Tuesday, May 24, 2016

U.S. fans of Cuban cigars still have long wait before they can be sold here

U.S. fans of Cuban cigars still have long wait before they can be sold here

The U.S. Food and Drug Administration could keep Cuban cigars out of
local tobacco shops for at least two years after the economic blockade ends.
Tampa Bay Times

For American cigar aficionados, Cuban tobacco is the forbidden fruit,
long-blocked from the United States market by its five-decade-old
embargo on the island nation.

But in this new era of normalizing relations, the prospect of the
embargo being lifted is rising. That excites Americans who now are
restricted to bringing in just $100 of the high-quality cigars, and then
only if they buy them on the island.

There's just one hitch: Regulations recently announced by the U.S. Food
and Drug Administration could keep Cuban cigars out of local tobacco
shops for at least two years after the economic blockade ends. And even
then, smokers may not find the full catalogue available in other countries.

"This administration is talking out of both sides of its mouth," said
Bryan Haynes, a partner with the Atlanta-based law firm Troutman
Sanders, which represents tobacco companies. "While building a better
relationship with Cuba, it's effectively banned its most famous product."

Under the new FDA rules, electronic cigarettes, personal vaporizers and
cigars introduced into the U.S. market after February 15, 2007, must
submit detailed accounts of their ingredients and the process used to
manufacture them. It is a regulatory process similar to how the FDA
governs the cigarette industry.

The FDA estimates the application process would take up to 1,700 hours
for cigar manufacturers. The tobacco industry counters it could be as
high as 5,000. In all, it could take as long as two years to complete
this work.

Cigars for sale in the United States can remain on the market as they
apply. New products cannot be sold until FDA approval is received.

While some brands of Cuban cigars were on U.S. shelves before the
embargo, they will still have to fully comply with the new regulations,
said Haynes.

"Something produced in the '50s or '60s and not sold since then is not
grandfathered in the FDA's eyes," he said.

So if the embargo were to be lifted in 2017, for instance, Cuban cigars
may not be available for purchase until 2019. And that is if Habanos
—Cuba's state-owned company that runs its cigar industry— began the FDA
process the very moment the embargo ends.

The premium hand-rolled cigar industry —a category that would include
most Cubans— is lobbying to be exempt from the regulations. Industry
leaders claim their products use pure tobacco and no dangerous chemicals.

Among the locals affected by these regulations is Ybor City's J.C.
Newman Cigar Co., which rolls premium cigars using tobacco from Cameroon.

"We are disappointed in the FDA's decision to treat premium cigars as
cigarettes," said Eric Newman, the company's president. "This will be a
real challenge for us long term, but we are ready to fight."

Different types of cigars sold by the same brand are considered separate
products and each must comply with the regulations.

To do so will cost up to $330,000 per product, the FDA estimates, while
the tobacco industry argues that number is closer to $1 million.

Either way, said J. Glynn Loope, executive director of the advocacy
group Cigar Rights of America, it is doubtful that boutique operations
can afford the bill. Larger companies, he said, may cut back on the
number of new cigars they produce and pull some cigars already on the
market to avoid the regulatory costs. Newman said that's a possibility
for his company.

Expect Cuba to initially engage the U.S. market in a limited fashion,
said Jeff Borysiewicz, founder of Cigar Rights of America.

"At best I could see Cuba bringing its two top brands to the U.S.," he said.

But it may be worth it for Cuba to go all in.

Richard Feinberg, a senior fellow in the Latin America Initiative at the
Brookings Institute, has estimated that the U.S. cigar market could
inject an extra $200 million into the Cuban economy, although that
projection was made before the new FDA regulations.

Simon Evans, a spokesman for London-based Imperial Tobacco, which is the
international distribution partner of Habanos, acknowledged that the new
FDA policy will provide obstacles.

"The regulations will undoubtedly have an impact in the market and will
increase some operating cost," he said. "It would be foolish to
speculate on the timing of any potential lifting of the embargo.
Nevertheless, the Habanos team continues to work hard to be fully
prepared for that eventuality."

Americans visiting Cuba are allowed to bring back cigars for personal
use, capped at $100 worth. It's among the policies passed by the Obama
administration over the past 18 months.

But that doesn't buy much, said Borysiewicz. A box costs between $200
and $500.

Even though Cuban cigars are not FDA-approved, the new regulations
aren't expected to affect imports of small amounts for personal use.

"Because the amount of merchandise imported into the United States in
personal shipments is normally small, both in size and value,
comprehensive coverage of these imports is normally not justified," FDA
spokesman Michael Felberbaum said in an email.

If the embargo is lifted, the U.S. law governing the importation of
tobacco for personal use from Cuba will then be the same as it is for
every other country, increasing what can be brought back to as many as
100 cigars with a price capped at $800.

Still, Borysiewicz said that doesn't include the cost and time of the
trip to Cuba.

What American cigar aficionados expect, he said, is to be able to visit
their local tobacco shop and choose from a full catalog of Cuban cigars.
But it seems they'll have to wait longer than expected.

"When the embargo is lifted we would be celebrating a new day in
U.S.-Cuba relations" said Haynes, the attorney. "The symbol of that
should be the Cuban cigar."

Source: U.S. fans of Cuban cigars still have long wait before they can
be sold here | In Cuba Today -

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