Report: FDA’s Flavored Cigar Ban Could Cost Retailers $4 Billion

According to the Cigar Association of America (CAA), FDA’s proposed ban on flavored cigars could retailers nearly $4 billion in retail sales and wipe out 16,000 jobs.

The CAA, an industry trade group, cites a 2022 study from the Policy Navigation Group, which estimated the impacts of FDA’s proposed nationwide ban on all flavored cigars.

In addition to the private sector losses, the group estimated it would cost the federal and local governments a combined $750 million in tax revenue. Policy Navigation Group says that the tax revenue loss breaks down as follows:

• $180 million — Loss of federal excise tax revenue
• $420 million — Loss of state and local excise tax revenue
• $150 million — Loss of state sales tax revenue

The $750 million figure is actually less than a study from the Tax Foundation, which estimated $836 million in lost tax revenue.

“Since almost no youth use flavored cigars, any reduction in youth usage as a result of the proposed ban would be almost nonexistent, “said David Ozgo, president of CAA, in a statement. “Thus, FDA proposes to crush a legitimate adult-focused industry, eliminate thousands of jobs, and sacrifice millions of dollars in tax revenue using the flimsiest of data. It is nothing less than a solution in search of a problem.”

Last April, the U.S. Food & Drug Administration (FDA) proposed a ban on the sale of all flavored cigars. The agency is still in the middle of a multi-year process before selling flavored cigars could be illegal at the federal level. So far, the agency has introduced a proposed rule and allowed for comments on the proposed rule. It now must take those comments under advisement as it crafts a final rule. The agency said that it plans on providing a one-year compliance period from the time the final rule is announced before it begins enforcing it, meaning the sale of flavored cigars will remain legal until January 2024 at the earliest.

That said, once the agency announces a final rule, it is likely to be met by lawsuit(s) that would almost certainly seek an injunction of the flavored cigar ban as a court reviews whether FDA’s final rule is legal.

At the same time it announced the proposed ban on flavored cigars, FDA announced a similar but separate proposal that would ban the sale of menthol cigarettes. The Tax Foundation estimates that could cost governments more than $6.5 billion in tax revenue.