Interior, Environment, Financial Services, and General Government Appropriations Act, 2019

Floor Speech

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Mr. RUBIO. Mr. President, in my home State of Florida, we have a rich history in manufacturing hand-rolled premium cigars. For those who aren't familiar with them, a hand-rolled premium cigar is not the same thing as a cigarette.

Number one, premium cigars are an expense product, and they are consumed very differently from a cigarette or some other tobacco product. I would say that they are more like wine than they would be like a cigarette, for sure.

The interesting thing about the cigar industry and its history--not just in Florida but in this country--is that, almost exclusively, the manufacturers of premium hand-rolled cigars are small family-run businesses. By the way, so too are the retailers that sell them. This is not the kind of thing you go and buy at 7-Eleven. There are stores that specialize in the sale of premium cigars. They cater to a clientele that can afford to buy these things. They are significantly older than someone who would walk into a convenience store and buy a pack of cigarettes from behind the counter.

The companies that are involved in this endeavor are not the big companies that we see involved, generally, in the tobacco industry. They are family-owned business, both at the retail level and also at the manufacturing level.

In addition to all of this, they represent a rich part of the cultural history of the Cuban community in Florida. Ybor City in Tampa is an example of it. It was an area that was settled over 100 years ago by Cubans that came to Tampa to start a very vibrant hand-rolling cigar industry. Again, these are hand-rolled premium cigars. These are people literally sitting down and rolling the leaves, and these are high-end products.

This industry is on the verge of extinction, and I will tell you why. In 2016, the previous administration finalized a rule based on a 2009 law, and, by the way, its intended target was not premium cigars. They meant to go after tobacco products that we mass marketed and mass produced.

This 2009 law was interpreted in a way in the rule that would require premium cigars to regulate the manufacture, the import, the packaging, the labeling, the advertisement, the promotion, the sale, and the distribution of their products. With each new product, they would have to do it over again.

From year to year, the premium cigar industry may change the blend inside the hand-rolled cigar. They come in boxes of 8 or 12, and every time that one of these things is changed, you would have to redo the labels, redo the packaging, and everything would have to be completely redone, which is simply cost prohibitive because these blends change constantly, especially as you bring new markets.

I have offered an amendment to the minibus that is before us that would exempt premium hand-rolled cigars from the FDA regulations, not just so that the industry can survive but so that it can thrive and also to free up the FDA to go after what it is intended to go after-- what everybody thought this was about--which is common tobacco products, like cigarettes and some of the others things that we are aware of.

Now, anytime you talk about this, it gets a little tricky because people talk about tobacco use causing cancer. I am as sensitive to that as everyone. My father was a lifelong smoker. He lost his life in his early eighties because of cigarette smoking.

I think we need to do everything we can to discourage people from smoking and consuming tobacco, especially cigarettes that are consumed in mass quantity and are cheap to buy in large quantities.

I would note that it is already illegal to sell tobacco products to anyone who is under the age of 18.

I would also tell you that beyond that, the numbers have continued to decline in tobacco use. So we know that the laws that are in place and the programs have worked, but one of the things that we have focused on is that tobacco is a legal product and small manufacturers of premium cigars are being harmed by this, but the regulations were not intended for them. The regulations were designed to target cigarettes. They were designed for flavored fat cigarettes and other commonly used tobacco products, the kinds that could potentially be marketed to young people and that are not like a premium cigar--at $5, $8, $10 for each one, or $80, $90 a box--but the sort of flavored fat cigarettes and all the new stuff that is coming out that you can buy from behind the counter. They are very cheap to buy, and they are mass manufactured. That is what the rule was about. It was never intended to apply to premium cigars, but the way it is written and the way the rule is interpreted, that is what it is now doing. It is putting the same requirement on a completely different product, and it is a requirement they simply can't meet.

The irony is that all of the things that are targeted under this new rule are going to survive. They are still going to be around. They may be a little bit more expensive, a little harder to bring to market, but they are still going to survive. All the mass-produced tobacco products will survive and continue to be more accessible to young people. They will be able to stay in business, but the premium cigar manufacturers are going to get wiped out.

