Economy

What This Nation Needs is a Good Affordable (Large) Cigar

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Kristoff cigars on workbench from Vernon Wiering via flickr

History has all but forgotten Thomas Marshal. After surviving an attempted bombing, the former governor of Indiana managed to serve two terms as Vice President under Woodrow Wilson. Narrowly escaping death, however, seems to have been Marshal’s greatest accomplishment in office. He took a cynical approach to the job, readily acknowledging the ‘insignificance’ of the vice presidency and joking that the job left him with virtually ‘no responsibilities.’ With minimal accomplishments in office, Marshal’s attitude then came to define his legacy, finding expression in his wit and humor and culminating in a summary statement on America’s domestic affairs that falls just short of brilliant: “what this nation needs is a really good five cent cigar.”

Today, Marshal’s sentiment is under fire, fueled by the entrenched interest of the FDA to do what it unfortunately does: regulate. The agency is expected this year to promulgate regulations subjecting nearly all tobacco products to the Tobacco Control Act of 2009. The act unsurprisingly provides a laundry list of regulations (ingredient lists, branding and labeling requirements, bans on flavored products, potential facility inspections, etc.) and severely increases the authority of the FDA to further regulate America’s ‘sins.’ However, cigars were not originally subject to the act, so the question naturally arises: why now?

Under existing law a quasi- ‘loophole’ exists where some tobacco users may come to substitute small mass produced cigars/cigarillos for cigarettes. In addition to being taxed generally at a lower rate (an area luckily out of the FDA’s control, but heavily influenced by their actions), small cigars/cigarillos can be sold individually or in small packages. This regulatory scheme makes it more cost effective for some smokers to simply smoke small cigars/cigarillos than to purchase an entire pack of cigarettes. This practice is especially true for chronic smokers who demonstrate significant liquidity constraints, a cohort with a particularly high prevalence of tobacco use.

The act of substituting small mass produced cigars/cigarillos for cigarettes is certainly a problem. Perhaps one of the most significant public health accomplishments to date has been the drastic reduction in the prevalence of cigarette smoking since the mid 20th century. This decrease is largely attributed to the general increase in cigarette taxes and stringent packaging policies that are based upon an iron law of economics: as a price increases, consumption goes down (the Tobacco Control Act influences this equation by requiring larger quantities for a single purchase).

It is perfectly reasonable and desirable to want to protect this accomplishment, and if small cigars and cigarillos are withering away this progress, then subjecting these products to a similar regulatory scheme makes perfect sense.

However, large and/or premium cigars do not easily fit into this model. Although a significant portion of individuals who choose to smoke both large cigars and cigarettes exists, (35.1% of premium cigar smokers) and therefore can rightfully be labeled as ‘smokers,’ this classification does not apply to everyone. Most large cigar smokers only occasionally partake, relative to the frequency demanded of the cigarette smoker. (The CDC estimates that only 3.3 percent of premium cigar users smoke every day )

Subjecting large cigars to the Tobacco Control Act would unnecessarily increase prices. In contrast to the oligopoly that is the cigarette industry, cigar making is still an art for many small businesses. These small cigar businesses exist both domestically and internationally, and rely heavily on antique machines and a hands-on process to produce their cigars, a method lost to cigarette manufacturers. The FDA wants to regulate this small-scale production in a manner akin to the mass production of cigarettes. Unlike the cigarette industry, who can easily pass-on to consumers the increase in taxes or the cost of a regulation (such as the estimated $ 450,000 a year required in order to comply with the regulations), several of these small cigar business would be forced to close under the regulatory burden.

Additionally, few large cigar smokers would be persuaded to change their behavior in any significant way. Smokers who occasionally indulge may indulge slightly less, but these individuals by definition already smoke on occasion. For those Tony Soprano-esque smokers who somehow manage to smoke a large cigar a day, I imagine that fluctuations in prices are not a large part of their decision calculus.

In essence, subjecting cigars to the same regulatory scheme as cigarettes would only have a marginal effect in combating the global burden of tobacco. More importantly, it would needlessly make cigars more expensive and put the craft cigar industry at risk of destruction by corporate tobacco. There is ultimately much wisdom to be found in Thomas Marshal’s quote. Small luxuries, like cigars, allow one to relax without anywhere near the harm alcohol and other drugs pose to society. Inflation may have revised the price Marshal had suggested, but the spirit persists. This nation needs an affordable way to enjoy the little things in life while promoting small business. Thomas Marshal recognized the importance of the little things, and it is my hope that FDA can as well.

 

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