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Davidoff- General Cigar July 17, 2019 Submitted via www.regulations.gov Division of Dockets Management Food and Drug Administration 5630 Fishers Lane, Rm. 1061 Rockville, MD 20852 Re: Docket No. FDA–2016-N-3818; Content and Format of Substantial Equivalence Reports; Food and Drug Administration Actions on Substantial Equivalence Reports; Proposed Rule Dear Sir or Madam: Davidoff of Geneva USA, Inc. (“Davidoff USA”), General Cigar Company (“General”), Nick’s Cigar Company d/b/a Tabacalera Perdomo (“Perdomo”), SWI-DE, LLC d/b/a Drew Estate (“Drew Estate”), Tabacalera Unidas, Inc. d/b/a C.L.E. Cigar Company (“CLE Cigars”) and Tabacalera USA Inc. (“TUSA”) (collectively “Premium Cigar Manufacturers”) are the six of the largest premium cigar companies in the United States and sell most of the iconic and acclaimed brands of premium cigars on the market today. I. Background on the Premium Cigar Manufacturers Davidoff USA is the exclusive U.S. importer and distributor of the portfolio of premium cigar products of the Swiss company, Oettinger Davidoff AG (“ODAG”) based in Basel, Switzerland. Davidoff USA is based in Pinellas Park, Florida and is a wholly-owned subsidiary of ODAG. Davidoff USA’s acclaimed premium cigar brands include Davidoff, AVO, Baccarat, Camacho, Cusano, The Griffin’s, La Fontana, Legendario, National Brands, Winston Churchill, Zino and Zino Platinum. General Cigar Co. is one of the world’s foremost manufacturers and marketers of premium cigars. The company was started in 1907 by German immigrants and is now a subsidiary of Division of Dockets Management FDA-2016-N-3818 July 17, 2019 Page 2 of 40 Scandinavian Tobacco Group. General Cigar is known primarily for producing brands like Macanudo, Cohiba, CAO, Hoyo de Monterrey, Punch, La Gloria Cubana and Partagas. General Cigar operates facilities in the United States, Honduras, the Dominican Republic and Nicaragua. General Cigar also operates the brick and mortar cigar lounge Club Macanudo in New York City, and its sister companies Meier & Dutch and Cigars International are respectively two of the largest wholesalers and online retailers of premium cigars in the country. General Cigar provides employment to approximately 125 people in the United States and 3000 people abroad. Perdomo is a Miami, Florida based company with over 2,000 employees in Florida and Nicaragua. Perdomo is a family run business founded by third-generation cigar maker Nicholas Perdomo, Jr. Perdomo has its origins with Silvio Perdomo who was a leading cigar maker in Cuba prior to the Cuban revolution, and after years in a Cuban jail emigrated to the United States in 1974. Silvio taught his son Nicholas Perdomo Sr. his craft, and Nicholas Sr. also eventually emigrated to the United States with the assistance of close friends. Nicholas Jr. was determined to follow in the footsteps of his father and grandfather and founded Perdomo in his garage in Miami in 1992. Today, Perdomo runs an 88,000 sq. foot state of the art factory, which is one of the largest cigar factories in Nicaragua, and produces the Perdomo brand including the Perdomo 20th Anniversary, Perdomo Estate Seleccion Vintage, Perdomo Habano, Perdomo Reserve Champagne, Perdomo 12 Year Double Aged Vintage, Perdomo Lot 23, Perdomo Small Batch and Perdomo Factory Tour Blend, amongst other brands. Drew Estate is a leading manufacturer of some of the most iconic brands in the premium cigar category, including ACID, Liga Privada, Tabak Especial, Undercrown, Herrera Esteli, Division of Dockets Management FDA-2016-N-3818 July 17, 2019 Page 3 of 40 Larutan, Nica Rustica, Deadwood, La Vieja Habana and others. As the owner of one of the largest hand-rolled premium cigar factories in the world, Drew Estate employs more than 1,700 people at its manufacturing facility, La Gran Fabrica Drew Estate, in Esteli, Nicaragua, as well as more than 75 employees in its U.S. operations, based out of Miami, Florida. Drew Estate is also the exclusive U.S. distributor for Joya de Nicaragua, the original and oldest premium cigar company in Nicaragua. Guided by its stated mission, “The Rebirth of Cigars,” Drew Estate has always remained boutique at heart and committed to delivering a wide array of beautifully crafted handmade cigars that meet the diverse needs of the Mom & Pop specialty retail shops in which premium cigar brands are built. Drew Estate is renowned for its unparalleled ability to engage consumers, including through innovations such as Barn Smoker and Cigar Safari that educate adult smokers about the joyous artisanal traditions of handmade premium cigars. CLE Cigars is based in Miami, Florida and employs over 700 people in Nicaragua, Honduras and the United States. CLE Cigars was founded in 2012 by third-generation premium cigar maker Christian Eiroa. Christian