Indiana’s New Vaping Law May Have Violated Antitrust and Corruption Laws

Men in black suits are interviewing manufacturers of e-liquids used in e-cigarettes. In 2015, Indiana legislators handed six e-liquid producers control of the Indiana e-liquid market, shutting down dozens of other manufacturers. Last week the FBI interviewed two Indiana lawmakers and a manufacturer of e-liquid about the state’s new vaping law which seems to violate federal anti-trust statutes.

The new law requires any company that wants to produce e-liquid for sale in Indiana to be certified by a security firm by June 30. Only one security firm in the nation is qualified to perform the certification and has handed out only a half-dozen certifications and denied dozens of others. As a result, businesses have closed their doors.

Placing the fate of e-liquid manufacturers in the hands of this single private security firm, Lafayette-based Mulhaupt’s Inc., has the vape industry up in arms. The Indiana law requires all e-liquid producers, even those not based in Indiana, to certify their products through Mulhaupt’s in order to receive a permit to sell their products in Indiana.

An e-liquid maker based out of Florida, GoodCat, challenged the law in courts, claiming that the certification requirement violates the U.S. Constitution’s commerce clause which prohibits states from enacting laws that excessively burdens interstate commerce. GoodCat won their case and as a result, GoodCat became the seventh producer awarded a permit.

Legislators contend that Indiana should maintain their ability to regulate e-liquids and e-cigarettes within its borders and that decisions about how to regulate the businesses that manufacture chemicals and devices should be made by elected representatives.

The Indiana law is just one of many which are hostile to the vape industry. Veracity Insurance Solutions is committed to helping insure the vape industry and offers general & product liability insurance to e-cigarette and e-liquid producers and small vape shops.

Although the Indiana law has forced many vape businesses out of the state, the GoodCat win in court sets a nice precedent. With luck, if more vape businesses challenge the Indiana law in court and win similar injunctions, the law may eventually be overturned.

What do you think about the Indiana law? Is it fair to the vape industry or do you think states should regulate businesses which manufacture chemicals and devices even if they don’t operate within their borders?

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