URGENT: Understanding Senate Bill No. 793

September 3, 2020

Dear California Retailers,

Senate Bill No. 793 has passed and signed into law by Governor Newsom as of August 28, 2020.

Senate Bill No. 793 generally prohibits California tobacco retailers from selling "flavored tobacco products" and "tobacco product flavor enhancers."

Below is our interpretation of this bill. We would highly recommend seeking legal counsel if you have any questions or need clarification on the details of this bill.

  • What qualifies as a "flavored tobacco product"? A flavored tobacco product means any tobacco product that contains a constituent that imparts a characterizing flavor.
  • What qualifies as a "tobacco product flavor enhancer"? A tobacco product flavor enhancer means a product designed, manufactured, produced, marketed, or sold to produce a characterizing flavor when added to a tobacco product.
  • Which items will be banned for sale in California? All flavored tobacco products (except for items on the exemptions list) and tobacco product flavor enhancers will be banned in the state of California, including, but not limited to:
  • Flavored Cigarettes (including menthol, mint, etc.)
  • Flavored Snus (including menthol, mint, etc.)
  • Flavored Machine-Made Cigars (including Swisher Sweets, Backwoods, Black & Mild, etc.)
  • Flavored Chewing Tobacco
  • Flavored Vape Juice
  • Flavored E-Cigarettes
  • Flavored Snuff
  • Flavored RYO (roll-your-own) Cigarette Tobacco
  • Plus all other flavored products that meet the definition of a "tobacco product". (Section 10445"A product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, cigars, little cigars, chewing tobacco, pipe tobacco, or snuff.")
  • Do any flavor exemptions apply? Yes, the new law does not apply to the following flavored tobacco products:
  • "Flavored Premium Cigars" (defined as any cigar that is handmade, that is not mass produced by use of mechanization, that has a wrapper that is made entirely from whole tobacco leaf, that has a wholesale price of no less than $12, that does not have a filter, tip, or non tobacco mouthpiece, and that is capped by hand);
  • "Flavored Loose Leaf Tobacco" (defined as, consists of cut or shredded pipe tobacco, usually sold in pouches, excluding any tobacco product which, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes, including roll-your-own cigarettes); and
  • "Flavored Shisha Tobacco Products" (defined to include products intended for smoking in a hookah including those with constituents that imparts a distinguishable taste or aroma other than that of tobacco), provided the hookah retailer, among other things, does not permit entry to anyone under 21.
  • Can I still sell flavored premium cigars in my retail store? Yes, as long as it meets the definition of a "premium cigar" and has a minimum wholesale price of $12.
  • Do non-flavored premium cigars need to meet the $12 wholesale minimum? No, the definition of "premium cigars" only applies to flavored tobacco products for the purpose of this bill. You may continue to sell non-flavored premium cigars as usual.
  • I have a cigar lounge which allows smoking on-site, can a customer purchase a flavored premium cigar and consume the cigar on premises? Yes, as long as the cigar meets the definition of a premium cigar and has a minimum wholesale price of $12.
  • Can I still sell flavored pipe tobacco in my retail store? Yes, as long as it meets the definition of "loose leaf tobacco".
  • How does the new law penalize violations? The California tobacco retailer will be fined $250 for each violation.
  • When does this new law take effect? Currently, the new law is scheduled to take effect on January 1, 2021.

 

- California Association of Retail Tobacconists, Inc. 

 

Nat Sherman International Closing

August 3, 2020

By David Savona I Cigar Aficionado

Ninety years after it opened its doors for the first time, Nat Sherman is closing down. Nat Sherman International Inc., which has been owned by cigarette giant Altria Group Inc. since 2017, will cease operations by the end of September, shutting down not only its midtown Manhattan cigar store but also its entire wholesale business.

The decision comes several months after Altria began looking for a potential buyer for the cigar subsidiary; the company announced it was considering the sale of Nat Sherman International Inc. in October.

“We worked hard to successfully transition Nat Sherman International to a new home. The Covid-19 pandemic created new challenges that were unfortunately too big to overcome,” said Jessica Pierucki, general manager, managing director for Nat Sherman.

Premium cigars were never a part of the Altria story. While the company had cigars in its portfolio prior to the acquisition of Nat Sherman, it is a machine-made cigar operation (Black & Mild) that is far closer to its core cigarette business than to handmade cigars. Back in October, Pierucki told Cigar Aficionado: “While we recognize the strength and value of the premium cigar business, it’s not core to Altria’s tobacco portfolio.”

Altria is one of the largest tobacco concerns in the world, with annual revenues of $25 billion. It acquired Nat Sherman in January 2017, buying it from the Sherman family for undisclosed terms. Altria’s major interest in Nat Sherman was the company’s cigarette business, which began in the 1940s.

The Nat Sherman cigarette division, which Altria separated from the cigar division after the acquisition, will remain in business.

