Legislative & Regulatory News
September 25, 2019
PCA Launches Campaign to Oppose New Premium Cigar & Pipe Tobacco Tax Increase Proposals
September 25, 2019, Washington, DC —In response to newly proposed federal legislation, the Premium Cigar Association is launching a campaign to oppose massive tax hikes against the premium cigar and pipe tobacco industry.
Congress, under the guise of addressing the Youth Vaping Epidemic, has introduced two bills that massively increase taxes for all tobacco products —including premium cigars. The legislation threatens the viability of thousands of small businesses across the country and risks putting tens of thousands of employees out of work.
In the Senate, Dick Durbin (D-Illinois) introduced the Tobacco Tax Equity Act of 2019 (S.2517) with the support of Democrat Senators Brown, Markey, Blumenthal, Reed, Hirono, Wyden, Murray, and Merkley. This legislation would ultimately increase excise taxes on cigars and pipe tobacco by:
- Amending Section 5701(f) of the IRS Code of 1986 by striking “$2.8311 cents” and inserting “$49.56” for Pipe Tobacco.
- Amending section 5701(a) of the IRS Code of 1986 by striking “$50.33” and inserting “$100.66” for Small Cigars.
- Amending Paragraph (2) of section 5701(a) of the IRS Code of 1986 by striking “52.75 percent” and all that follows through the period and inserting the following: “$49.56 per pound and a proportionate tax at the like rate on all fractional parts of a pound but not less than 10.066 cents per cigar for large cigars”. It would also allow for: “The Secretary of the Treasury, or the Secretary’s delegate, may issue guidance regarding the appropriate method for determining the weight of large cigars for purposes of calculating the applicable tax under section 5701(a)(2) of the Internal Revenue Code of 1986.”
In the House of Representatives, Congressman Tom Suozzi (D-Long Island, Queens) introduced the Quell Underage Inhaling of Toxic Substances (QUITS) Act (H.R. 4425) alongside representatives Peter King, Steve Cohen, Jimmy Panetta, Raja Krishnamoorthi, and David Ciclline. This legislation would ultimately increase excise taxes on cigars and pipe tobacco by:
- Amending Section 5701(f) of the IRS Code of 1986 by striking ‘‘$2.8311 cents’’ and inserting ‘‘$73.85’’ for Pipe Tobacco.
- Amending Section 5701(a) of the IRS Code of 1986 by striking ‘‘$50.33’’ and inserting ‘‘$150’’ for Small Cigars.
- Amending Section 5701(a) of the IRS Code of 1986 by striking ‘‘52.75 percent’’ and all that follows through the period and inserting ‘‘$73.85 per pound and a proportionate tax at the like rate on all fractional parts of a pound but not less than 15 cents per cigar.’’ It would also provide authorization as follows: “Secretary of the Treasury, or the Secretary’s delegate, may issue guidance regarding the appropriate method for determining the weight of large cigars for purposes of calculating the applicable tax under section 5701(a)(2) of the Internal Revenue Code of 1986.”
- SPECIAL RULE—”Beginning on the date that is 1 year after the date of enactment of the Quell Underage Inhaling of Toxic Sub stances Act of 2019, except as provided in sub paragraph (C), a tobacco product or any of its component parts or accessories (including the tobacco, filter, or paper) shall not contain, as a constituent (including a smoke constituent) or additive, an artificial or natural flavor (other than tobacco) that is a characterizing flavor of the tobacco product or tobacco smoke or an herb or spice, including menthol, mint, strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee. Nothing in this subparagraph shall be construed to limit the Secretary’s authority to take action under this section or other sections of this Act applicable to any artificial or natural flavor, herb, or spice.’’
“We are not going to sit idly by when Congress gives speeches against vaping, but their actual policies attack premium cigars and pipe tobacco, which are not part of the youth access problem, ” said Joshua Habursky, Director of Federal Affairs for the Premium Cigar Association. “These are cringeworthy tax increases that hurt retailer small business owners, employees, manufacturers, and ultimately every cigar enthusiast.”
