Cigars still sit in regulation purgatory, awaiting federal decisions on a number of other tobacco product (OTP) concerns including the future of flavors, while cities and states are moving forward with local ordinances on tobacco products.
Last month, Cumberland Farms announced a lawsuit against boards of health in six Massachusetts cities. The company, which operates more than 200 convenience stores in the state, alleges these municipalities have created a monopoly by adopting a business model, developed and pushed by a private organization, that bans sales of flavored tobacco products in any retailers other than smoke shops or smoke bars.
“We’re simply calling for a level playing field where we can continue to serve all of our customers without unelected local officials taking away their right to choose where to shop and what to buy,” Brian Glennon, Cumberland Farms general counsel, said in a statement.
As senior category manager for Duxbury, Mass.-based Verc Enterprises, Anna Bettencourt is all too familiar with the mercurial regulatory environment.
“Out of our 29 stores, 26 are in Massachusetts, and out of those, 13 are within cities with flavor bans. Right now, those 13 are allowed mint, menthol and wintergreen, but as of Jan. 1, 2020, one (store) will not be allowed those flavors either. That will be a vast product reduction for that site,” she explained. “Also, when a store gets a new restriction, you see a significant decrease in store sales of all items, not just tobacco-related.”
Cities and states continue to propose and pass restrictions, but it’s what the Food and Drug Administration (FDA) may do on a national level that has the c-store industry nervous.
In March, the FDA announced a proposed compliance policy change to restrict the sale of flavored cigars, other than tobacco, mint and menthol, for any products on the market prior to Aug. 8, 2016. That poses a significant threat to the cigars segment, which derives at least half of its dollar sales from flavors other than menthol, according to data presented at the National Association of Convenience Stores (NACS) State of the Industry Summit. Plus, the segment frequently is infused with limited-time offerings featuring unique flavors.
“We do bring in limited-edition flavors and we try to give them prominent shelf position and get our associates to push them,” noted David Collins, president of DC Oil Co. Inc., DBA Quick Shop. It owns and operates more than a dozen c-stores and truck shops in Alabama. “It will have a big effect on limited-time editions because we will never find out what the next hot flavor will be.”
There’s also a legal challenge regarding the substantial equivalence (SE) deadline. In 2016, the FDA decided cigars should be regulated the same as cigarettes, and ordered manufacturers to submit SE applications to demonstrate that their products exhibit similar characteristics to grandfathered products, those on the market prior to Feb. 15, 2007, or that their products do not present new public health questions. This is necessary to retain approval to be sold in the U.S.
The former FDA commissioner pushed the deadline to August 2021, but in May, a Maryland judge ruled in favor of public health groups to push up that date and review products sooner. Then in July, three cigar associations filed suit, asking the government to adhere to the 2021 deadline.
This is in addition to a new commissioner coming onboard, which raises more questions about the future direction of regulatory matters.
“There exists uncertainty about the particular direction the FDA will take on a number of (OTP)-related concerns being considered by the agency,” said Joshua Habursky, director of federal affairs for the Premium Cigar Association, one of the lawsuit plaintiffs. “(Acting Commissioner Ned Sharpless) has a lot of experience, and we hope he approaches any potential changes to current regulations and policies with caution and with an understanding that tobacco policy is very complex.”