[5]
By Jabob Grier, Portland Writer
Cocktail consultant, magician, blogger.
Liquidity Preference Blog [6]
The announcement of more normal diplomatic relations between the United States and Cuba [7] is welcome news for many reasons, but the one that seems to spring to mind for many is that Cuba’s most famous export, cigars, may finally become legally available in the United States. If only it were that simple. Here are three obstacles to getting Cuban tobacco into the US.
1. The embargo is still in place.
The new rules allow American travelers to return with up $400 of Cuban goods, of which only $100 worth can be alcohol or tobacco for personal use. This is still a long way from allowing commercial import. As before, any significant trade in Cuban cigars will be on the black market.
2. Trademark battles are going to be complicated.
The United States is the world’s largest market for premium cigars and our embargo with Cuba has essentially divided the global market in two [8]: us and everybody else. Our embargo has created dueling trademarks for cigars. Cuban brands such as Cohiba, Partagas, Hoya de Monterey, Bolivar, and Punch are sold around the world. The United States does not recognize the Cuban trademarks, so cigars of non-Cuban origin with identical brand names are sold here. A legal dispute over the American and Cuban claims on the Cohiba trademark has dragged on since 1997 [9] and still has not been resolved.
So even if the embargo is lifted entirely, the transition to allowing Cuban cigars won’t be a smooth one. Many of the Cuban cigars one can currently buy abroad would violate trademarks if imported to the US. Companies will have to fight this out in court or come to mutually beneficial agreements. Other likely outcomes are that Cuban products will be marketed under different names in the US or that non-Cuban companies will start using exported Cuban tobacco in their products [10]. In any case, buying that Cuban Partagas Lusitania [11] I enjoyed so much won’t be as simple as stopping into the nearest cigar store, at least in the short term.
3. The FDA could ruin everything.
The FDA has already announced that it intends to begin regulating cigars and outlined two approaches to doing this. The agency’s so-called “Option 2″ would create an exemption for premium cigars, allowing them to be sold under less scrutiny than cigarettes and other tobacco products. The proposed standards for this exemption are problematic (see my Daily Beast article [12] for details), but they would leave the door open for eventual Cuban imports.
The FDA’s Option 1, however, would be very bad news for Cuban cigars. Option 1 treats cigars just like cigarettes. Under the Tobacco Control Act, all tobacco products introduced to the United States after February 15, 2007, must receive explicit approval by the FDA. Getting approval is virtually impossible. As of my last coverage of the topic, only two new cigarettes had ever made it through the process, while thousands of product applications continue to languish in bureaucratic limbo. (See my articles in The Atlantic [13] and Reason [14]).
There were a lot of cigars legally on the market in 2007, but obviously none of them were Cuban. We don’t know yet know which option the FDA will choose, but Option 1 would have a disastrous impact on innovation in the cigar market. All Cuban imports and any new Cuban blends would have to somehow get past FDA regulators, whose record on cigarettes is terrible. The trade embargo could be lifted in the near future, just in time to have a new, de facto embargo imposed by bureaucrats at the FDA.
I’m keeping my fingers crossed for something like Option 2, but given political opposition [15] to removing the embargo, complicated battles over trademarks, and byzantine regulations imposed by the FDA, I suspect that I’ll be slipping Cubans into my luggage on trips abroad for many years to come.