To stop the tax hikes from coming into fruition, the PCA is launching a nationwide email and social media campaign to garner massive support from retailers, retailer employees, and premium cigar and pipe tobacco enthusiasts nationwide.
People can take action today by customizing one of the PCA’s pre-written letters or writing their own and sending it on to their elected officials in a matter of seconds!
For Additional Information or to Request a Quote:
Joshua Habursky
Director of Federal Affairs
Premium Cigar Association
joshua@premiumcigars.org
(814) 881-1618
September 23, 2019
PCA and CRA Set the Record Straight on HR 1854
WASHINGTON, DC — Last week opponents of H.R. 1854 circulated myths about the bill as it relates to premium cigars in the House of Representative. The Premium Cigar Association (PCA) and Cigar Rights of America (CRA) released a Myths v. Facts on H.R. 1854 in response to the misleading claims. “It is important that Capitol Hill is equipped with accurate information that is rooted in scientific research as opposed to baseless claims that make for good sound bites.”, says Scott Pearce Executive Director of the Premium Cigar Association. You can read the Myths vs. Facts on 1854 and the PCA Setting the Record Straight document for more information on the current tobacco policy debate. Urge the House of Representatives to support H.R. 1854 today!
August 29, 2019
FOR IMMEDIATE RELEASE: PCA Launches Educational Event Series
WASHINGTON, DC, August 29, 2019 — The Premium Cigar Association (PCA) is launching a Washington, DC educational event series aimed at providing quality in-person learning experiences for legislators, regulators, and staff. The series will kick off on September 5th with two subsequent events.
The first event, Diversity in Entrepreneurship & Small Business, will take place at the US Capitol Visitors Center as a lunch and learn on the topic of retail and manufacturer interests in the premium cigar industry. Later that evening, PCA will host the second event, Coffee & Cigars, a Q&A session with Yvette and Yvonne Rodriguez of Tres Lindas Cubanas Cigars and complete with Cuban coffee and cuisine. Both events are open to the public, are free to attend, and are intended for those in the premium tobacco industry. Registration is required and is available through the PCA Eventbrite page.
Later in Sept., the PCA will continue its educational series with a private film screening of Hand Rolled, featuring executive producer and owner of Tatuaje Cigars, Pete Johnson, who will also be in attendance to further discuss the film and the industry at large.
PCA plans to continue hosting monthly events at their headquarters (located near Union Station) to cover important issues facing the premium cigar industry.
“Our greatest resource as an association is our membership and one of our most effective tools is our office being located at Capitol Hill,” says Scott Pearce, Executive Director. “It is imperative that we leverage our people and our space so that we may continue to tell our story and build more meaningful relationships between PCA members and lawmakers.”
ABOUT THE PCA
Founded in 1933 as the Retail Tobacco Dealers of America, the Premium Cigar Association (PCA) is the oldest, largest and most active trade association representing retailers of premium tobacco products and assisting their suppliers.
The PCA represents nearly 3,000 retail stores who employ 30,000+ retail workers. As the only full-service premium tobacconist organization, the PCA fights for their members against onerous, business-killing regulations and taxes, provides business-enhancing professional development, and helps strengthen business relationships through their best-in-class trade show and other B2B offerings.
July 18, 2019
Premium Cigar Association (PCA) Files Substantial Equivalence Report Comment and Endorsement
The Premium Cigar Association (PCA) submitted a formal public comment to the Food & Drug Administration yesterday on the Content and Format of Substantial Equivalence Reports. PCA also endorsed the comments submitted by Cigar Rights of America (CRA) and a separate comment submitted by major manufacturing companies including Davidoff of Geneva USA, Inc., General Cigar Company, Nick’s Cigar Company d/b/a Tabacalera Perdomo, SWI-DE, LLC d/b/a Drew Estate, Tabacalera Unidas, Inc. d/b/a C.L.E. Cigar Company, and Tabacalera USA Inc.
