Cigar News: U.S. District Court Delays Substantial Equivalence Indefinitely

Some much needed relief has come to the cigar industry today. While this is not a permanent solution and does not fix everything in , it is a major step. U.S. District Court Judge for the District of Columbia Amit P. Mehta ruled that he would be placing substantial equivalence regulations on hold indefinitely. Premium cigar manufacturers will not have to file for premarket approval by the September 9th, 2020.

Had this not happened, on September 9th, cigar companies would have been forced to stop selling cigars “equivalent” to cigars released prior to February 15th, 2007. How substantial equivalence was to be determined has been murky and part of the reason for the ruling. In fact, The Court concluded that the failed to engage in “reasoned decision-making” regarding premium cigars, in violation of federal law. According to the Court, the ’s “incorrect and conclusory assertion that its hands were tied” in response to the premium cigar industry’s requests for a more tailored regulatory review process “was arbitrary.”

This ruling means the has to go back to the drawing board and come up with new streamlined processes to determine how a cigar is determined to be “substantially equivalent” to products sold before 2007.

In the meantime, premium cigars will not have to be subject to substantial equalence. The court has defined premium cigars as follows: “a cigar that: (1) is wrapped in whole tobacco leaf; (2) contains a 100 percent leaf tobacco binder; (3) contains at least 50 percent (of the filler by weight) long filler tobacco (i.e., whole tobacco leaves that run the length of the cigar); (4) is handmade or hand rolled (i.e., no machinery was used apart from simple tools, such as scissors to cut the tobacco prior to rolling); (5) has no filter, non-tobacco tip, or non-tobacco mouthpiece; (6) does not have a characterizing flavor other than tobacco; (7) contains only tobacco, water, and vegetable gum with no other ingredients or additives; and (8) weighs more than 6 pounds per 1,000 units.” Notable, this leaves out machine made cigars and flavored cigars.

While this is a win, in the short term at least, there are several things that Judge Mehta ruled that are not in favor of the cigar industry. He ruled that the original 2007 date would stand as it was not arbitrary or capricious. He also said that the ’s cost-benefit analysis was reasonable and reasonably explained to the extent it is reviewable.

Glynn Loope, CRA Executive Director says, “Judge Mehta’s opinion is a testament to the virtue of the public comments filed over the years with the by our industry alliance, and the failure of the to not only respond, but to recognize the suggestions made to address the fairness of the proposed regulations. The efforts of the advocacy strategies initiated by CRA and PCA served as the for this decision, proving that you always have to carry your message to both ends of Pennsylvania Avenue, and the courthouse that sits in the middle.”

“This is another monumental victory for the premium cigar industry. We congratulate our legal team, led by Mike Edney of Steptoe & Johnson, on an important victory that protects the livelihood of PCA members across the country. This comes on the heels of legal victories striking down warning labels for premium cigars. Both our retail members and associate members provided important strategy and guidance in our legal, legislative, and regulatory appeals to define premium cigars and showcase their distinctiveness from the courts to Capitol Hill,” says Scott Pearce PCA Executive Director.

You can read the entire court document here.