August 2016

The Great Indiana Vape War

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By Norm Bour

Imagine an entire state enacting a law so limiting, so unreasonable, so unconstitutional, that it shuts down an entire industry within that state. As far-fetched as that sounds, Big Brother has pulled off a sly trick in the state of Indiana that may do just that.

It’s called HB (House Bill) 1386 and it has been discussed here in VAPE magazine by many, and rather than go into all the details, (link here to a past article) it’s time to take action.

WHY?

Because this ridiculous legal act sets a danger precedent that could potentially lead to similar laws in other states. Georgia already picked up that baton and patched some loopholes from the Indiana version.

The Story behind the Story

The FDA has been mandated for several years to create a set of rules and guidelines for the vaping industry. Is vape tobacco? Is it not? In this situation that question is moot, but what it more timely is the question of: “When does a state go too far?” In this case, “too far” is HB 1386, which is an update to the law passed last year, HB 1432. In lieu of federal guidelines many states have enacted their own rules- most of them very bad.

This law has many unrealistic requirements, but one of the most significant is: E-liquid manufacturers must obtain a permit from the alcohol and tobacco commission before bottling e-liquid or selling e-liquid to retailers or distributors. This applies to manufacturers both within and outside the state.

This law is due to go in effect in a handful of weeks; there is still no process to get a permit.

Liberation Vapes from Indianapolis is an e-liquid manufacturer that sells both within and outside Indiana, which should give them a distinct advantage concerning the “importation of nicotine products.” But the rabbit hole goes much, much deeper. Imagine enacting a law that prevents you from driving faster than 65 MPH, but yet not offering a speedometer in any cars.

“There are some severe, hard core fundamental flaws to this law,” Evan McMahon states, “And there is no way to conform to it.” McMahon is the CEO of Liberation Vapes and has been in this battle since 2015. He is also the Chairman of Hoosier Vapers, the states’ de factor advocacy organization to protect the vaping industry.

When this law was first proposed the fear was that it would eliminate any nicotine products entering the state. When the smoke cleared it was even worse.
Legal firm Troutman Sanders LLP from Virginia filed the initial lawsuit and was soon joined by Keller and Heckman LLP from Washington, DC, along with the Right to be Smoke Free organization, which includes Hoosier Vapers. Hoosier, which started as a Facebook Advocacy group, is now looking to form local chapters along with their statewide organization.

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How Secure is Secure?

The other major component of HB 1386 says: Manufacturing facilities must have a security firm certification that the manufacturer meets security requirements.

These requirements are not identified yet. The problem is that this law requires a security company to have very specialized certifications. According to McMahon, “Only one company in the entire nation may be compliant, but even that is unknown.”

McMahon actually has some experience in these areas. Prior to getting into the vape space he was a lobbyist for the Libertarian Party, which affords him a bit of insight to the workings of politics behind the scenes.

ADT is one of the largest security companies in the United States, and was recently acquired for $6.9 Billion. McMahon shared that even they are not qualified to comply with the new law. On top of that, any security company that wished to offer their services to vape shops had to submit their applications by March 18, 2016.

“Common sense is not that common”

Currently there is a motion to file a “preliminary injunction” which would “stay” (stop) the law from taking effect. That was due to be heard on April 18 and was scheduled to be a hearing without anyone testifying. A decision normally would be rendered within 30 days.

In addition to the elimination of nicotine vaping products in Indiana and the harsh guidelines for security companies to do business there, a byproduct could also result in flavor bans and online sales restrictions.

There is no way to overstate the significance of this Indiana law.

“In the state we have about 200 vaping related businesses. The average shop has about 10 employees, so over 2200 people are going to lose their jobs,” McMahon said. Vaping is estimated to be a $100 million business in the state, which would create a significant loss of revenue. They may relocate just over the borders into the neighboring states of Illinois, Kentucky and Michigan.

“The families of the business owners are going to have to find some other way to make ends meet. We’ve already had 11 businesses close in Indiana since January.” Most businesses that are open today may have to close since their overhead and expenses will continue.

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Appie Peute and his wife Cyndi own Vaporz Vault in Hobart, Indiana, with a population of 30,000 residents. They are scared. “I have no faith in the justice system,” he stated, and many would agree, “and common sense is not that common.”

“This court case could go to the Supreme Court,” Peute offered, and there are law firms that would be happy to take it there.

There are also the estimated losses from more people returning to smoking, more people creating unhealthier lifestyles, getting sick, and in turn driving up health costs. Three cities in Indiana have created a noteworthy number of smokers turned vapors, resulting in healthier residents in the cities of Lowell, Spencer and Medford.

Another byproduct could also result in a growing Black Market as vaping goes underground.

When asked about the concerns of the “average Indiana” resident and if they know or if they care about this egregious abuse of power, McMahon replied: “No. They have no idea and efforts to engage mainstream media falls flat. Media only cares when something bad happens and they can vilify the industry.”

Ironically, ineffective laws that get passed sometimes generate more outcry after they are enacted.

Peute recently purchased a home in Daytona Beach, Florida, and grumbled, “If this law passes I may shut the doors and open a shop in Florida. That would be a real shame because my wife lives for and loves that shop.”

This battle is not trivial and is not just a wasted effort to encourage advocacy. This is the battle that could change the direction of the vape war for better or for worse.

Norm Bour is the founder of VapeMentors, which offers online educational programs, services & resources for anyone in the vape space, including vape shops, online stores and e-liquid brands. He’s also the host of Vape Radio, the largest vaping radio show in the world with more than 1.2 M downloads. Norm interviews the masters of vape and thought leaders in the vape space. Contact him at norm@VapeMentors.com.