PCA’s letter notes, “Both comments demonstrate that the substantial equivalence system reflected in the Proposed Rule is wholly inappropriate for premium cigars. Indeed, applying that system to premium cigars will be detrimental to the agency’s public health mission.”. The letter also contends, “that the substantial equivalence process set forth in the proposed rule is one geared for innovative e-cigarette and mass marketed tobacco products that people may use as nicotine delivery systems to feed an addiction. The Proposed Rule’s substantial equivalence system, and the reams of data and layers of testing it requires, will threaten the very existence of premium cigar manufacturers and retailers, purveyors of artisan, small batch products based on variations in natural tobacco leaf.”
The Family Smoking Prevention and Tobacco Control Act created a system that focused FDA review on tobacco products that are novel and present different questions of public health. See Act § 910(a)(3)(A). As a category, premium cigars are neither novel nor present different questions of public health. The definition of premium cigars so ensures, making clear that premium cigars must be handmade from natural tobacco. The various definitions of premium cigars, which were the subject of extensive commentary and evidence in the premium cigar rulemaking docket that closed in July 2018[1], make clear that any premium cigar will be made as premium cigars have been for centuries.
PCA’s comments reflect the interests of brick and mortar retail stores as it relates to the substantial equivalence process and expresses agreement for the arguments put forth by other premium cigar stakeholders in their separate comments. Ultimately, PCA believes that premium cigars should not be subjected to the substantial equivalence process and exempt from FDA regulation.
Respectfully,
Scott Pearce
Executive Director
Premium Cigar Association
July 11, 2019
Premium Cigar Association (PCA) Joins Secure Payments Partnership (SPP)
“As an association that represents 2,500 small businesses across the country, we understand the importance of keeping pace with rapidly evolving payment technologies, and believe the U.S. payments infrastructure should be the global standard. This is why we’re excited to announce that coinciding with our rebrand to the Premium Cigar Association, we are the newest members of The Secure Payments Partnership (SPP),” said Executive Director Scott Pearce. “At the end of the day we need a secure payments system that works for all participants – including the hard working Americans the association represents.”
About The Secure Payments Partnership
The Secure Payments Partnership is a coalition of retailers and debit networks that have joined together to promote greater security and transparency across the payments system. SPP members include the Food Marketing Institute, National Retail Federation, National Association of Convenience Stores, National Grocers Association, First Data’s STAR Network and SHAZAM.
July 8, 2019
IPCPR becomes Premium Cigar Association (PCA)
Washington, DC — The International Premium Cigar & Pipe Retailers (IPCPR), the leading trade association for premium tobacco retailers, announces the business’ rebrand to Premium Cigar Association (PCA). This comprehensive and strategic re-brand is necessary to facilitate the growth of the premium tobacco industry for cigar and pipe tobacco retailers, manufacturers and consumers, and includes a new logo, website and enhanced communications.
The Association was originally founded in 1933 as the Retail Tobacco Dealers of America (RTDA). Throughout the years, the Association has re-branded three times, updating its name to the International Premium Cigar and Pipe Retailers (IPCPR) in 2007, and now the Premium Cigar Association (PCA), in 2019.
PCA is the oldest, largest and most active trade association representing the interests of the premium cigar and pipe industry, with a large and powerful membership comprising retailers, manufacturers and consumers of premium cigars and pipes.
“The rebranding of our organization is a complete evolution and transformation that will offer a slate of new programs and services,” said Scott Pearce, the Association’s Executive Director. “The Premium Cigar Association represents a modernization to a full-service association, focused on delivering 365 days of value to every participant in the premium cigar and pipe industry.”
As evidenced by the current U.S. demand for premium handmade cigars—which is approximately 300 million cigars a year—PCA’s base is growing rapidly. PCA’s mission is to facilitate this growth, equipping retailers with the consumer research, recent legislation and education they need to work with suppliers and the public. In addition to acting as the industry’s top authority, PCA also operates as its top advocacy group, educating local, state and federal policymakers on the value, legacy and nuances of the premium cigar and pipe industry—from the time-honored, old-world methods still used to create premium cigars by small, family-owned businesses today; to the purity of ingredients cultivated for their binding and rolling by hand; to the unique consumption patterns associated with their enjoyment.
