While cigar manufacturers, retailers and smokers are still trying to grasp the impact of new regulations about to go into effect, it turns out the new rules could have been a lot worse—particularly for flavored cigars.

On May 5, the U.S. Food & Drug Administration (FDA) announced its plans to regulate cigars and other tobacco products. These new rules are part of what’s informally known as the deeming regulations. While the regulations were published a month ago, they’ve been in the works for many years.

(For more information regarding FDA’s regulation of premium cigars, visit halfwheel.com/fda.)

Part of that process includes submitting the potential regulations to the White House Office of Management and Budget (OMB), an executive agency that oversees any new rule proposed by an executive agency like FDA. The primary purpose of OMB is to review the cost of potential regulations for both the public and private sectors. As part of its review, OMB oftentimes makes changes to the rules before they are published and go into effect.

A document that shows FDA’s original proposed rules and the changes made by OMB indicates that FDA wanted to put in place harsher restrictions for flavored tobacco products, including flavored cigars.

Removed from the proposed document was 17 pages (Pg. 167-183) that would have drastically changed the approval process for flavored tobacco products. The new rules will require warning labels, regulate advertising, restrict free samples and enact user fees for cigars—but the largest impact is that any new product introduced after Aug. 8, 2016 will be required to apply for approval from FDA before it can be sold on U.S. shelves.

Any cigar that was actively sold as of Feb. 15, 2007 and has remained on the market since is grandfathered and not subject to the same approval process.

A cigar introduced after Feb. 15, 2007 but prior to Aug. 8, 2016—the day the rules go into effect—will be able to stay on the market for at least two years before it will be required to submit a report for substantial equivalence. While FDA reviews this report, a company can continue to sell the cigar until FDA rejects the application.

Under FDA’s original proposal, flavored cigars and other flavored tobacco product would not get the same treatment.

Any tobacco product containing “characterizing flavors” that was on the market as of Feb. 15, 2007 would be able to still use the grandfather provision, but products that were introduced after Feb. 15, 2007, but prior to Aug. 8, 2016 would not. Instead, manufacturers of these products would have had an additional 90 days from Aug. 8 to continue selling these products—until Nov. 6, 2016—but then would have been required to stop selling these products until after they were granted FDA approval, a process that is supposed to take only 180 days but could take years, particularly as FDA deals with a flood of likely thousands of new applications. (22-23)

Ultimately, OMB removed these provisions.

The debate about what constitutes a “characterizing flavor” is one that remains a contentious issue between FDA and tobacco companies. While FDA gave some further guidance, it ultimately declined to specifically define “characterizing flavor,” It did however provide a brief explanation and a phone number (168):

FDA will consider, for purposes of deciding whether its premarket review compliance policy applies, a flavored product to be one that contains a characterizing flavor. Regarding what we mean by a “characterizing flavor,” we note that this term is also used in section 907(a)(1)(A) of the FD&C Act, although it is only defined in fairly general terms there. As with section 907(a)(1)(A), we consider menthol and tobacco flavor to be “characterizing flavors.”15 Some flavors noted by commenters as currently available are discussed in section V.B.4 of this document, and these would likely be characterizing flavors.

Among the factors that FDA would consider in determining whether a product has characterizing flavor are: whether the manufacturer or retailer is representing, through product labeling, advertising, or other means that the product has a characterizing flavor; whether the product elicits a characterizing flavor sensory perception; or whether the product contains chemicals or additives that produce a characterizing flavor for the tobacco product. If needed, the agency will offer additional guidance on this compliance policy. If you have questions about an individual product, please contact CTP at 1-877-CTP-1373.

It’s important to note that while these regulations are mainly targeted at little cigars and cigarillos—Black & Mild, Phillies and Swisher Sweets were mentioned by name (178)—the agency would likely attempt to apply these restrictions to any non-grandfathered flavored/infused cigar like certain ACIDs, Baccarat, Javas and Tatianas. FDA also indicated it believes based on other data that 53.3 percent of cigar sales are that of flavored cigars, once again, this is likely largely small cigars and little cigars. (174)

Ultimately, these pages were removed in their entirety replaced by language like the following, “FDA is announcing that it intends in the future to issue a proposed product standard that would, if finalized, eliminate characterizing flavors in all cigars including cigarillos and little cigars.”

Other smaller changes were made to the proposed rule.

Special provisions have been established for small-scale tobacco product manufacturers that would allow for an additional six months of compliance time for some restrictions. Changes made to the document show the agency originally intended to define these manufacturers as those with 20 or fewer full-time employees and no more than $750,000 in annual revenue. The finalized rule changed that number to no more than 150 full-time employees and $5 million in annual revenue. (28) Economic analysis shows the agency estimates this will change the number of companies qualifying under this provision from 47 to 75. (498)

A paragraph was added that helped to clarify how the agency believes manufacturers of cigars will be able to use the substantial equivalence pathway, a form of approval process, in regards to blending changes. (99) Numerous modifications were also made in regards to further clarifying that the agency will issue further guidance for harmful and potentially harmful constituents testing (HPHC), something that will be part of a substantial equivalence report. (100) The most pertinent part of the clarification is that the agency will not require manufacturers to submit all testing reports until after further guidance has been issued on the matter.

There were minor changes made to the section dealing with why the agency decided to regulate premium cigars. Almost all of these changes dealt with citing additional studies or explaining various studies in further detail. In some cases changes were made to language regarding how harmful cigars are. For example, FDA originally stated, “because all cigars are inherently dangerous” which was changed to “the Agency has determined that cigar use presents health risks.” (237)

On one page a change was made to a line that seemingly would have exempted cigar advertisements from warning labels. (391) It seems that line might have been an oversight as the rest of the document shows language that indicates cigar advertisements would be subject to restriction and most of that language remains unchanged. In the finalized rule, FDA announced plans that will require all cigar advertisement to have a warning label.

Many changes were simple corrections of styling—whether to spell out five or use the numeral 5—while others were expanding on explanations, like why FDA believes it does not have the authority to change the grandfather date from Feb. 15, 2007 to a later date. (88)

Ultimately, the document does little to settle the debate on what a “characterizing flavor” is, but it does show FDA’s desire to further regulate these products. It also show that while OMB did not choose Option Two, a pathway that would have exempted premium cigars from FDA regulation, it did make changes that will greatly benefit at least some cigar manufacturers.

For the cigar industry, HPHC testing requirements remains the greatest uncertainty. Once the agency issues that guidance—something that does not have a firm deadline—the costs of regulation will become much clearer.

Note: All citations in parentheses refer to TAB B 2014-850 Deeming Final Rule Redline Changes, which can be viewed here.

For more information regarding FDA’s regulation of premium cigars, visit halfwheel.com/fda.

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Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.