House Committee Passes HR 2339 But Was It Really A Win?

First, let me state this article is 100% the opinion of Barry. It is being typed from my fingers. Yesterday, HR 2339 passed the committee vote by a vote of 28-24 and some people are calling this a win for the cigar industry. It is, to a degree, because it appears cigars are getting an exemption. However, that exemption is only being offered to a select few brands as they appear on the shelf at the time of writing this article.

The original bill called for a ban of online tobacco sales, including cigars. It required all transaction to be done face to face. So, by this definition, you couldn’t even call ahead, pay for the box and have your significant other pick it up while running errands.

The following lifeline would be added to the Federal Food, Drug, and Cosmetic Act:

(C) by adding at the end the following:

‘‘(iii) subject to subparagraph (C), for the period beginning on the date of the enactment of the Reversing the Youth Tobacco Epidemic Act of 2019 and ending on September 30, 2028, the tobacco product is a cigar and—

‘‘(I) is wrapped in whole tobacco leaf;
‘‘(II) contains a 100-percent leaf tobacco binder;
‘‘(III) contains primarily long filler tobacco;
‘‘(IV) does not have a characterizing flavor other than tobacco;
‘‘(V) weighs more than 6 pounds per 1000 units;
‘‘(VI) has no filter, tip, or non-tobacco mouthpiece;
‘‘(VII)(aa) is made by combining manually the wrapper, filler, and binder and is capped by hand; or

‘‘(bb) has a homogenized tobacco leaf binder and is made in the United States using human hands to lay the 100-percent leaf tobacco binder onto only one machine that bunches, wraps, and caps each individual cigar; and

‘‘(VIII) has a retail price (after discounts or coupons) per cigar of no less than—

‘‘(aa) for calendar years 2019 and 2020, $12; and

‘‘(bb) for each subsequent calendar year, $12 multiplied by any percent increase in the Consumer Price Index for all urban consumers (all items; U.S. city average) since calendar year 2020.’’

Let’s discuss the price, which effectively kills the online sale of bundle cigars. One can argue this is the highest segment of online sales. It hurts people on a fixed income. It hurts the person in middle America who now needs to drive 2 hours for a $50 dollar bundle of 20 cigars.  It will also prevent cigars like the Padron Thousand Series from being sold online because they are less than $12. It would also hurt a more modern brand like RoMaCraft Intemperance from getting a pass on substantial equivalence because it retails for less than $12 before any local taxes.

This in turn will either force companies to dramatically raise prices or have to deal with the aforementioned substantial equivalence. The price increases wouldn’t stop at one line, as even lines above $12 will go up in price to create the different tiers that currently exist in a companies’ portfolio.

So, while this is a win for manufacturers, for me as a consumer it is like an OT tie in hockey (before the invention of the shootout). Yes, we got the point, but it’s not a win.

Hopefully, as the bill moves through the process some changes will be made to benefit all those who enjoy an adult product, cigars.

Join us this Saturday on The Cigar Authority at 12 Noon as we discuss this and announce our Contenders for Cigar of the Year.

Update to Bill HB 2339 on Scribd