As the dust continues to settle after this week’s historic election, we wanted to provide you with an early update on what it means for the premium cigar industry’s efforts both from a legislative and regulatory perspective.
Congress
Many of our champions faced tough re-elections and in some cases, long odds prevailed. While we did lose a handful of supporters, that number was much less than anticipated. Premium cigar retailers and their customers responded in full force to our grassroots efforts throughout the year and their engagement in the political process was very important.
Several Members were victorious in tough races – Reps Denham (R-CA), Curbelo (R-FL), Bost (R-IL), Hurd (R-TX), Yoder (R-KS), Shuster (R-PA), Knight (R-CO), Coffman (R-CO), Reed (R-NY) and Katko (R-NY) along with Senators Rubio (R-FL) and Toomey (R-PA). Supporter Rep Todd Young (R-IN) was also elected to the Senate.
Members who lost in tight races – Reps Mica (R-FL), Hardy (R-NV), Dold (R-IL), Jolly (R-FL) and Guinta (R-NH). Rep Jolly was defeated by industry supporter and former Governor Charlie Crist who we expect will continue to support the industry.
A total of 23 of the co-sponsors of H.R. 662 will not be part of the 115th Congress – whether due to retirement or electoral defeat. With ballots still being counted in some districts, there will be 5 new Members of the Senate and at least 52 new Members of the House of Representatives. IPCPR’s team has already begun the process of educating the new Members about the challenges facing premium cigar retailers in their district and seeking their support for you and your employees.
Overall Chamber Control
Senate – Republicans currently hold 51-48 advantage with the Louisiana race headed to a runoff in December. Net so far +2 seats to Democrats.
House – Republicans hold a 238-193 advantage with several races with ballots still being counted. Net +6 seats to Democrats so far.
Reps Shimkus and Walden will vie to be Chairman of Energy & Commerce Committee which maintains jurisdiction over FDA, while Rep Frelinghuysen, a 3-time co-sponsor of our legislation will take over as Chairman of the Appropriations Committee which oversees federal agency funding decisions.
Lame Duck
House and Senate will return to session next week, recess for Thanksgiving week and then resume session thereafter. It remains to be seen how effectively Speaker Ryan and his Leadership team will work with the President-elect and how aggressive an approach Freedom Caucus will take. Extending government funding beyond December 9 is the top priority for Congress. We believe an omnibus approach remains a possibility but odds of a continuing resolution have increased with Republicans maintaining control of the Senate and winning the White House. In the coming days, we will be having conversations with our champions and closely monitoring developments particularly when Members return next week for organizing discussions. During the next several weeks, it is critical that cigar constituents are engaged to contact their Representatives and Senators asking for support of the premium cigar exemption language. Look for and respond to IPCPR alerts asking you to take action!
Administration
President-elect Trump has made overturning regulations a focal point of his campaign. IPCPR’s legislative team is working closely with the transition team which will be making decisions relative to appointees and nominees for key positions at regulatory agencies. We will be watching prospective nominees for these positions and engaging both directly and from Capitol Hill when that occurs – from formal meetings to confirmation hearings and behind scenes outreach.
As it relates to Cuba, the President-elect has said he will overturn President Obama’s recent actions unless additional concessions are made from Cuba. It remains unclear how that will develop. Just as President Obama instituted the changes to the embargo by executive action, President-elect Trump would be able to reverse them quickly. As far as broader Cuba policy, a significant amount of the embargo, including selling Cuban products in the U.S., continues to require action by Congress which is unlikely soon.
Political Conclusion
The results of Tuesday, while unexpected, were the best possible combination for the premium cigar industry. Adoption of the premium cigar exemption language in the House Agriculture FDA Appropriations bill remains a possibility and a path toward relief via executive action in 2017 has also opened. Continued grassroots engagement to buttress the work of IPCPR’s staff and government affairs team will be critical to our success.
Legal Update
The complaint filed by IPCPR, CAA and CRA has been assigned a Federal District Judge and the FDA has answered the complaint. The next step is the establishment of a “briefing schedule” which determines the timeline on which the action will take place. IPCPR is confident in the arguments we put forth and in our joint legal counsels’ ability to make those arguments.
Compliance Update
Compliance, by far is the most frustrating aspect of the FDA regulation. One might think 499 pages would clearly detail how the regulated parties would actually comply with the regulation. For both manufacturers and retailers, that is not the case. FDA guidance is expected on critical items, but not yet forthcoming even as deadlines loom. We know the associations representing manufacturers are working hard on answers. IPCPR is doing the same on retailer specific issues. We have detailed our questions to the agency and will provide answers when received. In the meantime, we advise you to visit www.ipcprlegislative.org and click on the FDA Toolbox for current information.
Conclusion
The incoming Administration and Congress should provide a more business friendly environment enhancing our chances to overturn all or much of the regulatory overreach that is on the books today. However, the work for all of us remains. Challenges include well-funded opposition groups, larger national issues causing political gridlock within and across party lines, and that our system of government provides the minority party with significant power to slow or stop legislative initiatives. Your volunteer leadership and staff, although more hopeful today than last week, have no allusions about an easy victory. Please continue to respond as we ask for your help to influence decision makers.
Please send any questions to Mark Pursell at Mark@ipcpr.org, Matt Dogali at Matt@ipcpr.org or Rachel Hyde at Rachel@ipcpr.org.