January 2017

Mastering the Vape Space: Don’t Be an Orphan


By Norm Bour

If you are one of the 7,000 to 9,000 e-liquid manufacturers out there, then this one’s for you. You probably fall into one of three categories:

  • You are a retail shop and you make your own liquid; hopefully not in your back room, but some of you know that you’re guilty of that. The bad news is that your days are numbered.
  • You may be a brand manufacturer of any size. You probably have your own facility and you may also make juice for others. Your days may be numbered

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 as well unless you have studied the regulations and are planning on putting major dollars into your process.

  • Or, you may be a contract manufacturer, making liquids for others and probably not selling your own branded products. If you plan to be here for the long term, then you have done your research and understand the rules of the game.

On the other side of the table we have the customers, the liquid sellers, that fall into one of several categories as well. If you have a substantial market share and are getting your juice manufactured by option number three above, then you need to know your risks and options going forward. You do not want to become an orphan.

New year, new game

Until recently, all “manufacturers” of vapor products were required to submit brand information, including names and labels to the Food and Drug Administration (FDA).

That target date was December 31, but the FDA was not prepared for the onslaught of submissions! They moved that date out six months to June 30, 2017. Ironically, the ingredients list for “large manufacturers” grossing more than $5 million annually comes before then, on Feb. 8, 2017, but by the time you read this that may be postponed, too.

The Product Composition Report is much more than an ingredient list—they must break down every ingredient and show the complete chemical composition. Small manufacturers have until August to supply the same.

Are you asking your e-liquid manufacturer the right questions?

Many contract manufacturers, along with most of the vape space, will be gone in the next 24 months. And many brands will go away as well because they don’t have a reputable manufacturer in place. A replacement alternative may not be available since they may be operating at capacity. Going forward you will see less businesses, doing more.

We spoke with James Arbaugh, one of the founders of the Vape Industry Business Exchange (VIBE), a newly formed trade group designed to support the industry through collaboration and teamwork. In addition to helping retail shops with mass buying power, they have also developed the “PMTA Exchange” which we will cover in more depth in our next issue.

For now, you need to ask tough questions of your manufacturer if you are using a third-party company. These are some guidelines that Arbaugh offered.

The three biggest lies told to vape industry businesses today

  • “The check’s in the mail.”
  • “I’m from the government and I’m here to help.” and…
  • “Don’t worry, our e-liquid facility is completely prepared for the FDA and will be approved with flying colors!”

The first two lies apply to many life lessons, but if

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you get bullshit answers to number three, then you should make a course correction quickly. Your livelihood is at stake and how you proceed will determine your longevity in the vape industry.

If you are getting your juice made by a third-party manufacturer, here are the Top Questions you must ask them.

1. What are you doing right now to prepare for FDA regulation of e-liquid manufacturers?

Their reply should have cGMP (current Good Manufacturing Practices*) at its core, since all manufacturers in all industries regulated by the FDA are required to adhere to industry-specific cGMP standards. Once cGMP’s are released for e-liquid manufacturing, they will be phased-in here, too. A serious and committed manufacturer should know about possible standards, which takes time and money to implement.

Acceptable responses might include: “We are substantially cGMP compliant” or, “We are making great strides in cGMP implementation.” Even, “We have hired (or retained) a firm that specializes in cGMP compliance and working frantically on it,” is passable.

Unacceptable answers include “We have an ISO-X clean room.” That lie has been revealed as unadulterated bullshit. Other unacceptable replies include: “Don’t worry about that, we’ve already registered!” Or, “We’re waiting to find out what the FDA requires because no one really knows yet until they release their requirements.” That means they haven’t taken the time to research and find out what they should be doing now.

True, while no one knows the specifics, there are many cGMP-related steps that can be taken now. Some should have been started last year and can save the company a lot of time without breaking the bank.

The absolute worst answer is, “We are already an FDA-approved e-liquid manufacturer.” There is no such thing and they are either lying to you intentionally or out of ignorance.

2. What are the qualifications of the person or firm that wrote your SOPs?

If they don’t have Standard Operating Procedures (SOPs), then they aren’t working on cGMP. If a PhD

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chemist or a masters-level chemist with several years of cGMP implementation experience wrote them, that’s good. If they downloaded boilerplate information and a high school chemistry geek customized them, you might have a problem. If in doubt of their reply, get a copy of the chemist’s background and experience.

3. Can I tour your facility?

If they balk at this, it may be a bad sign. Most legitimate manufacturers are willing to show you around. If they claim “proprietary manufacturing secrets,” that also should set off your spider senses. They will probably ask you not to photograph or record anything, or maybe even sign a non-disclosure agreement, but those are within reason.

The “batch testing” question

The FDA will soon require batch testing of samples. Currently there are just a few liquid companies doing that, and the FDA will allow some time for implementation of this step.

In the next year, the FDA will require all manufacturers to test each batch after mixing to validate that the active ingredient falls within +/- 10 percent of the label claim. If they use the acid based titration method to test finished product, most experts will tell you that’s inaccurate when mixed with other ingredients. That method is effective for nicotine purity before it’s mixed with flavorings, but not after.

The only way to accurately test the nicotine strength of finished e-liquid is with a specialized chromatograph. These fall into one of two categories, and are either a Gas Chromatograph (“GC”) or a High Performance Liquid Chromatograph (“HPLC”).

They should also staff a trained technician to keep the equipment calibrated and to read and record the results. If your manufacturer is doing batch release testing using GC or HPLC, then you did a good job at picking a winning company.

The future’s so bright you gotta wear shades!

The days of the Wild, Wild West aren’t so wild any more. The Feds are in town and are kicking ass and taking names. If your company is targeted for investigation, then you had better be prepared!

If your e-liquid manufacturer is keeping you in the dark and covering you with BS, you could find your brands on the trash heap of history. Don’t take that chance—know the right questions to ask, and understand the right answers!

The Vape Industry Business Exchange will be sponsoring manufacturing symposiums in 2017, hosted by VapeMentors and taught by industry leaders, Keller and Heckman, LLC law firm. Their first workshop of the new year will be held in Washington, D.C. on Feb. 2-3. Contact norm@vapementors.com for information about attending.

*current Good Manufacturing Practices starts with a set of Standard Operating Procedures, or “SOPs” that prescribe exactly how every step in the manufacturing process is to be conducted and documented to ensure every single bottle of e-liquid is exactly like the others.

Norm Bour is the founder of VapeMentors and creator of the VAPE U online programs. They offer services and 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 1.3 M downloads. Norm interviews the masters of vape and thought leaders in the vape space. Contact him at norm@VapeMentors.com.