grew up in Honduras, but his cigar making roots trace to his grandfather Generoso Eiroa a Cuban cigar maker. The Eiroa Family Farm is one of the most technologically advanced tobacco farms in the world, and CLE cigars takes utmost pride in every aspect of creating each handmade, premium cigar from seed to smoke. CLE Cigars manufacturers and distributes the brands CLE, Asylum, Eiroa, and Wynwood Hills. TUSA, based in Ft. Lauderdale, Florida, is a wholly-owned subsidiary of Imperial Brands PLC, and is a leader in the United States premium cigar space. TUSA has three main businesses that operate within its portfolio: Altadis U.S.A. Inc., JR Cigar, and Casa de Montecristo. Altadis U.S.A. Inc. Premium Cigar Division (“AUSA PCD”) is a distributor of fine premium cigars; its Division of Dockets Management FDA-2016-N-3818 July 17, 2019 Page 4 of 40 brands include Montecristo, Romeo y Julieta and H. Upmann. JR Cigar has a wholesale arm within its portfolio and is one of the premier cigar retailers in the United States, selling cigars to adult consumers through e-commerce and catalog retail mediums. Casa de Montecristo offers premier modern cigar stores, at 20 locations in eight states, featuring walk-in humidors and lounges for adults seeking an extraordinary and relaxing cigar smoking venue. In addition, TUSA works with various cigar manufacturers located outside the United States. TUSA companies are involved in every aspect of distributing and selling premium cigars. II. Introduction The Premium Cigar Manufacturers are key stakeholders in the implementation of any regulation of cigars as these regulations significantly affect their ability to conduct business. The Premium Cigar Manufacturers submit this comment to FDA’s Proposed Rule on the Format and Content of Substantial Equivalence Reports.1 These comments will be organized into three main sections: (i) the scientific and legal reasons premium cigars should be exempt from regulation; (ii) the Proposed SE Rule as written is unworkable for premium cigars and does not account for the unique aspects of premium cigars; and (iii) the economic impact of the Proposed SE Rule would result in a ban on much of the premium cigar category. 1 Content and Format of Substantial Equivalence Reports; Food and Drug Administration Actions on Substantial Equivalence Reports, 84 Fed. Reg. 12,740 (proposed Apr. 2, 2019) (to be codified at 21 C.F.R. pt. 16, 1107) [hereinafter Proposed SE Rule]. Division of Dockets Management FDA-2016-N-3818 July 17, 2019 Page 5 of 40 III. Premium Cigars Should be Exempt from FDA Regulation a. Definition of Premium Cigars The Premium Cigar Manufacturers are all members of the Cigar Association of America, Inc. (“CAA”), and contributed extensively to comments submitted by CAA to FDA’s Advanced Notice of Proposed Rulemaking on the Regulation of Premium Cigars, which outlined the scientific and legal reasons why premium cigars should be exempt from FDA regulation.2 The Premium Cigar ANPRM specifically asked for a proposed definition of Premium Cigar. The CAA Premium Cigar Comments proposed the following definition of premium cigar, which the Premium Cigar Manufacturers all adopt and endorse: … a premium cigar (i) is wrapped in whole leaf tobacco; (ii) contains a 100% leaf tobacco binder; (iii) is made by manually combining the wrapper, filler, and binder; (iv) has no filter, tip, or non-tobacco mouthpiece and is capped by hand; and (v) weighs more than 6 pounds per 1000 units.3 b. FDA’s History with Premium Cigars i. Proposed and Final Deeming Rule Since FDA first considered cigar regulation, it has recognized that premium cigars are unique, with construction, usage patterns, and potential health effects much different from any other tobacco product. The agency also understands that premium cigars are but a very small 2 Regulation of Premium Cigars, 83 Fed. Reg. 12,901 (proposed Mar. 26, 2018) (to be codified at 21 C.F.R. pt. 1100, 1140, 1143) [hereinafter Premium Cigar ANPRM]. CAA’s comments on the Premium Cigar ANPRM are incorporated by reference and attached as Exhibit 1 [hereinafter CAA Premium Cigar Comments]. 3 Whenever the term “premium cigar” is used through this Comment, the Premium Cigar Manufacturers use this definition in reference to that term. Division of Dockets Management FDA-2016-N-3818 July 17, 2019 Page 6 of 40 fraction of the overall tobacco space. These are, perhaps, among the reasons FDA has continually vacillated on the appropriate regulatory status of premium cigars. First, in the Proposed Deeming Rule, FDA proposed “Option 1,” which did not distinguish among various types of cigars, and “Option 2,” which would have exempted premium cigars from regulation.4 FDA proposed to define a “premium” cigar as one that: (1) Is wrapped in whole tobacco
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