Thursday, September 20, 2018
Business News

Temporary D.C. court injunction stops larger warning labels on cigar boxes

New tobacco regulations ordered by the Food and Drug Administration were close, but no cigar.

By Aug. 10, premium cigars were to be packaged in boxes with new, larger health warnings. The cigar industry says this is costly and ruins boxes considered works of art.

But on July 5, the United States District Court for the District of Columbia placed a temporary injunction on the regulation.

In Tampa, known as Cigar City for its history as an industry epicenter, the injunction was celebrated.

"This is a huge victory for Tampa’s cigar industry," said Drew Newman, general counsel of the 123-year-old J.C. Newman Cigar Co., operator of Tampa’s last premium cigar factory. "It helps preserve the status quo while the FDA reconsiders the regulation of premium cigars.

"It would cost millions of dollars for our family business and other premium cigar companies to redesign ... cigar boxes."

The proposed regulations call for warning labels to cover 30 percent of the two main display panels of cigar boxes — the outside top cover with its emphasis on the brand name, and the inside top cover where the most intricate artwork is typically placed.

Currently, warning labels cover about 5 percent of those areas.

RELATED: http://www.tampabay.com/news/humaninterest/big-new-warning-labels-may-doom-tampas-cigar-box-art/2293431

Among J.C. Newman president Eric Newman’s favorite boxes is Diamond Crown Julius Caeser. It is named in honor of his grandfather, company founder Julius Caeser Newman.

The inside cover of each box is adorned with a picture depicting a 20-year-old "J.C." Newman — his age when he founded the company — dressed in a purple toga and donning the fig leaf crown made famous by Roman Emperor Julius Caesar.

If not for the temporary injunction, in the short term, Newman said he would have slapped a "mask" — meaning a new warning label — over much of his grandfather’s picture.

He then would have had new boxes designed that would shrink or push his grandfather’s image into the corner to make way for a larger warning.

A new box design costs as much as $22,000, according to estimates by the trade organization Cigar Rights of America.

J.C. Newman currently offers 128 unique boxes.

Our "cost of complying with the new warning labels is estimated to be $2.8 million," counsel Drew Newman said.

The boutique operations that make up the bulk of Tampa’s current cigar industry likely have just one affordable choice — put the warning label over current cover designs, said Jeff Borysiewicz, co-founder of Cigar Rights of America.

"This regulation hurts the smallest guys the worst," he said.

In July 2016, Cigar Rights of America, along with Cigar Association of America and International Premium Cigar & Pipe Retailers Association, filed a lawsuit against the FDA to put a stop to the new labels by claiming this regulation was in violation of First Amendment rights.

The District of Columbia court ruled in favor of the FDA this past May but stated the regulation was "grossly unfair." Trade organizations filed an appeal in the Washington, D.C. circuit and requested the injunction.

According to the recent ruling, if the warning label regulations remain, premium cigar makers will have 60 days after the court decision to comply. No schedule has been set for an appeal.

The plaintiffs, reads the decision, "will have to incur millions of dollars in compliance costs, which they will not be able to recover if the warnings regime is determined to be unconstitutional."

These new warning labels are part of the FDA’s 2016 decision to regulate all cigars in the same manner as cigarettes.

It was also stipulated tobacco companies submit reports of the ingredients and manufacturing processes of cigars put on the market after February 2007.

The FDA estimates companies will spend $6,560 to $8,598 per cigar type to complete reports that may require lab testing.

J.C. Newman currently has over 600 cigars blends that need reports.

The premium cigar industry argues that it should not be regulated like non-premium stogies because their product — defined as using only natural tobacco and leaves and made by human hands — doesn’t use added chemicals.

And kids, they say, don’t purchase pricey premium cigars.

But anti-smoking organizations rebuff this claim.

"All cigars increase the risk of disease, are potentially addictive and produce secondhand smoke that can cause disease to nonusers," Matthew Myers, president of the Campaign for Tobacco-Free Kids, said earlier this year.

Still, the FDA is accepting public comments on whether it should revisit its 2016 decision to regulate premium cigars.

RELATED: Premium cigars have second chance to gain exemption from FDA regulation

The Newman company launched savecigarcity.com so the public can more easily navigate the comments process.

The comment period was originally set to end June 25 but has been extended until July 25.

Last month, 17 U.S. senators, including Marco Rubio and Bill Nelson of Florida, signed a letter to the FDA asking that premium cigars be exempt.

"The industry was in a situation where it was being forced to comply to regulations while a court case is going on and the FDA is looking at the rules," Cigar Rights’ Borysiewicz said. "But this isn’t done in any way. We need to keep fighting."

Contact Paul Guzzo at [email protected] Follow @PGuzzoTimes.

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