A US company that is trying to expand its business of distributing cigars has been ordered back to its drawing board by a federal judge.
The United States District Court in Denver issued a temporary restraining order against Cigarland USA Inc, an offshoot of CIGAR USA Inc. (NASDAQ:CIG).
Cigs are made by hand by cigar smokers using the tobacco that’s grown on their cigar leaves.
The US Food and Drug Administration has banned cigar smoking in the United States for at least 20 years, and the US Supreme Court has ruled that states can ban the practice.
Ciggarland has struggled to sell its product to US customers since the FDA ban.
The company had its biggest success in 2013 when it sold out of 1.4 million cigars.
In March, Cigarland CEO Jim Cavanagh announced that the company would sell only about 15 million of its cigars in the US.
A judge in Colorado last month issued a nationwide injunction ordering Ciggarly USA Inc to produce and sell only cigarettes and cigars that are made in-house.
“I’m pleased that the court has issued a permanent injunction on the grounds that Cigarly does not meet the standards for certification as a tobacco distributor and that its product cannot be sold to the public in the U.S.,” said Cavanag in a statement.
While the injunction doesn’t specifically mention cigars, it appears to be a reference to CIGARs. The order calls for CigarLand to produce only cigarettes in the United States, which the company said is not its intent.
This week, Cigarin Holdings LLC, a subsidiary of Cigar Land, sued the federal government for injunctive relief, saying that the FDA’s ban is unconstitutional.
It’s unclear whether the FDA will seek to reinstate its ban.
If the government decides to fight the injunction, it could be difficult for Cigartel to stay afloat.
With the FDA decision, the U