As the premium cigar industry barrels toward the Sept. 9, 2020 deadline to file Substantial Equivalence applications, many have been holding out hope for a last-minute reprieve. Substantial Equivalence is part of the compliance process defined by the Deeming Rule that requires manufacturers of covered tobacco products–including premium cigars, pipe tobacco, vapor, e-cigarettes, and hookah–to prove that tobacco products that do not have grandfathered/predicate status are “substantially equivalent” to a tobacco product that has predicate status. Substantial Equivalence has been a contentious part of the compliance requirements set forth by the U.S. Food and Drug Administration (FDA) due to a lack of clarity in how the process will be executed, the true costs associated with compiling the required reports and the length of time between submitting the reports and receiving approval or denial from the FDA.

On Aug. 5, 2020, in a letter penned by the U.S. Department of Justice’s (DOJ) trial attorney, Garrett Coyle, and sent to U.S. District Court for the District of Maryland Judge Paul W. Grimm, the DOJ filed a motion seeking clarification that the Court’s remedy order, ECF No. 127, does not prohibit the FDA from deferring enforcement of the Tobacco Control Act’s premarket authorization requirement against premium cigars on a case-by-case basis or, in the alternative, for the relief from the remedy order under the Federal Rule of Civil Procedure 60(b).

The letter goes on to state the FDA issued guidance in January 2020 stating its current enforcement priorities, which named flavored e-cigarettes and cartridge-based e-cigarette products as their highest priority due to their appeal and targeting of youth and premium cigars among their lowest priorities. The current information the FDA has, it states, indicates that youth smoke premium cigars comparatively less than most other deemed tobacco products. Due to this, the FDA would like to defer enforcement of the premarket authorization requirement for premium cigar manufacturers and importer on a case-by-case basis.

“The deferrals are intended to help prioritize the use of the FDA’s limited enforcement resources while the agency undertakes a new research effort to evaluate the public health impact of premium cigars. The FDA intends to describe how manufacturers and importers can submit deferral requests in a guidance document that would take effect immediately upon insurance.”

In the letter, the FDA acknowledges something that many trade associations and cigar industry advocates have argued since the Deeming Rule was first introduced–the FDA currently lacks the manpower and resources to effectively handle the influx of Premarket Tobacco Product Applications (PMTA) and enforcement.

“Premium cigars are made in many varieties with thousands of stock unites, which could entail a large influx of premarket applications for premium cigars on the market as of the deeming rule’s effective date,” writes Coyle. “The forthcoming guidance will allow the FDA to focus its limited enforcement resources on premarket applications for other types of deemed products posing a greater risk for youth initiation or use (of which the FDA anticipates receiving a significant volume by the September 9, 2020 deadline).”

The letter acknowledges comments and information the FDA has received on premium cigars over the years, including how premium cigars those a lower risk to the individual and public health than other tobacco products and how there is a small market for these products. This is something the FDA would like to study further, and the FDA would like to seek broad public comment on the research plan and will ultimately use this information to update its regulatory policy for premium cigars, including the public health impact and regulatory impact with premarket review of premium cigars.

This new plan for premium cigar regulation is not finalized yet and until the court makes a ruling and the FDA makes a formal announcement, the Sept. 9, 2020 deadline for Substantial Equivalence applications still remain in place. At best, this letter hints that at best, the industry could be granted another extension as FDA regulations are finalized. While premium cigars are considered a low priority, they are still in line for regulations and premarket review at some point.

Different trade associations who have been pushing for a delay in the Substantial Equivalence process are commenting on the latest move. Glynn Loope, the executive director at the Cigar Rights of America (CRA), commented, “While this letter is a welcomed recognition that premium handmade cigars warrant regulatory relief, it is concerning that the industry will be asked to submit, yet again, analysis to demonstrate what has already been proven – premium handmade cigars are unique and lack the adverse public health impact some seem determined to claim. This letter also recognizes that the agency has higher priorities. It is time for the FDA to provide the premium cigar industry and its family-owned businesses permanent relief from this unjustified regulatory scheme, rather than this uncertain potential process.”

Scott Pearce, executive director at the Premium Cigar Association (PCA), added: “This is an important indication by the FDA that they do not have the capacity or resources to regulate premium cigars for premarket review. However, the industry needs further clarity and is hopeful that the Trump Administration will take definitive action in support of the small businesses across the country and go a step further. We cannot operate businesses in regulatory uncertainty and the FDA’s action further complicates the situation especially without their definitive release of guidance on the topic.”

For up-to-date information regarding Substantial Equivalence, visit the FDA website fda.gov/tobacco-products/market-and-distribute-tobacco-product/substantial-equivalence.