“We’re sharing why premium cigar retailers are important to their communities; that most of our members have a center where politics, business, trade —just about everything, is discussed in their store. That our members’ shops are a community center and serve a community purpose,” said Joshua Habursky, the Association’s Director of Federal Government Affairs. “We want to make sure we’re telling the story of the small business owner.”
With the new name, Premium Cigar Association, the association is in a stronger position to differentiate itself from other tobacco products and drive home the differences. Combined with the bold simplicity of the new logo belies deeper layers of meaning: the three segments on the top and bottom of the leaf represent the founding year of the organization (1933), while the color palette represents the life cycle of tobacco —evolving from the vivid green of a tobacco plant to the rich brown of a processed leaf, and finally to a warm gray that evokes the ash of a freshly smoked, and enjoyed, cigar. The typography also holds significance: the PCA acronym is depicted in a slab serif typeface that is indicative of early 19th century design, while the condensed sans serif used for the full name demonstrates the professionalism and confident leadership that PCA embodies. All these design elements work together seamlessly to position PCA as a modern and forward-thinking organization with a rich and storied history.
PCA is steadfast in the belief that once the differences between premium tobacco products and other commodities typically regulated in their space are well understood, premium cigars and pipes will be considered in a class all their own. Learn more at www.premiumcigars.org.
PCA’S GUIDE TO TOBACCO 21 LEGISLATION
In Washington, there has recently been a flurry of action and discussion on the topic of raising the minimum purchase age for tobacco from 18 to 21. Lawmakers are prioritizing the prevention of teenage access to tobacco products and according to Senator Brian Schatz (D-HI) in a press conference, “This is the most impactful, achievable public policy measure we can take”, indicating that this is not the end of government action against tobacco, but instead the immediate response to a spike in teenage use of tobacco products. PCA will keep you updated on the status of all tobacco 21 (T-21) legislation and we will continue to differentiate premium cigars from other tobacco products that are at the intended focus of this debate . Below, PCA summarizes each piece of T-21 legislation so far:
- H.R. 2084 Stopping Consumption of Tobacco by Teens Act of 2019 (or The SCOTT Act of 2019) – Introduced by Rep. Robert Aderholt (R-AL), this bill is named in honor of Scott Gottlieb, former FDA commissioner. In addition to raising the minimum age to purchase tobacco to 21 nationwide, this bill also establishes new requirements and restrictions for online sale of tobacco products. Aderholt is a consistent supporter of premium cigars and a co-sponsor of H.R. 1854 (The Traditional Cigar Manufacturing and Small Business Jobs Preservation Act of 2019). H.R. 2084 was referred to the House Energy & Commerce Committee.
- H.R 2411 Tobacco to 21 Act – Introduced by Rep. Diana DeGette (D-CO), this bill prohibits the sale of tobacco to anyone under 21 years of age and requires retailers to card anyone who appears under the age of 30. The new age requirement would apply to the sale of all tobacco products. H.R. 2411 was referred to the House Energy & Commerce Committee.
- S. 1258 Tobacco to 21 Act – The Senate companion bill to H.R. 2411 was introduced by Senator Brian Schatz (D-HI), along with Senator Todd Young (R-IN), Senator Dick Durbin (D-IL), and Senator Mitt Romney (R-UT). In today’s press conference Schatz described this as a “clean bill” and as having “no loopholes”. S.1258 raises the minimum purchase age and grants the Secretary of Health and Human Services the authority to take enforcement actions. The bill has been referred to the Senate Commerce, Science, and Transportation Committee.
- H.R. 2339 Reversing the Youth Tobacco Epidemic of 2019 – Introduced by Rep. Frank Pallone (D-NJ), chairman of the House Energy & Commerce Committee. This comprehensive tobacco bill not only raises the minimum purchase age but also bans online tobacco sales, introduces new advertising and sales restrictions, increases user fees and bans flavored tobacco products. The bill was referred to the House Energy & Commerce Committee.
