Cigar Industry Amends Federal Lawsuit Over California’s UTL Regulations

Last week, attorneys representing various parts of the cigar industry in the federal lawsuit over California’s Unflavored Tobacco List (UTL) updated the complaint.

The UTL is a new law that recently caused issues for cigar companies and will soon start causing issues for California retailers and others. It is the result of two laws—one passed in 2020 and the other in 2024—which banned most flavored tobacco and vaping products in California. As part of the second law, the legislature—with support of the attorney general’s office—directed the AG’s office to create a list of unflavored tobacco and vaping products that are legal to sell in California.

Come next year: if a product is on the list or otherwise exempt, it is legal to sell; if it is not on the list, it is likely not legal to sell.

Before the end of 2025, the attorney general’s office must publish the first version of the UTL. After that, it will update the UTL with new submissions, a process that the AG’s office says will take up to 90 days to complete. In preparation for the first list, the attorney general’s office required companies to submit products for UTL inclusion by Oct. 9. As part of this process, companies need to submit paperwork certifying that the product is in compliance, send a physical sample to the attorney general’s office, and pay a $300 registration fee.

A week before the Oct. 9 deadline, the cigar industry, led by the Cigar Rights of America (CRA), sued the state. Technically, it ended up suing twice. First in federal court, then in state court.

As part of those initial suits, the plaintiffs—which included the CRA, seven of the nine CRA board member companies, and the Premium Cigar Association—sought an emergency temporary restraining order (TRO) that would have prevented the attorney general’s office from requiring UTL submissions for “premium cigars,” a request that was not granted.

Last week, the plaintiffs submitted an updated complaint, which made some changes to the lawsuit. None of these changes appears to be substantial, and some are quite predictable. For example, the parts of the lawsuit that accuse the state of violating the California Administrative Procedures Act were removed, likely because a federal judge ruled that those complaints would need to be heard in state court.

There are three new paragraphs that were added, two of which are specific to retailers. Those three new paragraphs are:

Premium cigars, because of their variety and complexity, are most often sold in specialty, corner store tobacconists retailers, where consumers can go to view, touch, and ask questions about different types of premium cigars. These tobacconists’ business depend on having access to a wide variety of premium cigars, and the newest special releases from a particular harvest. Absent this refreshed variety, there is less reason for consumers to steer their business towards these corner store tobacconists.

Further, mere possession of so-called “flavored tobacco products” in the state of California subjects Plaintiffs to significant penalties for cigars already in the state. The Attorney General or other law enforcement agency may seize any such product “possessed, stored, owned, or sold by [a] wholesaler.” Cal. Bus. & Prof. Code § 22978.3(a)(1). The statute further provides for mandatory penalties of $50 per individual package of product seized, which for premium cigar wholesalers, could be $50 per cigar. Id. at (b)(1).

Between the burdens and expense of the applications for inclusion on the Unflavored Tobacco List and the short time to submit them, manufacturers have and will reduce the varieties of premium cigars they offer in California. This, in turn, will injure corner-store premium cigar retailers, because it precisely this variety—including special blends coming from a particular harvest—that drives consumers into their stores. If fewer and less varied premium cigars are available, consumers are more likely to turn to the products they have had in the past and order them from online retailers. This will lead to substantial reductions in California retail store revenue that cannot be easily recovered from the State. These corner store retailers are members of one of the Plaintiffs, the Premium Cigar Association.

As expected, the amended complaint did not respond to the arguments made by the attorney general’s office as it was opposing the request for the emergency TRO. Those responses will come in subsequent filings, not this sort of update.

There is no schedule as to when the next action will take place in this filing.