The United States Food and Drug Administration issued preliminary guidance on January 17, 2017 regarding free samples of tobacco products. In the guidance, the FDA confirmed that the free sample ban applies to all tobacco products subject to its tobacco products authority. the consideration rule that went into effect on August 8, 2016 expanded this ban to cigars.
The guidance reaffirmed the fda’s position on banning samples to what it perceives as an ongoing problem with youth who have access to tobacco. The premium handmade cigar industry has long argued that it does not target or market to youth.
For the most part, this prohibits distributors and retailers from unconditionally giving out free samples of a tobacco product. There are some cases where this is allowed and the FDA sets guidelines in four scenarios: 1) discounts and coupons; 2) membership and rewards programs; 3) contests; and 4) business-to-business exchanges.
The first three areas have a common denominator. These types of free promotions are only allowed for tobacco products as long as they are tied to a monetary transaction and the person receiving the promotion provides valid age and identification requirements. the fourth area (business to business) seems subject to more interpretations and questions.
1.discounts and coupons
discounts cover two scenarios. in both cases, these must be linked to a monetary transaction.
- discount percentage: This covers a scenario like “save 20% on this tobacco product.” The FDA has stated that this is allowed. it is implied that a 100% discount cannot be given.
- buy x, get y free: This covers a “buy 2, get 1 free” scenario. the fda has also stated that this is allowed as it is tied to a monetary transaction.
an example of a coupon is “buy two, get one coupon redeemable for one”. these work a little differently than discounts. if the coupon is used at the time of purchase, it is allowed. if used later, the seller (manufacturer, distributor, or retailer) must have a form of verification of both age and identification that the person redeeming the coupon is the original purchaser. The FDA says these coupon rules exist to prevent minors from circumventing the age requirement rules.
2. membership programs and rewards
Like discounts and coupons, the FDA allows membership and rewards programs to take place. however, it must also be linked to a product sales transaction and the person receiving the promotion must meet the FDA’s minimum age and identification requirements.
an example of one is the punch card rewards program. This is done through a series of transactions that, when completed, allow the consumer to obtain a free tobacco product. an example of this is “get your 10th purchase free”. this is often implemented by giving the consumer a card and punching a hole (or supposedly it could be electronic). in this example, the tenth purchase is free.
in the example above; at the time the consumer gets the free product, it must be linked to a monetary transaction for the ninth or eleventh (subsequent purchase). if done independently (meaning the consumer logs in only to take credit for the 10th free item), the seller must use age and ID requirements to verify that this is the same person who made the other purchases.
3. contests
the fda has declared that a contest (i.e., raffle, sweepstakes, game of chance) cannot be a tobacco product unless it is distributed as part of a monetary payment and is subject to minimum requirements of age and ID.
An example is that if a tobacco product prize or discount coupon is awarded, it must be used at the time of tobacco purchase. the tobacco product prize cannot be awarded outside of the purchase of a product. the recipient (winner) would also be subject to minimum age and identification requirements.
4. business-to-business exchanges
for this rule, the fda has stated that it will not enforce this regulation with respect to business-to-business exchanges.
according to the fda, they define a business-to-business exchange as “the distribution of free samples in a limited quantity (i.e., no more than is necessary to achieve a business or marketing objective, such as awareness and exposure of the product for product selection or inventory purposes) to another business as part of a bona fide effort to sell or market a tobacco product to that business.
Although not explicitly stated, on the surface it appears that this would allow scenarios like:
- manufacturers and brand owners distributing samples to retailers
- manufacturers and brand owners distributing cigars at a trade show like ipcpr where attendees are retailers.
at the ipcpr trade show, ipcpr issued a statement saying: “While the term ‘limited quantity’ might be open to interpretation, this should allow sampling to continue at business-oriented events, such as from a dealer to a retailer, and at the ipcpr trade show.”
A big question is whether members of the media who receive free samples would be considered a “business as part of a genuine effort to sell or market a product for that business.”
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As with all draft guidance, the fda is accepting comments on this draft guidance. may be filed within 60 days of publication in the federal register of the notice announcing the availability of this draft guidance.
An interesting point is that charitable contributions were not explicitly listed in the draft guidance. however, the fda has stated that manufacturers, brand owners, and distributors may not donate tobacco products to charities (including the troops).
It is also worth noting that in the lawsuit filed by the Cigar Association of America (CAA), Cigar Rights of America (CRA), and International Premium Cigar and Pipe Retailers (IPCPR), the FDA ruling on samples free is not being challenged.
update: added link and quote from ipcpr communication