The FDA’s Cigar Fascism

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Consider this sequence of events.

During the Cold War, the Cuban government becomes communist and aligns with the Soviet Union, and many of that country’s productive citizens flee to the United States where property rights are more secure and government is more constrained. Cuba’s economy predictably fails and is kept afloat for years by foreign aid provided mostly by the Soviets. Meanwhile, Cuban businesses first take root, then flourish in the US, particularly in Miami, including a cigar industry based in Little Havana.

“The FDA’s policies — fascist in the sense that they allow for private ownership but government control — mean that, at the end of the day, the portion of the US cigar industry that escaped Cuba simply traded one repressive regime for another.”

Ironically, many of these cigar manufacturers succeed due to government intervention in the form of the Cuban trade embargo, enforced by the US government. Meanwhile, American demand for Cuban-grown and rolled cigars remains high, and many purchase them in extra-legal markets or on trips abroad — often when “abroad” translates to Mexico or Canada. I once met a man who smoked a Cuban cigar in the 1980s. It was such a profoundly pleasurable experience that he vowed to never smoke another cigar again.

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So it went until the Cuban embargo was lifted by the US government last year and questions arose about whether Miami-based cigar manufacturers would survive competition from los cigarros cubanos. Unfortunately, a threat bigger than competition emerged in the form of new rules for cigar manufacturers announced last week by the Food and Drug Administration.

[Read the full story here, at Mises Wire]

Based on the “duty to protect public health,” the FDA is requiring cigar manufacturers to comply with rules drawn up last year for the electronic cigarette market. These include the requirement of so-called “pre-authorization” applications and fees before being allowed to sell their product. These aren’t one-time tariffs either, as any decision to change tobacco blends in the future — a common practice in a premium cigar market responsive to consumer tastes and preferences — requires FDA permission involving new rounds of applications and fees.

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The costs are enormous and they especially affect the small business, as explained in a recent Miami Herald article:

“I mean I get it — you have to do what Uncle Sam says,” said Sandy Cobas, owner of El Titan, one of the 119 Miami businesses that Miami Mayor Tomás Regalado says depend on hand-rolled cigars. “But how are we going to be able to afford this?”

She isn’t alone, say industry experts like Marvin Shanken, founder, editor and publisher of Cigar Aficionado magazine.

“Miami, and South Florida in general, is the heart of the cigar industry,” Shanken said. “The impact will be most visible there, without a doubt.”

The FDA estimates that small businesses like El Titan, which produces 250,000 to 300,000 cigars per year, will pay $278,000 to $397,000 in application fees and other costs during the initial compliance period. While El Titan will be able to pass some of those fees on to the companies that hire it to make private-label smokes, it will still need to raise prices.

The new rules will have the greatest impact on companies less than a decade old, which will be required to apply for pre-market approval at an average cost of $6,560 per application, according to FDA estimates.

Fourth generation cigar roller, Jose Blanco, who opened Los Cumbres Tabaco in Doral in 2014, figures he will have to submit between 25 and 30 applications, which likely will cost more than $100,000. “For companies starting off in this business, you’re lucky to be breaking even like we are,” Blanco said.

Cigars sold prior to Feb. 15, 2007 — an estimated 60 percent of all cigars sold in the U.S., according to the FDA — are grandfathered in.

Though Tamarac-based Gurkha Cigars was incorporated in 1989 (the brand was first established in 1887), the company estimates it will pay $500,000 in legal costs on top of fees for 800 individual applications.

It’s a lot of money that harms small manufacturers to benefit large ones. In fact, it’s likely the large ones championed the FDA rules to provide them with more market power in a post-embargo world. It also reflects the first rule of government regulation of business, that regulation always causes secondary effects that are sometimes anticipated, and sometimes not. Read the rest of this entry »


Defying Obama’s Condiment Crackdown: States that Demand Hot Sauce Meet or Exceed Customary Standards of Acceptable Hotness

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Poll: Americans Want the Government to Stop Banning Things They Like

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Breanna Deutsch reports: Americans want the government to stop acting like their mother.

According to a Reason-Rupe poll, Americans do not want government to ban trans-fats, e-cigarettes, online poker, violent video games or genetic testing kits.

Many Americans are becoming frustrated with the government’s growing involvement in what they believe should be their personal decisions.

For one, they do not want the government to be their personal nutritionist. The poll found that 71 percent of Americans oppose the Food and Drug Administration’s proposed trans-fats ban. Only 24 percent of Americans would support measures to outlaw the additive.

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FDA Shuts Down 23andMe: Outrageously Banning Consumer Access to Personal Genome Information

8VBGQ61g14N4-jiWwL7oJA_img_kitReason Magazine’s  reports: For a couple of years, I have been warning all my friends and colleagues to purchase $99 personal genome testing from 23andMe before the Feds banned it. Well, now the Food and Drug Administration has banned it sending the genome testing company a warning letter:

The Food and Drug Administration (FDA) is sending you this letter because you are marketing the 23andMe Saliva Collection Kit and Personal Genome Service (PGS) without marketing clearance or approval in violation of the Federal Food, Drug and Cosmetic Act (the FD&C Act).

This product is a device within the meaning of section 201(h) of the FD&C Act, 21 U.S.C. 321(h), because it is intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease, or is intended to affect the structure or function of the body. For example, your company’s website at http://www.23andme.com/health (most recently viewed on November 6, 2013) markets the PGS for providing “health reports on 254 diseases and conditions,” including categories such as “carrier status,” “health risks,” and “drug response,” and specifically as a “first step in prevention” that enables users to “take steps toward mitigating serious diseases” such as diabetes, coronary heart disease, and breast cancer. Most of the intended uses for PGS listed on your website, a list that has grown over time, are medical device uses under section 201(h) of the FD&C Act. Most of these uses have not been classified and thus require premarket approval or de novo classification, as FDA has explained to you on numerous occasions.

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