More e-liquid firms try to beat state's deadline as courts weigh vaping laws

June 30, 2016

The smoke finally could clear on Thursday for e-liquid manufacturers who have tried to either fight or comply with the state's controversial new vaping laws that go into effect on Friday.

Depending on decisions at the state and federal levels, they likely will get clarity on a number of questions about whether the laws actually will take effect and whether other manufacturers will slip in under the deadline.

The Alcohol and Tobacco Commission said Wednesday afternoon that it was reviewing multiple last-minute applications to determine whether any would qualify firms to do business in Indiana come Friday. That's the day on which unapproved manufacturers would be barred from making or selling their products in the state. E-liquids are flavored solutions used in certain types of e-cigarettes.

There are six more pending e-liquid manufacturer applications—two of which are from companies based in China—which could be voted on by the ATC on Thursday morning. An ATC meeting called for Tuesday to review new applications was canceled at the last minute.

Meanwhile, manufacturers that are critical of the vaping rules hope federal judges will rule in their favor Thursday and grant their requests for injunctions. Two federal lawsuits, as well as a state lawsuit, call the laws into question.

The second federal lawsuit was filed last week by Naples, Florida-based Goodcat LLC—which sells its products through more than 200 Indiana retailers. The suit targets the e-liquid security firm requirements, which critics say were written in a way that essentially gives a private Lafayette security firm, Mulhaupt's, veto power over the entire industry.

The Florida company, which tried to get an application but was denied by Mulhaupt’s said in its suit that the “security firm requirements have a discriminatory effect by imposing security firm requirements that can be satisfied by only one firm in the entire United States.”

E-liquid manufacturers have cried foul because no other security firms besides Mulhaupt’s appears to meet oddly specific requirements in the law, and applicants must have a five-year contract with a qualified security firm to be approved by the state.

So far, six e-liquid manufacturers have been approved by the state. All use Mulhaupt’s as their security firm.

ATC paralegal Kim Chew declined to say on Wednesday which, if any, of the firms that had pending applications would be voted on for approval on Thursday.

IBJ reported June 18 that at least 30 national and local manufacturers tried to do business with Mulhaupt’s, but many were unsuccessful. The security firm said it was being choosy with whom it worked.

One of the pending applications is for California-based Cali Co-Packing LLC, which is affiliated with another California firm, One on One Flavors, with common leadership.

Initially, it was working with California-based Bay Alarm Company, an ADT-style commercial and residential security firm.

But upon talking to the ATC, Bay Alarm learned it would not qualify because it used subcontracted, not salaried, employees to fulfill the required certifications, according to Bay Alarm’s office manager, Miranda Beckman. Companies that use subcontractors do not meet the state's standards.

“We had to withdraw,” Beckman said. She said her company was encouraged by Cali Co-Packing to stretch the truth regarding its credentials on the application, but “we would not lie about it.”

One on One Flavors’ chief operating officer, Ivan Loochkartt, denied that Cali Co-Packing asked Bay to misrepresent its qualifications, and said he quickly found another security firm that met the requirements.

“We sent over the information yesterday along with the firm certification and it appears everything is good,” Loochkartt told IBJ Wednesday afternoon. “We’re just waiting on them to hear that we received approval.”

Loochkartt would not tell IBJ which security firm it had chosen to work with.

That Loochkartt found a qualified security firm so quickly surprised Indiana manufacturers who had done months of unsuccessful research to find a qualified group besides Mulhaupt’s.

Evan McMahon, who runs vaping industry group Hoosier Vapers and has his own shop called Liberation Vape, said he “finds it highly suspect.”

“How can somebody find a company i[so quickly],” McMahon said, “and then turn around and get all of that information to a state bureaucracy who is then supposed to vet it all?”

Editor's note: This story was updated from its original version to note that Loochkartt denied that Cali Co-Packing asked Bay Alarm Company to misrepresent its qualifications.


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