One more irony in all this: It is still illegal to mass-import Cuban cigars, but you can bring them in in individual quantities. Those are not impacted by these regulations at all--none whatsoever. Think about that for a moment. A product made in another country doesn't have to meet the same guidelines but has all the same attributes.

I talked a moment ago about Tampa and in particular Ybor City, and today in Ybor City, after all this time, there is only one factory left, a company called J.C. Newman. It is within Ybor City, and it is known as Cigar City. They have been making premium cigars--not cigarettes, not flavored cigarettes, not JUULs so people can vape; I am talking about premium, expensive, hand-rolled cigars. They have been making them since 1895, and that is all going to come to an end in the near future if this rule goes through. They are a profitable company. They sell about $10 million worth of products annually. That sounds like a lot of money, but it is nothing compared to mass-produced products. It is going to cost them three times that amount just to comply with the FDA regulations--three times as much--upwards of $30 million to comply with this rule, the way this rule has been interpreted.

The sad part about it is that everyone knows this. You go to the FDA, and they say: Look, we get it. The law wasn't supposed to go after these guys. But that is the way it is written, and that is how we are going to have to apply it.

It was never meant to be about them. Everyone admits it. Yet that is the way it is going to be, and that is going put not just J.C. Newman but also other companies out of business. The retailers, the specialty cigar stores, those that sell premium cigars that are contained in a humidor--that is going to put them out of business very soon, all because of a stupid regulation that was written as a result of a law that was not properly drafted and was interpreted inappropriately.

The Federal Government is going to put these guys out of business. The irony is that the people they were trying to impact with the regulation are going to survive and remain in business and be as accessible as ever, and the people no one meant to harm are going to get wiped out. This is the epitome of government overreach and abuse.

Regardless of whether the business is 10 years or 100 years old, this industry represents the livelihood of hundreds of American families. There are people who work in those factories. There are people who own those retail stores. They are going to be out of work, not because the market shifted, not because Americans no longer want to smoke premium cigars, they are going to be out of business because no one can stay in business if the cost to follow the law is three times as much as what you make. You can't do it.

This is a legal product made by hard-working Americans who have been doing this for a very long time. They are not the intended target of this rule. It is unjust for these small businesses to be singled out. It is unjust, unfair, and it is wrong.

The worst part about this rule is that it is written retroactively. So not only will they have to start complying moving forward--because you could argue, well, just change your blend in the future--it goes all the way back to 2007. They are going to have to go back and relabel and repackage everything they have been making for the last 11 years. That explains a little bit about the $30 million cost for just this one business.

By the way, they have broken no laws. Yet they have been singled out, and this threatens their livelihood.

This is a bipartisan, bicameral issue. A number of Members in the Senate from across the aisle agree with this. I have been working with Senator Nelson on this for a long time. This is not a partisan issue, not a Big Tobacco issue; this is a premium cigar issue. These are consumed differently than cigarettes by different groups of people in different ways. You don't smoke 10 cigars a day. We just know this. It is common sense. But this is what is going to happen. We are going to wipe these guys out because of a government rule and the way it was interpreted even though it was never meant to be about them.

We have an amendment. We have a law that fixes all this. I am not going to offer it on this bill because it is already part of the House package that lines up with the appropriations bills that are before us, but I wanted to point this out because I know that people in Ybor City and people around the country who care about this issue are watching, and I want them to know that when this issue gets conferenced with the House, we are going to be fighting for this. This needs to get fixed.

This is the last chance. That is the other point. This rule is about to kick in. The comment period is about to end, and the rule is going to kick in. This is our last chance. If we don't get it right here when we work this out, this is going to happen. You are going to be reading about it. Maybe it doesn't matter in some places. It matters a lot to Florida, and it matters a lot to this company in Ybor City in Tampa. It matters a lot to hundreds of thousands of people across the country who work in the retail shops that sell them and who work in the places hand-rolling and making them.

This is wrong, and we should do everything we can to stop it from happening. I hope we will deal with this issue in conference. I am glad it is in the House version. I wish we could get it in the Senate version. We are going to fight to include it in the final version. We are not going to watch as J.C. Newman and small businesses like it are put out of business by a rule that was never supposed to apply to them.

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