The Nat Sherman story dates back to 1930, when the first version of the store opened in Manhattan at 1400 Broadway. The current location, at 12 East 42nd Street, marks the fourth location of the shop.
 
Nat Sherman International has 24 employees. The cigar store (now known as the Townhouse) is not owned by the company, and is leased. All of the company’s cigars (such as Timeless) are made under contract, so the company does not own a cigar factory.
 
Before the sale to Altria, Nat Sherman had embarked on an ambitious rebranding of its cigar line, spearheaded by Michael Herklots, who is now vice president of Nat Sherman International. The new cigars earned several 90-point-and-higher scores, and made appearances on Cigar Aficionado’s Top 25.

“Leading what has become Nat Sherman International’s final chapter these last nine years has been the honor of a lifetime,” said Herklots. “Hopefully, our premium cigars will live on in the humidors of our greatest fans and be appreciated with fond memories for many years to come.”

Gene Tipton, 74, Longtime Altadis U.S.A. Employee Passes Away

Gene Tipton was a friend and source of valuable information to JMG for many years prior to his retirement from Altadis.

We are sorry to learn of his passing. He will always be remembered as a champion of the cigar industry and a trusted colleague.

Our prayers go out to his wife and family.

Gene, your smile and powerful handshake will be missed.


July 8, 2020

By Charlie Minato - Halfwheel 

Gene Tipton, who spent five decades working at Altadis U.S.A. and its predecessors, has passed away due to complications from cancer.

Tipton’s career began in 1964 at a company called Hav-A-Tampa Cigar, which made machine-made cigars in Tampa until 2009. That company was one of the predecessors to Altadis U.S.A., the modern-day premium cigar company behind the U.S. sales of Montecristo, Romeo y Julieta and others. Tipton worked for the company until 2014, when he retired as the vice-president of premium cigars after spending 50 years at the combined companies.

A year later he would find himself back in the cigar business, this time working for Sindicato Cigar Group, which was being led by Jim Colucci, with whom Tipton worked with during their tenures at Altadis U.S.A.

“We are very saddened to learn that Gene Tipton has passed away,” said Javier Estades, president and ceo of Tabacalera USA, the parent of Altadis U.S.A., in a statement. “I met Gene when I came to the USA to work at AUSA more than nine years ago. He was truly a gentleman who loved this industry so much as well as our customers and clients. He had a rare combination of a deep knowledge of our market and was a great leader for our sales team. He was definitely an outstanding VP of Sales for so many years and from whom I learned so much.”

Update — This post originally indicated that Tipton was 75-years-old, he was 74.

US Court of Appeals Unanimously Strikes Down Warning Labels

July 7, 2020

Washington, DC —The Premium Cigar Association (PCA) and Cigar Rights of America (CRA) are pleased that a unanimous panel of the United States Court of Appeals for the District of Columbia Circuit found flaws in the FDA’s Deeming Rule regulating cigars and held that the Food & Drug Administration (FDA) did not do necessary work to show an effect of large cigar warning labels on reducing smoking rates.

Judge Gregory G. Katsas notes in the opinion, “The Tobacco Control Act permits the Food and Drug Administration to regulate tobacco products for the public health, but only after considering whether the regulation would likely increase or decrease the number of smokers. Under this authority, the FDA promulgated regulations requiring extensive health warnings on packaging and in advertising for cigars and pipe tobacco. The FDA concluded that these warnings would help communicate the health risks of smoking, but it failed to consider how the warnings would likely affect the number of smokers. We hold that this failure violated the Tobacco Control Act and the Administrative Procedure Act.”

On February 3, U.S. Federal District Court Judge Amit Mehta issued a ruling overturning the FDA regulation that required six new health warning statements for premium cigars to be printed on premium cigar packaging/cigar boxes and premium cigar advertisements. The court found that “the FDA’s subjecting of premium cigars to warnings requirements to be arbitrary and capricious in violation of the Administrative Procedures Act (APA), insofar as the agency failed to provide a reasoned explanation for this action.”

Both of these decisions further affirm the message of the PCA and CRA: That the FDA’s regulation of premium cigars is flawed and exceeds its statutory authority without justification. PCA Executive Director Scott Pearce notes, “We commend the work of our legal team on this case and providing a win for the industry. We believe that similar flaws infect the substantial equivalence requirements, which we continue to fight in the courts and with the administration”. Glynn Loope, executive director at Cigar Rights of America, stated upon the release of the court's decision, "This pronouncement by the court ratifies what the courts and members of congress have been saying for years: A reflexive, unstudied, “one-size-fits-all“ approach to regulation simply doesn’t work. For all too long, that h as been the approach of the agency, and the courts continuously tell them they’re wrong. It’s time for court decisions like today, and messages from hundreds of members of congress from both sides of the aisle to be heard: Exempt premium cigars from the most onerous elements of these regulations, and reform the most economically threatening rules that have already been implemented.”

Read the full opinion here.