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Vaping law author introduces bill to fix 'perceived monopoly'

January 23, 2017

The author of Indiana’s controversial vaping law, which essentially created a monopoly in the e-liquid production industry, has put forth another bill regulating the industry that he says will address the “perceived monopoly.”

But a critic called state Rep. Kevin Mahan’s bill a “slap in the face” to business owners who were forced out of the industry as a result of the law, which ended up giving a private company control of deciding which manufacturers could get a state permit to make the “juice” used in e-cigarettes.

The vaping law was challenged in several court cases and its origin was eventually probed by the FBI. Legislative leaders have publicly acknowledged the bill created a monopoly and harmed businesses, and vowed to fix it.

Mahan, R-Hartford City, introduced a bill Monday that would extend until December 2019 the window for security firms to meet requirements under the law. And it removes the requirement that e-liquid manufacturers must have been registered by July 2016 to do business in the state.

Mahan’s bill also limits to 10 the number of permits that the State Alcohol and Tobacco Commission may issue, a number he said was open to debate. There are currently seven manufacturers that have permits: six that were initially approved under the strict requirements and a seventh permit that was ordered by a court.

“My No. 1 goal was to try to address this perceived monopoly,” Mahan said. “I’m a small business owner. I would be thoroughly upset if my government would pass a law that would only allow one company to conduct business.”

The state law championed by Mahan in 2015, and modified in 2016, required e-liquid manufacturers to sign a contract with a private security firm before being allowed to get a permit from the state. But the requirements for which firms could be considered qualified security firms were so strict that just one company—Lafayette-based Mulhaupt’s Inc.—could qualify. One of those requirements was to have a certification from the Door and Hardware Institute, an organization where Mulhaupt's owner Mike Gibson serves as president-elect.

Evan McMahon, chairman of Hoosier Vapers and an e-liquid manufacturer, said he was “dumbfounded at how [Mahan’s] bill can be introduced claiming to be anything other than a furthering of the monopoly in Indiana.”

“This is window dressing for a bad bill that makes no substantive changes, trying to parade around as some sort of fix,” McMahon said. “While other legislators are doing their part to try to undo the harm that was caused, this bill is just a slap in the face.”

McMahon and other advocates that have spoken out against the law are supporting Senate Bill 1, authored by state Sen. Randy Head, a Republican. That bill eliminates the security firm requirements and essentially brings back an open market with manufacturing safety requirements that Head calls “common sense” restrictions.

Head’s bill is being heard in committee this week. It is unclear when Mahan’s will be heard.

House Speaker Brian Bosma did not immediately reply to a request for comment.

Mike Leppert, a lobbyist with Turning Point Brands—formerly National Tobacco Co.—said he didn’t understand Mahan’s attempt to cap the number of permittees.

Leppert also said “the entire issue of the security firm is unnecessary and irrelevant to safety and security of the product we sell.”

Indiana Smoke Free Alliance President Amy Lane said her group is "willing to work with any legislator on reasonable regulations,” but said Mahan’s bill doesn’t adequately increase access to Indiana’s vaping market. She also said keeping security firm requirements in Indiana is unnecessary given recent FDA rules governing the products nationally.

“It really should be about fixing the problem and this does nothing but Band-Aid the problem,” Lane said.

Mulhaupt’s President Doug Mulhaupt, through a spokesman, told IBJ that the company is “reviewing House Bill 1598 in order to fully understand its impact on Indiana’s e-liquid industry.”

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