Trump’s election may have been the biggest f**k you ever recorded in human history, but does this mean it’s time to give the FDA the one-finger victory salute?
While eliminating job-killing federal regulations was a centerpiece of his campaign, there are more than a few reasons to temper our expectations for what President Trump will do about the FDA’s attack on the cigar industry. Change could be on the distant horizon, but for now, the industry needs to continue preparing to comply.
Trump Despises “Excess” Regulation
The President-Elect spent over a year on the campaign trail preaching the perils of the nanny-state and estimating that roughly 70 percent of regulations should be scrapped. Although he’s often criticized for taking a variety of contradictory views, Trump has remained consistent in his disdain for unnecessary government regulation.
There’s certainly a big caveat here. It’s pretty unlikely that President Trump would see FDA’s regulation of the tobacco industry as “excess” or “unnecessary.” Consider this quote from his 2000 book “The America We Deserve”:
For a country that has such an excess of regulation…it’s interesting that we often don’t regulate the right businesses. Think about whiskey. I don’t know why everyone’s suing tobacco companies—though they’re terrible—and leaving alcohol companies alone…You have terrible auto accidents because of alcohol, thousands killed. Taxing alcohol companies isn’t enough; I’d like to see them forced to take responsibility.
In fact, Trump often attributes much of his own success to the fact that he’s never smoked, consumed alcohol, or taken illegal drugs. This makes it really hard to envision a scenario in which President Trump devotes any significant time or resources to rolling back regulations on tobacco in any form.
But there’s hope. Most would agree that President Trump’s policies are likely to be heavily influenced by the people around him. Luckily, the cigar industry would appear to have more than a few friends right at the top.
While the Trump Family has no direct ties to the cigar industry (wait…there’s Trump Vodka…why not Trump Cigars?!), there are some pretty encouraging connections. Don Jr. is an avid outdoorsman, outspoken 2nd Amendment supporter, and a bit of a cigar aficionado. He and brother Eric frequent the Grand Havana Room , a members-only cigar club in New York that caters to some of the city’s most influential people.
Even more interesting, the Grand Havana Room is located at the top of 666 5th Avenue, a building owned by Ivanka’s husband Jared Kushner. Not only is Kushner Trump’s son-in-law: he’s one of his closest advisors and is on the transition team that will fill the nearly 4,000 appointed positions in the Trump administration.
A noted cigar lover, the former Mayor will likely have a high-level cabinet position within the Trump Administration.
It’s unclear whether his love for cigars would translate into a favorable action for the industry, but it certainly can’t hurt.
If Giuliani gets involved, it wouldn’t be his first rodeo with the FDA. In fact, Giuliani’s consulting firm lobbied the FDA on behalf of Indian pharmaceutical giant Ranbaxy in 2008.
Vice President Mike Pence
Pence’s connection to tobacco runs deep. His father was an executive for the “Tobacco Road” chain of cigarette/gas/convenience stores. When running for Congress, his article “The Great American Smoke Out” detailed his firm stance against smoking regulations. As Governor of Indiana, Pence signed legislation allowing new cigar lounges in the State. He also reportedly received over $100,000 in campaign contributions from the tobacco industry throughout his political career.
For now, it’s too early to tell whether the Administration will take action to reverse or revise the FDA’s deeming regulation. If anything does change, we know it will not be immediately. Many of the deadlines established by the FDA are fast-approaching, so failing to prepare could leave retailers, manufacturers, and importers in a difficult position.
What About Congress?
The Appropriations Bill that included language exempting cigars from FDA regulation is now unlikely to pass. Instead, expect Congress to pass a continuing resolution to fund the government through March 2017. The standalone bills are also extremely unlikely to reach a vote. This leaves the best chance for Congressional action to take place sometime in late 2017, with the earliest effective date most likely in 2018 or beyond.
With no immediate changes on the horizon, it’s important that retailers/manufacturers/importers stay on-top of upcoming deadlines for FDA compliance.
December 31, 2016 – Manufacturer Registration and Product Listing
Domestic Manufacturers of tobacco products must register with the FDA by the end of this year. While this does not apply to those who use foreign factories to produce their cigars, it does apply if you make any changes (repackaging, re-labeling, etc.) to the product after it enters the United States. Submissions should be sent to FDA electronically through the FURLS system, or through Form FDA 3471.
Considerable thought needs to go into this submission. The first step is determining whether you are considered a Domestic Manufacturer under the deeming regulation. Second, you must list each SKU you currently have on the market. This includes each iteration of your products (singles, 3 packs, boxes, samplers, etc.). This registration will serve as the keystone for later submissions to the FDA, including SE reports. It is extremely important that the registration data matches the data you will later submit to the FDA for product approval.
February 8, 2017 – Submission of Health Documents and Ingredient Lists *Small-scale manufacturers have until August 8, 2017 to comply with the following
- Submission of Health Documents
Foreign and domestic manufacturers/importers must submit to FDA health documents, but not HPHC’s for each of their products. Guidance on this was recently published in September 2016, and as is true with most other FDA guidance documents, the rules aren’t very straightforward.
- Submission of Ingredient Lists
While some have said that a submission under this provision should simply be “tobacco, air, and water” for premium cigars, the FDA’s guidance document seems to require a much more specific and involved submission.
May 10, 2017 – Submission of Cigar Warning Plan
This is another rather involved submission that must be submitted to the FDA. This isn’t a document that can be generated overnight, so diligence and preparation is crucial. The published guidance document can be found here.
February 8, 2018 – Submission of Substantial Equivalence Report
This report, depending on your specific product, could take nearly a year to generate. Significant time and resources must be devoted to planning, testing (both the predicate product and the “new” product), and compiling the report. While the deadline seems far off now, initial preparations to complete it must be started immediately, despite the uncertain future of the FDA deeming regulation.
As I’ve stated in a prior post, the most costly part of generating the SE report will come with product testing. However, a detail often overlooked by those in the industry is that there will need to be an initial round of private “in-house” HPHC testing before the SE report is generated. This in-house testing is necessary to determine which predicate product you will use to have your new product approved. The predicate product you select must have lower HPHC levels than the new product, otherwise there is an extremely high likelihood that your new product will not be approved. This initial testing is relatively inexpensive, as it does not include the 20 reps that FDA has traditionally required (3 reps is considered scientifically valid). The testing doesn’t need to be done immediately, but arrangements to complete it should already be in the planning stages.
The bottom line: while there is reason to be hopeful for the future, there is no end to the FDA regulations in sight. Don’t make the mistake of thinking that Trump’s election means you can stop preparing to comply with these burdensome rules.
If you need some guidance, counsel, or just want to discuss your plan for compliance, feel free to call/text me at (808) 358-4942 or email me at email@example.com.