FDA and Premium Cigars: An Overview
I think it's important to begin by addressing, who is responsible for regulating the premium cigar industry?I think many might be surprised to find out it's the U.S. Food and Drug Administration. On Aug. 8, 2016, the U.S. Food and Drug Administration's deeming regulations went into effect. This essentially marked the first day that FDA was formally regulating cigars. These deeming regulations have, and will continue to have a major impact on the premium cigar industry for years to come. The FDA regulations on the industry are complex and far reaching; in this article we aim to touch on some of the fundamental implications. The three main issues in the FDA’s regulatory efforts stem from warning labels, product approval, and user fees.
Lets first discuss the issue of product approvals. Prior to the FDA taking the reins on the regulation of premium cigars, the new product was able to flow freely into the market. This was a major benefit to the retailer, manufacturer and most importantly the consumer. With the FDA regulations, manufacturer’s are forced to seek FDA approval for each new product. The problem is compounded by a lack of clear guidance, costly testing and slow turnaround times on releasing new blends. The second issue stemming from the new regulations involving the FDA and premium cigars involves the actual packaging of the product. The FDA is wanting manufacturers to place warning labels on their products. Once again the FDA has been ambiguous on this regulation; if it goes into effect this will also become costly and reduce the attractiveness of the packaging. Many cigars companies spend time and money to create beautiful, collectible and unique packaging, that will be compromised by warning labels. Lastly, but not least we have the issue of user fees. The user fees will be used to fund the FDA’s regulation on the industry. The users fees are placed on the manufacturers, and will be passed onto the consumer; in the form of user fees being added to the wholesale cost of cigars. Luckily, the industry has done a great job of banding together in an effort to fight the FDA. In future posts we will aim to go into further detail on each of these issues and provide updates on how the battle for cigar rights develops.