The Cigar Inn exudes success. Well-dressed men and occasionally a couple of women sit on plush and leather chairs, elegantly smoking. On any given evening, half a dozen languages flit through the thick smoke — the midtown-Manhattan location is a few blocks from United Nations headquarters — and cufflinks with the flags of several countries line the walls, along with candles, humidors, and cigar cutters for sale. There’s even a barber chair for a shave, as well as a shoe-shine service.
Don’t let the luxe setting fool you. The Fakih brothers, originally from Lebanon, have spent more than two decades painstakingly building their New York City cigar enterprise. From humble beginnings in the ’80s at a West Village shop that sold a few smokes, in addition to hats, T-shirts, and all sorts of “funky stuff,” as they put it, they carefully expanded their cigar offerings during economic booms, meticulously stocking smokes and merchandise recommended by their growing clientele. They lived paycheck to paycheck during the recession, negotiating with the landlord as they fell late on rent, and they manfully shouldered a tax spike that cut significantly into their profits.
But new and ambitious regulations on cigars proposed by the Food and Drug Administration pose the biggest threat to their business yet, the Fakihs say.
“Creating a business takes so much time and effort,” says Bass Fakih, a friendly man who sports a hot-pink goatee. “The American dream is not something you start and it’s done. Here, you work your ass off, but it’s available.” For years, Bass says, the Cigar Inn has created jobs and paid taxes, “but the FDA’s approach [to regulating cigars] is crazy, and it will put us down. We’ll be depending on government assistance.”
The cigar industry has been wary of upcoming regulations since 2009, when Congress passed the Tobacco Control Act, giving the FDA the authority to regulate any tobacco or tobacco-derived product. In April, the FDA finally published its proposed rules, opening them up to comment until early August.
The regulations would impose three new rules that the cigar industry views as particularly devastating.
First, they would subject many new cigars to a pre-market review process, which the industry says is somewhat comparable to the process the agency uses to review a new pharmaceutical product.
Cigar manufacturers would have to file an application for each individual new smoke, a process that takes around 5,000 hours and must be done perfectly. Hire a lawyer to guide you through this onerous paperwork, and the cost could rise above $1 million for each new type of cigar.
And then there’s the lag — already, the FDA is behind in reviewing about 4,000 similar applications for cigarettes and smokeless tobacco. The cigar industry says that if the proposed regulations go into effect, they would flood the FDA with an additional 10,000 new applications each year, stretching already long waits for approval even longer.
But for the past five years, new cigars have become a major driver of the tobacco industry, with most companies issuing several fresh products a year, says Charlie Minato, editor of the popular cigar blog Halfwheel. “The cigar industry is mimicking the kind of development of new products similar to what you’re seeing in the craft-beer market,” Minato says. “There are more new products being released today than ever before in the history of the cigar business, I would imagine — certainly since the Cuban embargo. . . . Under the new regulations, if you have to go through the FDA to get approval, that would mean the new-product boom would stop in a heartbeat.”
The second new rule would ban free cigar samples, another industry staple. The cigar industry doesn’t pass out free stogies to kids, as regulators fear, but it does use sample smokes to draw new customers and retain old ones, says Glynn Loope, the executive director of Cigar Rights of America, a coalition of 60 cigar manufacturers as well as retailers and smokers in all 50 states. Cigar smoking is “a temperamental process,” Loope explains, “and manufacturers want to make sure that the consumer likes the new products. You ought to be able to try it before you spend $250 on a box of cigars. This [ban] would just rip the heart out of the way the premium-cigar industry markets to the consumer.”
Finally, the FDA has considered exempting some so-called premium cigars from the rigorous pre-market review process — but its definition of which cigars qualify is problematic. Under the FDA’s proposed rules, a cigar must meet eight standards before it can be considered “premium,” including full-tobacco-leaf wrapping and the lack of infusion of additional flavors into the cigar.
Most contentious, the FDA has arbitrarily decided that a cigar doesn’t qualify as “premium” unless it costs $10 or more. But “85 percent of the market of premium handmade cigars is $9.99 or less,” Loope says. “A lot of incredible cigars on the market cost $6.50, $7.50. So that part of the [proposed] regulations is horrible.”
That $10 standard becomes all the more unreasonable, Minato says, because the FDA looks only at the price at the cash register — but different states impose different taxes on cigars. Some manufacturers and shops may hike prices across the board just to get around the FDA’s arbitrary cut-off.
Retailers like the Cigar Inn will see their selection decimated as companies put out fewer cigars each year — some American manufacturers may even go out of business entirely — and as consumers hesitate to pay the arbitrarily increased prices for once-cheaper smokes. “Seventy percent of what you see here would be gone,” says Gus Fakih, waving his hand at several shelves in the Cigar Inn’s walk-in humidor. “And what are you going to do with the companies that make them? . . . After all these years, suddenly there comes a law that will slash everything — gone! Did I sweat my neck and my head and my butt for this?”
Cigar shops and cigar manufacturers have protested vociferously, rallying loyal smokers to fight the proposed regulations. The FDA received at least 81,896 comments before the closure of the comment period.
Loope tells me that 162 representatives from both parties in the House, as well as 16 senators, have signed on to legislation that would prevent the FDA from cracking down so harshly on the cigar industry.
The Fakihs say they find the federal government’s level of regulation disturbing. “Protection of people’s health, yes, but at the same time, [the federal government] is taking away their freedom,” says Bass. “We have hoped this business will prosper and continue to move on — until now, when the FDA is moving against us.”
— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.