BROOMFIELD, Colo. — Last week, I had the honor of moderating a panel of leaders from innovative cigar, RYO/MYO and cigarette manufacturers at the 2015 Smoker Friendly Conference and Tobacco Festival. Dan Carr, president of General Cigar, Richmond, Va., J. Kelly Michols, CEO of Scandinavian Tobacco Group-Lane USA, Tucker, Ga., and Henry Sicignano, CEO and president of 22nd Century Group Inc., Williamsville, N.Y., shared their views with more than 500 Smoker Friendly franchisees in attendance.
As always, the session had a few “off-the-records,” but I’d be remiss not to share some of the more valuable takeaways from our conversation. Those included:
- Manufacturers Are Prepping for Deeming: Although the U.S. Food and Drug Administration (FDA) had set the end of summer as a deadline to announce the final deeming regulations, it sounds like the fourth quarter of 2015 is more realistic. Manufacturers are concerned not just about the onerous cost of regulations (assuming the grandfather date for substantial equivalence is not moved), but how long the approval process for pre-market tobacco product applications (PMTAs) will take. One manufacturer pointed out that their company is still waiting on numerous substantial equivalence applications, despite filing the applications years ago.
- Retailers Will Not Have to Worry About Removing Products … Yet: Retailers in the audience were understandably concerned about what the deeming regs mean for business. Specifically, will products currently on the shelves become illegal once the regulations are finalized? The good news is retailers will not have to take newly deemed products off the shelves so long as those products are on the market before the deeming regulations go into effect. They can keep selling these products during the two-year grace period manufacturers will have to submit PMTA or SE applications … and will be allowed to continue selling such products until the FDA rules.
- Uncertainty Remains on Premium Cigars: During the public comment period on the proposed deeming regulations, the FDA asked for feedback on whether premium cigars should treated differently from other deemed products, or even exempt altogether. Though no one was optimistic that the premium segment would be exempt from all regulations, many believe the segment will at least be subject to less-strict regulations given their high price-point.
- The First Modified Risk Approval Might Not Be a Smokeless Product: While the FDA is still considering Swedish Match’s application for modified-risk status for General Snus, 22nd Century believes it has two cigarette products that should qualify as modified risk: low and high-nicotine cigarettes. Theoretically, the low-nicotine options could help ween smokers off cigarettes while studies show the higher-nicotine options allow smokers to consumer fewer puffs per cigarette and fewer cigarettes overall because they’re getting a higher dose of nicotine.
- Cuban Cigars, Not So Fast: With the July 1, 2015, announcement that President Obama was ending the diplomatic isolation of Cuba, many retailers wanted to know if and/or when they could start selling Cuban cigars. Though the United States now officially has an embassy in Cuba and citizens can freely travel to and from without issue, the trade embargo that prevents the sale of Cuban cigars is still in effect (Congress would have to lift than ban, which Obama has encouraged). Even if the embargo is lifted, there are many obstacles that will have to be tackled—especially once the deeming regs go through. Cuban manufacturers would be subject to the same regulations as U.S. manufacturers if they want to sell their cigars here. In short, retailers will likely be able to sell Cubans at some point … but it will take a while.