products introduced after Feb. 15, 2007 but before Aug. 8, 2016 has been extended indefinitely, but that products introduced after Aug. 8, 2016 would require premarket approval even if FDA is not allowed to do the premarket approval process at the moment.
That would potentially open up the door for someone to argue that FDA has basically made it impossible for anyone to legally start a new cigar company until after the review of the premarket approval process has finished. Would that be successful? I don’t know.
But practically, none of this seems to matter. Cigar companies are likely to continue to do what they’ve been doing all along and FDA is likely to continue to look the other way.
7. WHAT CIGARS AREN’T INCLUDED AS “PREMIUM” CIGARS?
Almost everything in the humidor of your local cigar store will be fine for the time being.
The notable exceptions are flavored or infused cigars that aren’t grandfathered (i.e., were not marketed prior to Feb. 15, 2007) and potentially some cigars that are produced by J.C. Newman using vintage machines in Tampa, Fla. that aren’t grandfathered. Some other companies make larger machine-made cigars, but those products aren’t sold in most stores in the U.S.
Some people have asked me if cigars that are bunched via a Lieberman machine would be excluded by yesterday’s announcement because they are not bunched by hand. My understanding is that those cigars will be fine because a Lieberman machine—despite the name—functions more as a tool and a human is still necessary to operate it at every step.
Others have asked if the weight requirement—a minimum of 6 pounds per 1,000 cigars—would affect any cigars. The answer to that is also no as even the smallest petit coronas weigh well over the threshold.
The final area is the characterizing flavors. Some cigar makers definitely add things to the dried tobacco other than pure water. Pepper, oils, sugar, salt, etc. If you can think of it, someone has probably tried mixing it with water and then dunking tobacco in it to see what happens.
It’s not entirely clear to me what FDA’s views are on this in the context of whether that would be a characterizing flavor, but unless someone sends video of a worker dumping a 10-pound bag of sugar into water that is then going to be used to wet tobacco, I’m not really sure how FDA is ever going to attempt to regulate this as part of yesterday’s court ruling.
All companies need to do is look at the requirements for what’s considered to be a “premium cigar” and determine whether or not their products meet the requirements. If the companies think they do, they don’t have to file any paperwork with FDA. Meaning that in order to get in trouble, it would need to look something like this: FDA thinks that a certain cigar might not be premium, FDA checks to see if the company has filed for premarket approval, FDA concludes it has not, FDA determines that the product is not in compliance, FDA begins the process of notifying the company and retailers that the product must be removed from the market.
In short, so long as a cigar looks like it is premium and doesn’t smell flavored, I have no idea how FDA would go about considering whether it should be removed from the market. And that’s assuming a world where FDA wants to spend resources on doing this, which it does not.
8. THE APPEAL(S)
There is almost certainly going to be an appeal of Mehta’s decision by machine-made cigar companies or the Cigar Association of America on their behalf. This is the same action that was taken earlier this year when Mehta ruled that warning labels for premium cigars and pipe tobacco were illegal. The decision was appealed and the ruling was overturned to include all cigars.
The stakes are rather different this time around and I imagine that FDA will want to fight this more than the warning label requirements, which honestly were somewhat of a moot point practically for some of the most popular machine-made cigars.
We are likely to get some clarity on this shortly as whoever tries to get this decision appealed will likely ask for an emergency ruling given the looming Sept. 9 substantial equivalence deadline which applies for all cigars that are neither grandfathered nor considered “premium.”
9. JUDGE MEHTA’S ONGOING ROLE
Judge Mehta continues to side with the cigar industry regarding accusations that FDA is treating it unfairly. And one of the smaller tidbits that should be celebrated is that barring a retirement or a promotion for Mehta, he’s going to continue to have a say in this process if the cigar industry is unhappy with what FDA decides to do.
He has not always ruled in favor of the industry in these disputes, oftentimes citing his inability to find a legal rationale for doing so. Another example of this took place in yesterday’s ruling where he agreed with claims that the Feb. 15, 2007 grandfather date seemed arbitrary but concluded that the cigar industry needs to take up that issue with Congress—which set the date—and not FDA, which is following Congress’ orders.
But the good news—particularly as it pertains to the future of whatever FDA does with the premarket approval process—is that if the cigar industry has issues with the outcome, it will go back in front of a judge who both understands the issues and is sympathetic to the industry’s arguments.
I’d also argue that—in my very limited legal knowledge—Mehta has always come across as both incredibly smart and very fair. I’ve gotten the sense that when Metha delivers a decision, it’s one that is very thought out. He has repeatedly taken the time to explore moonshot arguments from both sides, he is not afraid to express his opinions, but ultimately, he returns to the law. There are judges that would inevitably be more favorable to the cigar industry’s cause, but those same judges are likely to deliver decisions that are more challenging to uphold and extremely difficult to predict.
10. THE CIGAR INDUSTRY REALLY NEEDS TO FIGURE OUT WHAT REALISTIC OUTCOME IT WANTS
I would pair the above thoughts about Mehta with the following argument.
The premium cigar industry needs to figure out how it wants this to end, within reason.
It’s not that the legal strategy is the issue, it’s the whole strategy for dealing with regulations isn’t fully formed. Most people that own cigar businesses have no idea what the collective industry is trying to accomplish beyond the aspirational hope of exemption. I know this because I get emails, texts and phone calls from these people. And, more pointedly, because the industry has not sat down and tried to formulate one.
And that’s also one of the biggest differences between how our industry fights regulation and how other industries fight regulation. Or at least as far as I can tell. What has been done is various actors have opted for their own approaches, some of which are in conflict with others. Even this lawsuit—filed by three cigar trade groups—no longer has a unified strategy as the Cigar Association of America is routinely opposed to the interests of the Cigar Rights of America and the Premium Cigar Association. And outside of the companies who are stakeholders or decisionmakers in these respective organizations, the rest of the industry is mostly on the sidelines: both from having a say in the decisions and the direct funding of the legal efforts.
There really should be a broad strategy that is at least presented to and voted on by the owners of companies, big and small. They will not unanimously agree; just like the cigarette companies don’t always agree, the car companies don’t always agree or the NFL players don’t always agree. But there at least needs to be some sort of attempt at trying to find a main strategy for the industry. And if singular players want to deviate from that strategy, that’s fine, it’s everyone’s right. But the industry hasn’t even had the meeting to discuss what the strategy is and most of the stakeholders have no idea. Step four (hire a legal team and fight FDA in courts) is well underway, but the industry skipped step zero (ask everyone what it would like to see happen.)
And the problem is now is not an abstract one. Not only do most people in the cigar industry not have an understanding of the broad strategy, they don’t even really understand what’s happening.
Poor education leads to poor decisions, which will likely lead to worse outcomes. And the industry is about to have another say at trying to give FDA feeback on what it thinks is reasonable, something that has previously led to high-profile public disagreements within the industry.
Whether formally in the comments section of the upcoming review of substantial equivalence for premium cigars or informally in private meetings with FDA, it would be best to have as many cigar businesses and people in the cigar industry delivering one message.
Yesterday’s ruling was a guarantee of more time—not a promise of a specific duration of time—and a guarantee to at least consider another way forward. As I’ve argued countless times before, it mostly goes to waste if the cigar industry doesn’t use this time to try to work with FDA to craft a set of regulations that most the industry can live and prosper under.
Because if there was one thing yesterday’s decision did not do, it certainly didn’t put an end to the regulation of premium cigars by the U.S. Food & Drug Administration.