Opposition To New E-Cig Regulations Growing Among Producers

The backlash against Indiana’s vaping law has been significant. Dozens of manufacturers have been forced out of the industry by the legislation that even a federal judge described as “quite restrictive.”

World of Vapor is a vape shop in Indianapolis. The shop isn’t very big. A faint haze of e-cig vapor hangs in the air. Back in the corner are four big chairs around a little table underneath a big “World of Vapor” sign hung on the wall, and owner David Cohn says those little details are really all that separates World of Vapor from any other vape shop anymore.

“We have the best customer service,” Cohn says. “We have the best atmosphere. Other than that, there’s no reason to drive from Carmel to come see me, which is what used to happen.”

Cohn used to sell hundreds of kinds of e-liquids – different flavors, different nicotine levels — before Indiana’s new law. Since the law took effect, the number of legal manufacturers went from well over a hundred … to seven.

"This was one of those, 'you don’t know enough about the industry and not listening to us when we tell you you’re doing this wrong.'"

—Evan McMahon, E-liquid Manufacturer

“Now there is no competition,” Cohn says. “Here we’ve been in business for three years and some of the juice that I’m buying now that’s being bottled for other companies I’m literally paying four to five dollars more for now.”

The new law imposes a variety of labeling, packaging, cleanliness and security requirements.

E-liquid manufacturer Evan McMahon used to have a lab in downtown Indianapolis. The law forced him to move his operation to Ohio. In order to sell his product in Indiana, McMahon has to give his recipes to one of the seven manufacturers.

So what about the law has forced so many out of the industry? Well, McMahon says there are several problems, many of which stem from one central issue.

“This was one of those, ‘you don’t know enough about the industry and not listening to us when we tell you you’re doing this wrong,’” McMahon says.

For example, “It’s requiring that machines, big bottling machines, have to be disassembled and either washed by hand or run through a machine,” McMahon says. “Well that’s not how those machines are cleaned, but there’s no leeway in the law.”

But McMahon says the biggest problem is the security firm requirements. The law mandates that each manufacturer contract with a security company. And it says the security company must fulfill a whole host of requirements and certifications.

“It takes all of these things – manufacturing, doors, locksmiths, monitoring, live people watching screens – and says it all must be done by one company, and you can’t subcontract any of that out.”

The requirements are so prescriptive that only one company in the country,  a security firm in Lafayette, can meet them. Rep. Kevin Mahan, R-Hartford City, the author of the vaping law, says that was never his intent.

“The free market that we all thought was going to take place on the security portion didn’t happen,” Mahan says. “We didn’t have security companies come to the table.”

Still, the law’s requirements have people like McMahon decrying it as one that creates a monopoly. Indiana University law professor Max Huffman, an anti-trust expert, says the law creates a possible monopoly at two levels, with both the security company and the seven manufacturers. But he notes, none of it is illegal.

“The federal anti-trust laws would be terribly concerned if a group of private firms got together and said we’re going to keep out everybody except for seven,” Huffman says. “And I should just be clear, the Indiana anti-trust laws would also be concerned about that. But the illegality turns on private action. If the state wants to do something, the law doesn’t prohibit it.”

Key lawmakers have expressed willingness to revisit the law and make it less restrictive. But vape shop owners and manufacturers like Cohn and McMahon say the damage is already done. Rep. Mahan thinks that might be an exaggeration.

“I think at the end of the day the sky hasn’t fallen and the world hasn’t come to an end,” Mahan says. “People that’s needing the e-liquids are still getting the e-liquids.”

Yet Mahan acknowledges that the law needs another look. But he says come January, the legislature’s goal should be to ensure the only manufacturers in the state are ones providing safe products to Hoosiers.