- S.1541 Tobacco-Free Youth Act – Senate Majority Leader Mitch McConnell (R-KY) introduced the Tobacco-Free Youth Act along with Senator Tim Kaine (D-VA) in late May. This bill is in the Senate Health, Education, Labor, and Pensions Committee. The bill would raise the age of purchase from 18 to 21 and would require state by state adoption of the measure by coercing them through federal funding similar to how the age of purchase was raised for alcohol through federal transportation funding for states.
- Currently Hawaii, California, New Jersey, Oregon, Maine, and Massachusetts have a tobacco age restriction of 21 in place. Arkansas, Delaware, Illinois, Utah, Washington, and Virginia will become 21 in the future with effective dates ranging from later in 2019 through 2021. Age increase bills in Vermont and Maryland passed and have been sent to their respective Governors for a signature. If you have questions about legislation on the state level, please contact Senior Director of State Affairs Rachel Hall at rachel@ipcpr.org
It is PCA’s mission to keep our members updated on any type of legislation that would potentially impact your business. We will continue to monitor the status of each of these bills and advocate appropriately to promote premium cigars. For more questions regarding T-21 or other legislative concerns, reach out to Joshua Habursky, PCA Director of Federal Government Affairs at joshua@ipcpr.org or Tori Ellington, PCA Program Manager – Government Affairs at tori@ipcpr.org.
IPCPR SUBMITS COMMENT TO FDA DRAFT GUIDANCE
Earlier this week, IPCPR submitted a comment to the Food and Drug Administration (FDA) Draft Guidance: “Modifications to Compliance Policy for Certain Deemed Tobacco Products”, which proposes to modify the current compliance policy in several significant respects for certain electronic nicotine delivery systems (ENDS) and flavored cigar products.
The IPCPR position states that:
- The current FDA approach to flavored tobacco products will not achieve the desired outcome of keeping tobacco and nicotine products out of the hands of teenagers;
- The definition of “flavors” is entirely too vague and is therefore impossible to understand or comply with;
- The change of product sell through time (for those products that do not meet the standards) is much too short at 30 days, as premium products average over 100 days to sell.
CLICK HERE to read the full comment.
REP. PALLONE INTRODUCES NEW COMPREHENSIVE TOBACCO BILL
Yesterday, Congressman Frank Pallone (D-NJ), chairman of the Energy & Commerce Committee, along with Congresswoman Donna Shalala (D-FL), introduced a comprehensive tobacco bill. The bill, “To amend the Federal Food, Drug, and Cosmetic Act with respect to the sale and marketing of tobacco products, and for other purposes” (H.R. 2339), will be called the ‘‘Reversing the Youth Tobacco Epidemic Act of 2019”. While premium cigars have not contributed to this epidemic, they would still be significantly impacted by this legislation. The bill would amend the 2009 Family Smoking Prevention and Tobacco Control Act, originally designed to curb youth access to cigarettes. This new legislation would extend the current regulations on cigarettes to all other deemed products, including cigars. It also introduces a number of new restrictions on tobacco sales.
How “Reversing the Youth Tobacco Epidemic Act of 2019” would impact premium cigars:
- Ban Online Sale of All Deemed Tobacco Products – Online sales of cigarettes and smokeless tobacco products were banned in 2010, but this bill would extend that rule to ALL deemed products, which currently includes premium cigars.
- Increase User Fees – The FDA would have explicit authority to collect fees from all deemed products in addition to cigarettes and the total amount of fees collected by the agency would increase by $100 million.
- Raise Minimum Tobacco Purchase Age to 21 – The minimum age to purchase tobacco would be 21 nationwide. There is no provision prohibiting states or localities from raising the minimum age above 21.
- Advertising & Sales Restrictions – All cigarette advertising and sales restrictions would also apply to premium cigars. This means advertising any tobacco brand on non-tobacco merchandise (such as t-shirts or other apparel) is prohibited; event sponsorship (music, sports, etc.) by a tobacco brand or manufacturer is prohibited; and free gifts (even non-tobacco) in exchange for consideration of purchasing a tobacco product is prohibited.
