Monday, July 18, 2016

NEW FDA RULING WILL CRIPPLE THE CIGAR INDUSTRY AND COULD CREATE A NATIONAL SECURITY THREAT

Ruling would put newer manufactures out of business and have devastating effects on Central America and the Caribbean

Fort Lauderdale, FL - The FDA's new ruling against the Cigar Industry will have devastating effects on cigar manufacturing, could leave more than 400,000 people unemployed in Central America, particularly single mothers that work in the fields.  It could also increase the drug trade with the United States.  It could result in significant job loss in the U.S.

"The companies greatest at risk for losing their business as a result of this ruling are the smaller manufacturers that have been established since 2007," said Kaizad Hansotia, the CEO of Gurkha Cigars.  "It is unjust for them to lose their livelihood and for their businesses to be destroyed by a regulation that was never even intended for premium cigars."

Hansotia is leading the charge to build awareness on the devastating effects of this ruling. The FDA ruling would put the same rigorous review on premium cigars that it has on cigarettes.  It was initially intended for the regulation of smokeless tobacco products such as vapes that market to children and is addictive.  Premium cigars were then rolled in much to the disappointment and surprise of Congress on both sides of the aisle. Premium cigars are not addictive, as they are not inhaled, celebratory and artisanal in nature.  In an industry where the average price of a cigar is more than the price of a whole box of cigarettes, teens aren't rushing to cigar shops to get their hand on the latest cigar.

The most damaging item in the ruling included new products.  Cigar lovers eagerly wait for and enjoy new and exciting blends.  This new item would require product verification and government approval prior to release.  Manufactures would have to put in applications for review of all cigars.  New cigars cannot be sold until the application has been approved.  Existing cigars can continue to be sold for 12 months of the application being reviewed, but if in 12 months the FDA has not had time to approve it, sales must cease.  The issue is that there is a notorious backlog in the FDA and, because of the artisanal nature and unique blends of cigars, it is estimated to result in more than 40,000 new applications.

"If you were in business after 2007 the FDA can shut you down.  How can the US government shut down a business based solely on an arbitrary start date of operation?" said Hansotia.   "This ruling is punitive and goes against the principles of capitalism and what that the US represents."

The FDA is not receiving any new budget or operational growth to deal with the demand so in essence you will see many cigars simply being pulled off the shelf.  In addition, the ruling is incomplete, as the FDA has not addressed the cost for HPHC testing.  It is expected that the cost be astronomical and will put several small manufactures out of business.  The FDA has not issued any guidance on the matter.  

Small farms throughout Central America have enjoyed the twice a year harvest that a cash crop such as tobacco allows.  Eliminating this steady and lucrative source of income could force farmers to grow other crops with similar harvests such as coca leaves and marijuana to sustain themselves versus crops with longer growth cycles and smaller paydays.

"The US has been working with and subsidizing farms in Peru and Bolivia to get rid of these illegal crops and grow other things," said Hansotia.   "This ruling will have an adverse effect and force countries that have not been involved in the drug trade to consider it as an option."

The ambassadors of several countries in Central America have issued pleas to the White House against the rulings and the U.S. Small Business Administration went on record saying that the economic impact of the ruling has been severely underestimated.  The mayors of the cities of Miami and Tampa have also sent economic impact letters to the White House.

"The FDA has by and large ignored Congress, the US Small Business Administration, Ambassadors of Central America and local government in truly assessing the far reaching effects of this regulation," said Hansotia.  "It is evident that the cost far outweighs any benefits it is providing specifically when discussing premium cigars."

The FDA has not thoroughly thought through the ramification and the devastating effects for an industry and the country.  It will not stop the smoking of cigars, which is largely celebratory in nature but what it will do is put legitimate and upstanding small manufactures out of business.

The International Headquarters of Gurkha Cigars quietly carries on a century-old tradition of excellence by bringing the finest cigars to connoisseurs from its beautifully appointed facility in South Florida. Gurkha is a must have for any cigar smoker. Be advised, once you try these most alluring of all sensations and taste, you can never go back to smoking anything else. It truly is the nectar of the gods. For additional information, visit www.gurkhacigars.com.