by Jon Guze
Senior Fellow, Legal Studies, John Locke Foundation
James M. Patterson explains at libertylawsite:
With its holding in FDA v. Brown and Williamson Tobacco Corp. (2000), the U.S. Supreme Court found that the Food and Drug Administration lacked the authority to regulate tobacco products. The result was opportunity—and a cigar-production “golden age” like that of the ongoing craft beer renaissance. Old, established companies like Davidoff released new lines of cigars, and startups like Rocky Patel, Tatuaje, and Blanco began innovating in blends. However, from 2007 until 2009, the Family Smoking and Prevention and Tobacco Control Act made its way through the U.S. Congress. It reached President Obama’s desk in 2009, he signed it, and the FDA now had its long-sought authority to regulate tobacco.
For the first few years the agency kept its attention on cigarettes, but it recently moved to consider premium cigars. FDA officials spent months mulling over the relative strength of the regs it would apply, but ultimately decided to subject cigar manufacturers to the harshest level of scrutiny….
The regs will require submission of all post-2007 (older blends are grandfathered in) blends to the FDA for approval, and the firms will have to pay for the review. They are obliged to even as they lose out on revenues due to the opportunity costs the regulatory regime imposes. The regulations will have no obvious benefit to the public, but it is quite clear they will increase the costs for cigar producers, vendors, and enthusiasts.
The results can be predicted with dreary certainty: smaller manufacturers will close their doors, or merge with larger ones that have the economies of scale to absorb the costs of compliance. The quality of the cigars will decline as margins shrink. As quality declines, manufacturers will cut back on labor. Vendors will suffer as prices increase to cover regulatory compliance costs even as the quality of cigars declines….
Davidoff began during the early 20th century with a Jewish tobacconist family in Kiev, Ukraine. José Orlando Padrón fled communist Cuba and began manufacturing his cigars in Miami to meet the demand for cigars that the U.S. embargo had rendered unmet. He was one of the first manufacturers to use Nicaraguan leaves, and Padrón cigars are now among the greatest cigars in the world. More recently, the Blanco family started Blanco Cigars in 1998; the father-son team running the operation had served in the U.S. Army and law enforcement before returning to the cigars at the heart of their Cuban heritage….
At my old cigar shop in Gettysburg, Pennsylvania, the elderly owner was from an old Irish Catholic neighborhood in Philadelphia. He left the city, where his business contended with a high incidence of crime, to start a Civil War merchandise business in Gettysburg and later opened a cigar shop because of his own passion for cigars. His manager is a U.S. Army veteran who … works to keep the shop open and thriving. The two have done well enough to open a business in a new location in nearby Chambersburg, and the manager of the new shop is a Penn State graduate who could not find work in his field but proved an excellent tobacconist.
An African American couple runs my favorite spot in Charlottesville, Virginia. When I was last there, they were having an impromptu family reunion, since the shop has become a center of activity with relatives always coming through the place. They are not rich, but they make an honest living.
Cigars used to be a cliché: the prop in the fist of the heartless industrialist, who took draws in between making deals that crushed the souls of the workers. Now, cigar smoking is a pastime of the working class. It is an affordable luxury among veterans, pipefitters, retirees, cops, landscapers (and the occasional political science professor)….
Finally, it is worth noting that a large number of manufacturers, workers, and vendors are Latino—ranging from Cuban to Nicaraguan to Mexican—which would mean that the FDA regulations could be expected to have, in the bureaucratic phrase, a “disparate impact” on these populations. Does the FDA want to be responsible for putting so many men and women of color out of work?…
[The] regulations went into effect on August 8. As one cigar enthusiast and blogger, Bryan Glynn, announced, “The golden age of cigars is over.”