A kinder, gentler FDA thread -- now with facts! (TL/DR, the sky is not falling)

[Senor Perfecto]

I do not often report from other cigar sources, but this is a biggie for a lot of people and probably justified.
https://www.reddit.com/r/cigars/comments/4j3vp4/crunching_the_numbers_with_the_fda/

https://www.reddit.com/r/cigars/comments/4j7fsy/crunching_the_numbers_with_the_fda_part_ii/

This guy sounds like he knows what he is talking about. He is spouting facts and experience.

Bottom line: expect somewhere between a $.01 and $1.00 increase per stick. The $1 increase only likely affecting the very very limited fancy sticks. Most will be in the .10 increase range. I think we can handle $2.40 more for that box of Jericho Hill, yeah? To help keep kids off cigarettes/vapes/etc.?

The sky isn't falling and the gubmint is not out to get you

Well... YOU, maybe...

 

[StogieNinja]

I can't view reddit from work, but does he address the backlog of products waiting for FDA approval on the cigarette side and how it's unlikely to be any different on the cigar side?

 

[Senor Perfecto]

I can't view reddit from work, but does he address the backlog of products waiting for FDA approval on the cigarette side and how it's unlikely to be any different on the cigar side?

He says, essentially, not an issue: cigar makers will not even be asked to do so, most likely, as that approval process is for chemical formulations only. So unless you're talking about flavored cigars... no worries. Again, the smart money seems to be on the idea that this was aimed squarely at the vape industry.

 

[Craig Mac]

I am hearing more of few dollars per cigar hike once the manufactures have to pay to test EACH sku and pass that cost on to the consumer in 2 years. The biggest variable is how much the application will cost, and no one knows that number yet.

 

[Senor Perfecto]

I am hearing more of few dollars per cigar hike once the manufactures have to pay to test EACH sku and pass that cost on to the consumer in 2 years

He essentially debunks that in his analysis. The whole idea that each SKU is going to be considered a different cigar is fundamentally wrong. And the $ amount required to approve lines also is much overstated in all the hearsay.

From his perspective, the cigar industry will barely be affected by this ruling, even if it is unchanged come August.

 

[Craig Mac]

He essentially debunks that in his analysis. The whole idea that each SKU is going to be considered a different cigar is fundamentally wrong. And the $ amount required to approve lines also is much overstated in all the hearsay.

I modified my post right after I sent it regarding the biggest variable. I have had several conversations with people in the industry and they all seem to think it's going to be on the higher side, but as I said, it remains to be seen.

 

[Senor Perfecto]

I modified my post right after I sent it regarding the biggest variable. I have had several conversations with people in the industry and they all seem to think it's going to be on the higher side, but as I said, it remains to be seen.

The whole point of his post is, it doesn't require guessing how much things will cost: it's all in the language of the ruling. Listening to people in the industry, who know cigars but not legislation (or how to read it) is counterproductive in this case; you are essentially going to get a reaction that is purely emotional, based on how paranoid/exposed each person feels.

The facts are:

"The pertinent information is found in the chart starting on page 94 and continuing on 95. It talks about Initial Full Substantial Equivalence Reports, Bundled Reports etc. The Full, initial report is the most expensive of these options with $22,787 in estimated cost. Bundled sits at $6,836... and so on down the line. These are the numbers the FDA estimates it will actually cost to get these reports completed and filed. This is important, because at no point does it talk about application fees etc. Why? Because they most likely WILL NOT CHARGE ANY. The TTB does not charge fees to file alcohol formulation fees (which is a decent analogy). Further, this is an economic impact report, so if they were going to charge a fee it --should-- have been included in this report.

But, $22,000 per line is still a huge number and will destroy the little guys! Well, true it is a big number, but in all honest very few of the little guys are producing less than 10,000 units of a particular cigar. Further, they can bundle several sizes together and file them "bundled". That is estimated to cost only $6,836 because frankly... you are cutting and pasting numbers and data, and changing the size of the cigar.

So, I would say the most we can expect to see is a buck or two increase in the cost of cigars if they are super limited, less than 20,000 produced, only one size cigars. For your average line, where they will be producing tens of thousands, and be able to bundle their applications for multiple sizes.... a price increase of more than $.10 would be uncalled for.

Also, they are nice enough to break down weighted average costs for cigars in the next table. $6,560 for the initial compliance period, slightly higher at $8,598 -- due to the fact that this secondary period is more likely to be those limited small batch products, that will not be bundled. Even the smallest batch stuff is more than 10,000 produced."​

Those numbers -- $22,787.00 or $6,836.00 per approval -- that's a REALLY far cry from the "$100,000 to $500,000" you hear bandied about by people who, frankly, have not read the ruling.

Chicken Little.

 

[Craig Mac]

All I am saying is that it remains to be seen, it's a good read for sure, but does include speculation.

 

[Senor Perfecto]

All I am saying is that it remains to be seen, it's a good read for sure, but does include speculation.

Agreed.

 

[StogieNinja]

that's a REALLY far cry from the "$100,000 to $500,000" you hear bandied about by people who, frankly, have not read the ruling.

IIRC, it was the FDA who put out those estimated numbers.

 

[Senor Perfecto]

IIRC, it was the FDA who put out those estimated numbers.

Yes! But that's for changes to *chemical* forumlas, and for the top-tier products like vape juice. Then that same number was associated with cigars by people who haven't analyzed what the rule says, mainly because it sounded worse. This guy's analysis sounds about 100,000 to 500,000* times better than the rumor mill that's been churning the last week.

