Indiana Vaping Law Update
This entry was posted on 11th July 2016 by twus.
As a follow-up to our original article published back in March, we wanted to update you on HB1432 and its continuing affect on the Indiana vaping industry. As of July 1st - the house bill was adopted into state law, despite multiple legal challenges to its constitutionality.
On June 30th - federal judge Judge Sarah Evans Barker of the Southern District of Indiana, Indianapolis Division - upheld the new law as constitutional making it the 2nd failed attempt to thwart the bill in less than a month. The first decision was handed down on June 2 by Marion Superior Court Judge Cynthia Ayers, ruling in a separate suit brought by the same parties at the state level that the law can go into effect.
The ramifications have been far reaching, as the law has effectively crushed, if not crippled vape shop owners by putting a single private firm - Lafayette-based Mulhaupt’s - in charge of deciding which companies can seek a permit to manufacture e-cigarette liquids, all but shutting the door on the state’s vaping market. To add insult to injury, the security firm is not under obligation to even talk to manufacturer’s they don’t want to do business with, and hasn’t been shy about exercising their clout. In fact, the firm has rejected many applications, including those of mom pop shops who say they have been forced to close or move out of state. National players have been shut out as well, essentially having no day in court, since Mulhaupt’s does not have to release information about the companies it turns down nor its reasons for doing so. At present, only 6 manufacturers countrywide have been authorized to sell their products in Indiana - of which, two appear to be brand new firms. Since the approval deadline on June 30th - scores of vape shops and convenience stores have been essentially “put out of business” overnight. The shutdowns have been largely due to the significantly higher prices of approved firms, but some owners say they’re hamstrung by leases that will force them to keep doing business in what they describe as a monopoly environment. A 7th e-liquid manufacturer had been approved one day before the deadline, but it now appears that this application is void, since the security firm used - California-based Lock-Up Inc - did not hold all of the required credentials.
Most Vape Shop owners have welcomed regulation of their products to keep them out of the hands of children, but sadly many of those same vendors are the ones now closing their doors, citing the state permitting process as “blatantly corrupt” politically motivated and rigged. The 2015 law, tweaked in 2016, includes a ban on sales of e-cigarettes to minors, requires that e-liquid ingredients be listed on packages, and mandates random testing of the liquids to ensure they are safe. The controversial part of the law requires that manufacturers hire a security firm to certify they meet state rules for clean rooms used for mixing and bottling liquids, secured areas where products will be stored, and remote monitoring for areas where e-liquids are mixed, bottled, packaged and stored. As part of the licensing application, a store or manufacturer must enter a five-year agreement with a security company.
The source of contention has been that the security company must have at least one employee who is a certified consultant on architectural hardware such as locks and door hinges, and one who is a certified technician on rolling steel fire doors. These employees must also have been employed by the company for a year; therefore excluding new hires taken on specifically for this role. Manufacturers say they don’t oppose oversight, but the law - crafted in part by a state senator whose district includes Mulhaupt’s and a politically connected attorney who now represents the company - sets out such detailed requirements for the required security firm that Mulhaupt’s alone, appears to be the only US company qualified to work with them. “If you want to sell e-liquid in Indiana, it doesn’t even matter if you are from another state, you have to go through Mulhaupt’s,” said state Sen. Vaneta Becker, R-Evansville, who wants to change the law. Publicly, Malhaupt’s has downplayed its role, arguing that the Indiana Alcohol and Tobacco Commission makes the final decision on whether a company can manufacture the liquids. However, no manufacturer can move forward in the licensing process unless they strike a deal with Mulhaupt’s to provide security for five years—and Mulhaupt’s has been choosy about whom it accepts. One company recently commented that they had reached out to hundreds of security firms across the United States but couldn’t find anyone else that met the state rules - which include having at least one employee certified by the Door and Hardware Institute and one certified by the International Door Association. What’s more: Security firms had to be in compliance with the rules by July 1, 2015, meaning firms that aren’t compliant, can never catch up and get the certifications to make themselves eligible. The company had even offered Mulhaupt’s $100,000 for a five-year contract, but were told they were too late in contacting the security firm, who stated that they couldn’t work with anyone else.
Despite the bleak outlook however, many vape shop owners remain hopeful. Another legal challenge to the e-liquids statute, GoodCat LLC et al. v. Cook et al., is still pending before Judge Richard Young of the U.S. District Court for the Southern District of Indiana. One shop owner was quoted after the federal ruling as saying; “This fight is not anywhere near over.”
