Vaping Law Overturned By Federal Court

A controversial Indiana law that limited e-liquid production for sales in the state to only six companies has been partially overturned by the 7th Circuit Court. According to the court, the law gave Indiana control over out-of-state manufacturers in violation of the United States Constitution.

The law, which was enacted in 2015 and amended last year, required that e-liquid manufacturers get approval from a security firm in order to sell their products in the state of Indiana. The requirements for security firms to qualify were so strict, according to the court, that only one company in the country qualified; Indiana-based Mulhaupt’s, Inc. In addition, the requirements for e-liquid manufacturers to get certification from Mulhaupt’s were so stringent that only six manufacturers were approved by the process.

The legal problem this created was the potential of a monopoly. An FBI investigation was launched, and state lawmakers scrambled to figure out if they had perhaps made a mistake. The 7th Circuit declared the law unconstitutional because it extended control beyond e-liquid companies in Indiana and included manufacturers across the United States. That violates the dormant Commerce Clause of the U.S. Constitution.

The court’s decision also overturns a June 2016 ruling that dismissed a challenge to the vaping law by three out-of-state e-liquid manufacturers.

While the vaping industry is pleased with the court’s decision, it only affects part of the strict vaping law. The court noted that Indiana has a perfect right to regulate e-liquid production by companies within the state. The law also prohibits sales to minors, requires that ingredients be listed on labels, requires child-proof packaging and requires purity of ingredients.

Those types of regulations are largely favored by those in the vaping industry. But the law’s extreme rules for e-liquid production, which included, among other things, having 24-hour-a-day video surveillance of manufacturing facilities, put companies that could not meet the requirements quickly out of business. Limited availability of e-liquid also caused prices to rise, and threatened the entire industry. The owner of one vape shop in Indiana said she had to move her e-liquid manufacturing business across the border to Kentucky because of the law.

Many e-liquid manufacturers are small businesses, as are many vape shops. The strict regulations lawmakers have been inclined to put on e-cigarettes and related products have the potential to put many of these small businesses out of business, while leaving big corporations to dominate the vaping industry because they are the only ones who can afford to comply with the rules. That situation would not only limit consumer choice
when it comes to smoking alternative products, but it could also hurt many small businesses and ultimately hurt the economy.