That's akin to the Treasury putting out a report that defines what each person's tax liability will be, and that the government expects to take in 1,000,000,000,000 in revenue... and someone saying "OH MY GOD THE GOVERNMENT IS MAKING ME PAY A TRILLION DOLLARS IN TAXES!"

(*your results may vary)

 

[CaptainRon]

Any word on pipe tobacco? I'm far more concerned with that than the price of cigars. I've heard, but not confirmed, that there's supposed to be and increase from something like $0.30 to $3.00 per ounce of pipe tobacco to bring it more in line with cigarette tobacco (thanks to manufacturers relabeling ryo tobacco as pipe tobacco).

Thanks for the report. Happy that it doesn't look like the sky is falling for cigars!

 

[ar2381]

If these regulations mean the end of LEs it's not really a big deal IMO. You could argue that the industry would be better off with less LEs as it will force manufacturers to focus on making better long term brands. IMO, many of the smaller manufacturers simply due LEs for the quick cash, and a LE involves less risk.

 

[StogieNinja]

If these regulations mean the end of LEs it's not really a big deal IMO. You could argue that the industry would be better off with less LEs as it will force manufacturers to focus on making better long term brands. IMO, many of the smaller manufacturers simply due LEs for the quick cash, and a LE involves less risk.

On one hand, I like the idea of manufacturers focusing on better, long term brands. But I hate the idea of them being forced to do it, and worse I hate the idea that creativity and experimentation will be completely smothered out, and we the public lose access to a lot of the variety that makes this so much fun.

 

[Senor Perfecto]

On one hand, I like the idea of manufacturers focusing on better, long term brands. But I hate the idea of them being forced to do it, and worse I hate the idea that creativity and experimentation will be completely smothered out, and we the public lose access to a lot of the variety that makes this so much fun.

If it's $1 more per stick it won't end LEs. It's a 10% increase. I think people like us will still buy our yearly boxes of Monsters and Las Calaveras and TAAs.

 

[StogieNinja]

If it's $1 more per stick it won't end LEs. It's a 10% increase. I think people like us will still buy our yearly boxes of Monsters and Las Calaveras and TAAs.

My response was to Alan's post.

As to yours, the question remains as to how they will interpret these rules. If you're right, its absolutely true that a $1 increase will not kill LEs, or the industry. But if everyone else (and I do mean literally every outlet covering this thing) is right, then we deal with Alan's scenario.

I'm just not convinced this one guy somehow or another has insight that no one, including every single individual with a vested interest in the cigar industry who has commented so far, seems to have.

I would be more than happy to eat these words. Ecstatic, even. I do hope you're right. But I'm not convinced.

 

[jasonsbeer]

I do not often report from other cigar sources, but this is a biggie for a lot of people and probably justified.
https://www.reddit.com/r/cigars/comments/4j3vp4/crunching_the_numbers_with_the_fda/

https://www.reddit.com/r/cigars/comments/4j7fsy/crunching_the_numbers_with_the_fda_part_ii/

This guy sounds like he knows what he is talking about. He is spouting facts and experience.

Bottom line: expect somewhere between a $.01 and $1.00 increase per stick. The $1 increase only likely affecting the very very limited fancy sticks. Most will be in the .10 increase range. I think we can handle $2.40 more for that box of Jericho Hill, yeah? To help keep kids off cigarettes/vapes/etc.?

The sky isn't falling and the gubmint is not out to get you

Well... YOU, maybe...

Thanks for the information. While I agree this sounds better than what we've been hearing, I disagree with the conclusion that we have nothing to worry about and $1 per stick is no big deal.

When bureaucrats are involved, we should all worry. Next time around, it will not be $1/stick. These things are always incremental and they need to know we are paying attention and will not tolerate messing with our pleasures.

Just my biased opinion.

 

[THEMISCHMAN]

I'm just gonna leave this here for anyone who's interested.
http://savetheleaf.org


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[Mr. McSquirelly]

I do not often report from other cigar sources, but this is a biggie for a lot of people and probably justified.
https://www.reddit.com/r/cigars/comments/4j3vp4/crunching_the_numbers_with_the_fda/

https://www.reddit.com/r/cigars/comments/4j7fsy/crunching_the_numbers_with_the_fda_part_ii/

This guy sounds like he knows what he is talking about. He is spouting facts and experience.

Bottom line: expect somewhere between a $.01 and $1.00 increase per stick. The $1 increase only likely affecting the very very limited fancy sticks. Most will be in the .10 increase range. I think we can handle $2.40 more for that box of Jericho Hill, yeah? To help keep kids off cigarettes/vapes/etc.?

The sky isn't falling and the gubmint is not out to get you

Well... YOU, maybe...

Thanks for the informative thread. This definitely alleviates a lot of concerns I've had over the last week. I also like the idea of manufacturers being able to apply for an exemption from 'Substantial Equivalent' regulation. That may ultimately prove to be a decisive loophole. Congress can still vote to include an exemption for premium cigars as well when the House votes on the funding for these new FDA regulations. I still believe that contacting your House representative before they vote is key. After the whole Trump run, these representatives are on edge and really nervous about more angry constituents. If I have to pay $2-$3 more to keep Crowned Heads on the shelves, that's fine. I was just worried that they would be taken off the shelves altogether, but that guy on reddit clearly explains why that won't happen. Thanks again, man.

 

[THEMISCHMAN]

Bullshit, we shouldn't have to pay more and the manufacturers shouldn't have to charge more because some Govt. geek is sticking his fingers in our business. That mind set will only help them with their agenda. http://savetheleaf.org

#savemefromthepeopletryingtosaveme


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