This entry was posted on 11th July 2016 by twus.
As a follow-up to our original article published back in March, we wanted to update you on HB1432 and its continuing affect on the Indiana vaping industry. As of July 1st - the house bill was adopted into state law, despite multiple legal challenges to its constitutionality.
On June 30th - federal judge Judge Sarah Evans Barker of the Southern District of Indiana, Indianapolis Division - upheld the new law as constitutional making it the 2nd failed attempt to thwart the bill in less than a month. The first decision was handed down on June 2 by Marion Superior Court Judge Cynthia Ayers, ruling in a separate suit brought by the same parties at the state level that the law can go into effect.
The ramifications have been far reaching, as the law has effectively crushed, if not crippled vape shop owners by putting a single private firm - Lafayette-based Mulhaupt’s - in charge of deciding which companies can seek a permit to manufacture e-cigarette liquids, all but shutting the door on the state’s vaping market. To add insult to injury, the security firm is not under obligation to even talk to manufacturer’s they don’t want to do business with, and hasn’t been shy about exercising their clout. In fact, the firm has rejected many applications, including those of mom pop shops who say they have been forced to close or move out of state. National players have been shut out as well, essentially having no day in court, since Mulhaupt’s does not have to release information about the companies it turns down nor its reasons for doing so. At present, only 6 manufacturers countrywide have been authorized to sell their products in Indiana - of which, two appear to be brand new firms. Since the approval deadline on June 30th - scores of vape shops and convenience stores have been essentially “put out of business” overnight. The shutdowns have been largely due to the significantly higher prices of approved firms, but some owners say they’re hamstrung by leases that will force them to keep doing business in what they describe as a monopoly environment. A 7th e-liquid manufacturer had been approved one day before the deadline, but it now appears that this application is void, since the security firm used - California-based Lock-Up Inc - did not hold all of the required credentials.
Most Vape Shop owners have welcomed regulation of their products to keep them out of the hands of children, but sadly many of those same vendors are the ones now closing their doors, citing the state permitting process as “blatantly corrupt” politically motivated and rigged. The 2015 law, tweaked in 2016, includes a ban on sales of e-cigarettes to minors, requires that e-liquid ingredients be listed on packages, and mandates random testing of the liquids to ensure they are safe. The controversial part of the law requires that manufacturers hire a security firm to certify they meet state rules for clean rooms used for mixing and bottling liquids, secured areas where products will be stored, and remote monitoring for areas where e-liquids are mixed, bottled, packaged and stored. As part of the licensing application, a store or manufacturer must enter a five-year agreement with a security company.
The source of contention has been that the security company must have at least one employee who is a certified consultant on architectural hardware such as locks and door hinges, and one who is a certified technician on rolling steel fire doors. These employees must also have been employed by the company for a year; therefore excluding new hires taken on specifically for this role. Manufacturers say they don’t oppose oversight, but the law - crafted in part by a state senator whose district includes Mulhaupt’s and a politically connected attorney who now represents the company - sets out such detailed requirements for the required security firm that Mulhaupt’s alone, appears to be the only US company qualified to work with them. “If you want to sell e-liquid in Indiana, it doesn’t even matter if you are from another state, you have to go through Mulhaupt’s,” said state Sen. Vaneta Becker, R-Evansville, who wants to change the law. Publicly, Malhaupt’s has downplayed its role, arguing that the Indiana Alcohol and Tobacco Commission makes the final decision on whether a company can manufacture the liquids. However, no manufacturer can move forward in the licensing process unless they strike a deal with Mulhaupt’s to provide security for five years—and Mulhaupt’s has been choosy about whom it accepts. One company recently commented that they had reached out to hundreds of security firms across the United States but couldn’t find anyone else that met the state rules - which include having at least one employee certified by the Door and Hardware Institute and one certified by the International Door Association. What’s more: Security firms had to be in compliance with the rules by July 1, 2015, meaning firms that aren’t compliant, can never catch up and get the certifications to make themselves eligible. The company had even offered Mulhaupt’s $100,000 for a five-year contract, but were told they were too late in contacting the security firm, who stated that they couldn’t work with anyone else.
Despite the bleak outlook however, many vape shop owners remain hopeful. Another legal challenge to the e-liquids statute, GoodCat LLC et al. v. Cook et al., is still pending before Judge Richard Young of the U.S. District Court for the Southern District of Indiana. One shop owner was quoted after the federal ruling as saying; “This fight is not anywhere near over.”