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42SMOKESHOP February 2015

Over the past 13 years, I have been

asked what the cigar industry

landscape will look like if the

Cuban Embargo is lifted. In the United

States, obviously you will see a preva-

lence of Cuban cigars. Sales of those

cigars will skyrocket, causing a dip in

sales of non-Cuban cigars. After a fewyears, at most, sales will subside, and

non-Cuban cigars will come back since

the American palate has changed over

time. Further, you will find that there

will be less of a distinction between

Cuban cigars and non-Cuban cigars

since cigar companies will liberally

blend tobaccos from Cuba, Nicaragua,

Honduras, and the Dominican Republic.

What is less understood, is what

will the cigar industry look like in

Cuba? Over the years, I have speculated

as to different scenarios. But the truth is,I dont know. Even though I am inti-

mately involved in Cuban trademark

disputes and other cigar trademark dis-

putes, I can not tell you with any cer-

tainty what the future holds for busi-

ness in Cuba. However, it is possible

that the following eight topics will be

challenges to any company that is inter-

ested in conducting any business in a

post-Embargo Cuba.

TRADEMARKS: There will continue to be

trademark disputes both in Cuba, and in

the United States. Therefore, you should

register your trademarks in Cuba as soon

as possible. For decades, large U.S. com-

panies have registered their trademarks in

Cuba, but smaller companies have not.

Cuba has a Patent and Trademark Officelike nearly every nation in the world. It is

antiquated, but it runs surprisingly well. If

you are interested in conducting business

in Cuba, you need to first secure your

trademarks in that country as a first step

in conducting business.

REAL PROPERTY: Property rights issues

stemming from exiles claiming confiscat-

ed lands/buildings will be a thorny issue

for years to come in Cuba. Not all proper-

ty will be challenged, but you can bet that

desirable property (beach front, down-town, and Pinar del Rio farming land)

will be hotly litigated in whatever legal

forum that might exist at the time.

Therefore, if you are holding a big bag of

money and itching to buy land in Cuba,

whether for the cigar industry or not, you

should do your homework before hand-

ing the loot over to the first fulana del

tal that you meet once you land at Jose

Marti Airport.

CUBAN PARTNERS/EMPLOYEES: If

you plan to run a business in Cuba, but

are not able to live there full time, you

should choose your Cuban business

partners/employees with extreme cau-

tion. The cigar industry has countless

stories of a gringo setting up a cigar fac-tory in Honduras, Nicaragua, or the

Dominican Republic with a local, only to

later be screwed in ways that are incom-

prehensible to the American psyche.

THOSE THAT ARE THERE BEFORE YOU:

If you are a newcomer to the cigar indus-

try, dont think that you are going to

storm down there and pick up great

farmland in Pinar del Rio, or have access

to the best, or any raw materials. Re-

member European-based Altadis, S.A. (a

huge cigar conglomerate) is a 50 percent

partner with Cubatobaccos Corporacion

Habanos, S.A. They, along with some

others, have Cubas best tobacco fields

and people on lockdown and will defend

it in a post-Embargo landscape.

TAKE A CUBAN-ZEN APPROACH:

During the first few years of a new Cuba,

just tell yourself that everything will be a

financial and psychological challenge.

As such, you will need to have substan-

tial resources to weather the early days.For instance, there is currently no decent

roadway system in Cuba. As such, trans-

porting your Cuban made goods will

take longer then expected. The banking

system is a wildcard. There is no Internet

infrastructure, so your American habits

of communication will be slowed to a

crawl. Countless other daily inconven-

iences will be frustrating. So, take a

Cuban-zen approach to your start-up

days on the island.

COURT SYSTEM: As any person in-volved in business knows, threats of lit-

igation, and litigation happen. Its a cost

of doing business. Lawyers are usually

blamed for this, but the truth is that

lawyers get involved once a dispute has

heated up for some time and the parties

make the costly decision to seek court

intervention when business discussions

have broken down. If you conduct busi-

ness in Cuba, there is a very good

Advice on Starting a Cigar(or any) Business in CubaA surprise change of U.S. foreign policy towards Cuba will take the

biggest steps ever in normalizing relations, but theres still likely a longroad ahead before the embargo itself is lifted. Post-embargo Cuba willstill present challenges to cigar entrepreneurs. >BY FRANK HERRERA

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chance that you are going to have busi-

ness disputes. Most will be small and

you will be able to resolve on your own.

However, some will require the hiring

of counsel and court intervention. What

then? What court will hear your busi-

ness dispute?

I have no idea what a post-Embargo

Cuban court system will look like. Will itcontinue as it has? Will it change to look

like our American system? Will it become

a hybrid of the Cuban law system and

our American system? Again, I dont

know. However, you may want to con-

sider including a choice of law provision

that requires that all disputes be held in

the United States. I believe that Miami

would be a good venue, as I am certain

that Cuba/U.S. business disputes will be

increasingly heard in courts located

there. You may also choose to include in

your business contracts a provision that

any dispute will be resolved by arbitra-

tion. I am certain that will be a growing

method of resolving business disputes in

Cuba. It follows that you must exercise

extreme caution when choosing who rep-

resents your interests. Cuban lawyers are

not like United States lawyers. Both have

their strengths and weaknesses, so you

should research who (or what team) will

represent you with the understanding

that there are differences in legal culture

and dispute resolution.

NO RISK, NO REWARDThose cur-rently producing cigars in Nicaragua,

Honduras, and the Dominican Republic

are well aware of the challenges set forth

above. They will find success in Cuba

just as they have in these other cigar-pro-

ducing countries since the transition will

not be as jarring. However, this article is

written more for those of you that are

dreaming about getting into the cigar

business, or some other business in

Cuba. There will be significant chal-

lenges, but no risk, no reward.

PALANTEFinally, many in the Cuban

exile community have displayed outrage

at the manner in which Obama et al

made this announcement and the fact

that the United States will be viewed as

weak on the international stage. I agree

that you can not negotiate with terror-

ists, communists, or others that use vio-

lence, human rights violations, and sys-

tematically manipulate the liberal media

to justify their repressive agendas. Alan

Gross alleged crimes of providing

communication devices to facilitate

Internet communications do not equalthe crimes of Cuban spies for which he

was exchanged. However, Cubans on

both sides of the Florida Straits have a

saying, siempre palante, para atras ni

para coger impulso. This translates as

always move forward, never backwards,

not even for a boost. So, to all of you

interested in conducting business in

Cuba, be cautious, be respectful, and do

everything you can to instill that free-

dom of speech, the press, association,

and other inalienable rights are part of

your contribution to a new Cuba.

Frank Herrera is a Delray Beach, Fla.

attorney specializing in intellectual pro-

property, corporate, and internet law,

and is the founder of Herrera Cigars.

44SMOKESHOP February 2015

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