According to the Premium Cigar Association (PCA), the U.S. premium cigar industry will face challenges and opportunities in 2024.
In a commentary posted on its website, the industry group detailed issues expected to impact its business this year.
With Congress gridlocked and the U.S. Congress narrowly divided along party lines, the PCA expects to see little legislation signed into law in 2024. Therefore, government action may be more regulatory than legislative.
Aggressive legislation in the U.S. House and Senate remains a threat to the premium cigar and pipe industry, which would result in massive federal tax increases. Separate legislation in the form of the Tobacco Tax Fairness Act and the Caring for Mothers Act uses tobacco tax revenue to pay for new maternal health programs.
The White House Office of Information and Regulatory Affairs is convening and reviewing tobacco product standards to determine flavors in cigars, which would prohibit the determination of flavors in all cigars (except tobacco).
In November 2023, the PCA raised several objections to the product standard and asked the Office of Management and Budget (OMB) to send the rule back to the FDA for further analysis. The Center for Tobacco Products (CTP) has since delayed the release of the final rule, which was originally scheduled for December 2023. Although the FDA is working to finalize the final rule in 2024, the PCA believes that issuing a final rule before the election could deprive millions of adult consumers of a preferred product choice, which would be politically challenging.
The FDA also proposed new requirements for the manufacture, design, packaging and storage of tobacco products. The PCA participated in numerous public forums and submitted written comments opposing the proposed rule, including its applicability to premium cigar factories. The rule is expected to be submitted to the Office of Management and Budget for regulatory review in 2024.
In 2022, the Biden administration announced plans to develop a proposed product standard that would establish maximum levels of nicotine to reduce the addictive properties of cigarettes and certain other combustible tobacco products. The agency has not released the proposed rule, and the PCA's main question is whether the rule applies to premium cigars, cigars more generally, or pipe tobacco.
In September 2023, the Department of Justice, representing the FDA, notified the court of its decision to appeal Judge Amit Mehta’s decision in American Cigar Association et al. identification rules. The case is currently before a three-judge panel in the U.S. Court of Appeals for the District of Columbia Circuit. The case is expected to be argued in 2024. The revocation of the premium cigar designation rule currently remains in place during the appeal process. However, the Court of Appeal may be asked to block this ruling while it considers these arguments.