- Ban Flavored Tobacco Products – Characterizing flavors of all tobacco products would be prohibited under this Act.
IPCPR continues to seek exemption for premium cigars from legislation intended to curb usage of other, non premium tobacco products. We will continue to engage with lawmakers to work to seek fair treatment of premium cigars by the FDA. Premium cigars are a 100% natural, artisan product and should not be regulated the same as cigarettes or electronic nicotine delivery systems. We are continuing to gain support and co-sponsors for our exemption bills in both the Senate (S.9) and the House (H.R. 1854). To read the House Committee on Energy & Commerce’s section by section breakdown CLICK HERE.
*This week, Senator Mitch McConnell (R-KY) announced his intentions to introduce a Senate bill raising the minimum tobacco purchase age to 21. Updates to come.
For questions regarding H.R. 2339 or other legislative concerns, contact Tori Ellington by emailing tori@ipcpr.org.
RUBIO HOLDS SMALL BUSINESS FIELD HEARING: “KEEPING SMALL, PREMIUM CIGAR BUSINESSES ROLLING”
Today, Senator Marco Rubio (R-FL), as Chairman of the Senate Small Business and Entrepreneurship Committee, held a field hearing in Tampa, Florida on “Keeping Small, Premium Cigar Businesses Rolling”. The hearing’s purpose – to “look at the climate of overregulation of the premium cigar industry, an iconic staple to Florida’s economy” according to a press release from Senator Rubio’s office.
Witnesses who spoke were Charles Maresca (director of Interagency Affairs in the Office of Advocacy at the U.S. Small Business Administration), Dr. Brad Rodu (endowed chair for Tobacco Harm Reduction Research in the University of Louisville), Drew Newman (general counsel for J.C. Newman Cigar Company and great-grandson of J.C. Newman), and Jeff Borysiewicz (president and founder of the Corona Cigar Company).
Mr. Maresca’s testimony gave an overview of the Small Business Administration (SBA)’s involvement since the Food and Drug Administration (FDA)’s proposal of the Deeming Rule in 2014. The SBA expressed concern at that time and encouraged FDA to publish a supplemental Initial Regulatory Flexibility Analysis (IRFA) before the Deeming Rule became final in 2016. The agency failed to do so and SBA’s concerns remain. Mr. Maresca stated “The FDA must conduct a more robust economic analysis on the rule’s impacts on small businesses, specific to the affected premium cigar industry, and consider significant alternatives to those impacts to accomplish the agency’s stated objective while keeping small premium cigar manufacturers and retailers in business”.
Dr. Robu’s testimony was heavily backed by science and he concluded that “The agency’s unsupported position has led to needlessly subjecting cigar and pipe smokers, and the manufacturers of those products, to the same onerous and burdensome regulatory regime as much more hazardous cigarettes.”
Mr. Borysiewicz explained how these regulations have wide reaching negative impacts on everyone in the culturally rich premium cigar industry from manufacturers to retailers to farmers. He emphasized the urgency of finding a solution because “the greatest threat to my business and to the thousands of other premium cigar retailers just like me, is the heavy hand of government regulations being pushed forward by the FDA”.
Mr. Newman brought the perspective of a manufacturer and explained why a unique premium cigar, typically manufactured in a small batch, is not the same as mass produced cigarettes. Between Substantial Equivalence Applications, high testing standards, user fees, and obtrusive warning label requirements, “Our boutique premium cigar industry simply cannot absorb these massive regulatory costs” according to Mr. Newman.
The IPCPR and all of our industry partners are extremely encouraged by the opportunity this hearing provided and grateful to Senator Rubio for giving us a platform to speak on the harmful impact of burdensome FDA regulations. We encourage all Florida members to reach out to Senator Rubio and to thank him for his diligence in fighting for the premium cigar industry. To watch the recorded hearing CLICK HERE.
For questions regarding the hearing or any other legislative matters, reach out to Tori Ellington by emailing tori@ipcpr.org.