Sometimes a cigar is just . . . a cigarette?
Published by Florida Times-Union on May 20, 2006.
For decades, Swisher International has filled the air around the Springfield neighborhood with the redolent aroma of dried tobacco, tobacco that it turns into 8.5 million cigars a day.
Or at least what Swisher produces has always been labeled a cigar.
Now, though, 40 state attorneys general are asking the federal government to reclassify some of those products as cigarettes, saying that "little cigars" -- thin, brown, finger-length smokes -- are really just cigarettes in disguise.
If the officials have their way, the changes could have a big impact on Jacksonville-based Swisher, whose product line includes a variety of little cigars.
Swisher has been making little cigars for more than two decades, and company officials say that it has about half of the U.S. market.
Now, the company, which has been in Jacksonville since 1924, is at the top of the attorneys general's list of those that it says are selling "thinly veiled cigarettes being marketed as cigars."
"There are legitimate little cigars," said Bill Roach, spokesman for Iowa Attorney General Tom Miller, co-chairman of the National Association of Attorneys General tobacco committee. "That's not what this dispute is about. This dispute is about a very different type of product, one that -- in all respect except that the wrapper is brown rather than white -- looks like a cigarette."
One big difference between the two products, though, is how they are taxed. A 20-count pack of regular cigarettes is taxed 39 cents by the federal government. The same size pack of small cigars? Four cents.
The line between cigars and cigarettes has traditionally been a pretty clear one: Cigars had tobacco-leaf wrappers filled with tobacco, while cigarette wrappers were made of paper.
The definition was blurred, the attorneys general say, when manufacturers started making wrappers of ground, reconstituted tobacco.
But those wrappers still make a cigar a cigar, said Joe Augustus, Swisher's senior vice president of external affairs.
"Our little cigar has been around for a long time and has always conformed to what the [government agencies] call a cigar," he said. "The filler is cigar tobacco, not burley. The wrapper is made of reconstituted tobacco rather than paper. The only similarity is that they both have a filter."
Swisher's little cigars come in several flavors, including menthol and cherry.
Precise definitions have long been important in taxation matters, from the 1893 Supreme Court ruling that tomatoes are vegetables to the 2003 U.S. Court of International Trade ruling that comic book characters the X-Men are nonhuman.
(The rules meant, respectively, that tomatoes got taxed while X-Men figures were taxed at a lower rate.)
The Alcohol and Tobacco Tax and Trade Bureau routinely deals with precisely defining the products it regulates, such as setting the boundaries of winery regions.
For the past several years, said Art Resnick, a spokesman with the bureau, federal and state agencies as well as importers and manufacturers -- "everybody" -- has asked the agency to come up with a clarification.
"This has been building up for a little while," Resnick said. "We've been working on it."
The attorneys general began looking at the issue, Roach said, because of health concerns as well as a belief that the flavored little cigars have been marketed to young consumers.
"We saw the development of this new trend -- of creating a category of brown cigarettes that are able to evade marketing restrictions and some taxes -- as something that was a public health concern," Roach said.
Since more restrictions were put in place after the attorneys general reached an agreement with cigarette manufacturers, the sale of little cigars has skyrocketed, Roach said, from 1.6 billion a year in 1997 (when the agreement went into effect) to 3.7 billion in 2005.
But most people buying them at the Jacksonville-area convenience stores Sherry Ramirez manages, including a Texaco on Beach Boulevard, are buying them because they're cheap and powerful, she said: If they've switched from cigarettes, it's to save money and get more.
"There's more nicotine," she said. "You can't smoke in a lot of places, so this gives you a bigger hit."
Little cigars also attract bargain shoppers, she said: While a 20-count pack of cigarettes go for between $3 and $5, the same number of little cigars cost between $1.09 and $2.29. "They appeal to a lot of people on a lower budget," she said.
That cost difference might change if the push to relabel the products changes the little cigars into brown cigarettes. As well as the higher taxes Swisher would face, Augustus said, the company would have to redesign their packaging, use a different warning label and perhaps be brought into the costly regulatory agreement that cigarette makers have with the government, requiring them to do things like fund anti-smoking ads.
Sometime in the next six months, the Alcohol and Tobacco Tax and Trade Bureau will release a proposed rule change and ask for public comment, Resnick said.
As far as Swisher goes, the company would welcome a clearer definition, Augustus said, although he added that Tax and Trade Bureau only has the authority to clarify the definition, not to change it.
"We've been waiting almost two years for the TTB to answer our request for clarification," he said.
"We made this request long before the attorneys generals ever started getting involved in this issue."
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