Eight Things: What the House Omnibus Bill Means for FDA Cigar Regulation

Well, nothing yet.

Earlier today, the U.S. House of Representatives passed an omnibus, a singular spending bill that contains a variety of spending bills that fund the U.S. government.

Included in it was language that would prevent the U.S. Food & Drug Administration (FDA) from receiving any funding for FY2018 if it regulated premium cigars, effectively meaning that it would exempt cigars from FDA regulation, at least for the moment.

That also included language that would change the predicate date from Feb. 15, 2007 to Aug. 8, 2016. This would mean that cigars, pipe tobacco, e-cigarettes and other products would be grandfathered so long as they were on the market by Aug. 8, 2016.

WHAT CHANGED TODAY?

Nothing.

Today was a step, a big step. But no deadlines were pushed back, nothing was exempted and cigars are still being regulated in the exact manner as they were yesterday.

WHAT’S NEXT?

The Senate and the House will have to work to find an agreement about what should be included in the final omnibus. It then would need to be signed by President Donald Trump.

This must happen by Dec. 8, otherwise the government would run out of money. If history is any indication, there will be some late nights during the first week of December as the omnibus historically goes down to the last minute.

The omnibus is sort of like a box of donuts, it’s a collection of 12 different funding bills ranging from the agriculture appropriations bill, where FDA gets its funding, to bills that fund the military, Medicaid and pretty much every other part of the federal government.

To continue the metaphor, both the House and Senate start with their own box of donuts, they will work towards combining that into one box.

Each will have their own versions of these individual 12 bills, the omnibus is the finalized version after they have been negotiated by both houses on both sides. The two chambers will come to an agreement for each of the 12 individual bills which text, either House or Senate, will be used as the starting point and then they will begin to negotiate out the details.

The goal is to make sure that the government gets funded. So the two chambers work together—and in good faith—that neither will hold up the finalized bill once it’s introduced.

Cigar smokers will want Congress to use the House text as the starting point for the agriculture part of the omnibus because it already passed with the language. If that happens, the industry will have to hope that cigar-friendly members of Congress can work to defend on keeping the language in the text. In this case, playing defense is said to be much easier than offense.

AND HOW LIKELY IS THIS?

No one really knows. I’ve been covering the omnibus for a few years and what’s very apparent is that: a. it’s difficult for most of these riders, i.e. special language in bills, to pass; and b. no one really knows which ones are included until the bill is presented for a vote.

This is the first time that either house of Congress has passed a bill that includes the exemption language as a complete body, which is a massive step forward compared to getting the language out of committee.

In short, it’s a better chance than any other time before, but all of those have failed.

BUT THIS IS ONLY SHORT TERM?

Yes. Technically it is only good for FY2018, which expires Oct. 1, 2018.  The language specifically says that FDA would be prevented from using funds in this bill if the agency still regulates cigars. As such, it only applies for FY2018.

However, the consensus is that once the language is passed, it’s challenging for it to be removed. There’s no guarantee that if it passes it will be included for FY2019, but the cigar industry would gladly play those odds.

AND IT WOULDN’T AFFECT ALL CIGARS?

Some small cigarillos might be left out of the exemption, but almost every cigar you find in a humidor, flavored or not, would be covered.

As for the predicate date, all cigars are included.

WHAT ABOUT PIPE TOBACCO?

Not included in the language for the exemption, but part of the predicate date.

WHAT WOULD HAPPEN IF IT PASSES THEN?

FDA wouldn’t be able to regulate cigars through Oct. 1, 2018. That means new product would be able to come into the market legally, no warning labels would be required and presumably user fees would not be owed for the period, though the latter isn’t clear.

There’s a slew of warning label deadlines scheduled for Aug. 10, 2018, those would be unenforceable until Oct. 1, 2018 at the latest.

It’s likely that the cigar industry trade groups will meet with FDA to discuss the potential impacts of this delay, as it could cause a massive headache for cigar makers, particularly if the potential exemption was not extended for FY2019.

In addition to the user fees, it’s unclear what would happen to new product. Cigar makers would be allowed to import and sell the product prior to Oct. 1, 2018, but after that, who knows. Without special guidance from FDA, it might very well be the case that a product could be legal on Sept. 30, but illegal on Oct. 1—all while it is sitting on the shelf at a store.

As for changing the predicate date, it seems likely that the change would be permanent.

HOW DOES THIS AFFECT THE LAWSUIT?

Today’s vote probably did little, though it didn’t hurt.

It certainly shows the cigar industry is in a better place than previously and this cannot be making the anti-tobacco groups happy.

If the language passes the final omnibus and becomes law, the lawsuit likely takes a very different turn. The cigar industry will have specific evidence to whether Congress’ intent is to have premium cigars regulated by the deeming regulations, and more importantly, they’ll have a lot of leverage.

Because the language wouldn’t be permanent, the long-term hope has to be negotiation with FDA, something the majority of industry leaders are open to. Between this, the short track record of new FDA leadership and the general nature of how the lawsuit has gone so far—those negotiations would be far more cigar friendly than 18 months ago.

Trying to avoid any regulation is likely a pipe dream at this point, but finding regulations the industry can live with is a very real possibility and would provide long-term stability.

Update — This story originally stated there were no changes for pipe tobacco. That’s not entirely accurate. It’s been updated with information about the grandfather date change.