Cigar Reps Challenge Feds’ New Tobacco Tax

     (CN) — The Food and Drug Administration’s new tobacco rule wrongly taxes cigars and e-cigarettes and treats small tobacconists like big manufacturers, cigar trade associations claim in court.
     The Cigar Association of America, the International Premium Cigar and Pipe Retailers Association and Cigar Rights of America sued the U.S. Food and Drug Administration, its commissioner Robert Califf MD, the Department of Health and Human Services and secretary Sylvia Burwell in Washington, D.C. Federal Court on Friday.
     The dispute stems from “an unlawful final rule published on May 10, 2016, by the FDA that threatens the sale of any cigars, pipe tobacco and associated products not on the market as of Feb. 15, 2007,” the 40-page complaint states.
     The rule is “contrary to the language and purpose of the Family Smoking Prevention and Tobacco Control Act of 2009, the basis of FDA’s authority to regulate tobacco products,” according to the lawsuit.
     That law allegedly regulated cigarettes, cigarette tobacco, roll-your-own and smokeless tobacco, but allowed the FDA to “deem” other products subject to regulation in the future.
     Five years later, the FDA did just that for cigars, pipe tobacco and certain other products including e-cigarettes, via the final rule, the cigar groups claim.
     “The final rule is legally defective and contrary to the [Tobacco Control Act] and congressional intent in several respects,” according to the complaint.
     For instance, the rule “incorrectly and impermissibly” subjects cigars and other products to stricter regulatory restrictions than cigarettes and smokeless tobacco, the trade associations claim.
     “It effectively imposes a tax on cigars and pipe tobacco in the form of ‘user fees,'” the lawsuit states. “Moreover, these ‘user fees’ are imposed on only some of the newly deemed products, contravening Congress’s intention that all regulated entities will bear their fair share of the costs associated with regulating tobacco products.”
     The rule also allegedly fails to explain that its benefits outweigh its “undeniably severe costs, particularly as to thousands of small businesses.”
     The cigar groups say the rule “regulates as ‘manufacturers’ small retail tobacconists who blend and/or repackage finished pipe tobacco and products received in bulk form into smaller quantities and cigar retailers who create ‘cigar samplers’ from finished cigars.”
     It also “imposes new and expanded warning label format requirements without analyzing whether the new requirements are necessary and least restrictive,” their complaint states.
     These constitute violations of the Food, Drug and Cosmetic Act, Administrative Procedure Act, and the First and Fifth Amendments to the U.S. Constitution, the trade associations claim.
     The nine-count complaint seeks declaratory, injunctive and monetary relief.
     The cigar groups, which are all nonprofits, are represented by Mark Heller, Mark Raffman, and Kristin Davenport with Goodwin Procter in D.C., and David Clissold and James Ellison with Hyman, Phelps & McNamara in D.C.
     The Cigar Association of America is a national trade group of companies from all sectors of the industry, while the International Premium Cigar and Pipe Retailers Association represents more than 2,000 typically family-owned small businesses, such as retail stores, the complaint states.
     Cigar Rights of America “serves as a voice of premium cigar manufacturers and consumers in the United States on matters of legislative and regulatory concern,” with more than 60 members across all 50 states, according to the complaint.
     FDA spokesman Michael Felberbaum said the agency “does not comment on possible, pending or ongoing litigation.”
     The Department of Health and Human Services did not return a request for comment Monday.

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