US appeals court strikes down part of Indiana vaping law

Markets Associated Press

A federal court on Monday struck down a major portion of Indiana's restrictive vaping law, which created a monopoly for one security firm and sparked an FBI probe.

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A three judge-panel of the 7th U.S. Circuit Court of Appeals in Chicago ruled that the law's strict requirements guiding the production of the nicotine-laced liquid consumed through vaping imposed "unprecedented" and "extraordinary" regulation for out-of-state companies. The ruling effectively ends the stranglehold that Lafayette-based security company Mulhaupt's Inc. had on deciding who could enter the Indiana e-liquids market, although it applies only to out-of-state manufacturers.

The Legislature first approved Indiana's vaping law in 2015, ostensibly to create safety standards for "e-liquid" production. The law was amended last year in a way that effectively gave Mulhaupt's sole discretion to decide who could be certified to produce "e-liquid" sold in Indiana. The law guided everything from requirements for sinks and cleaning products to the details of contracts with outside security firms and the qualifications of those firms' personnel, the judges wrote.

The appeals court found that the restrictions violated the Constitution's commerce clause and were "akin to telling out-of-state communities how to run their recycling programs."

"At the most basic level, one might wonder why Indiana cares," the judges wrote, noting that the law's "astoundingly specific" provisions "raise still more questions that go well beyond the Commerce Clause."

Last year, Mulhaupt's set a permit application deadline for e-liquid manufacturers one week before the bill was signed into law by former Gov. Mike Pence. Then it certified just six companies to produce the liquid, freezing out other businesses. The company is based in the district of Republican state Sen. Ron Alting, who helped shepherd the measure through the Senate and resisted efforts by other lawmakers to make changes to the bill.

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When the law went into effect, it drew the attention of the FBI, which questioned a number of people connected to it. Those who have been interviewed said the FBI asked who was involved, what their motivations were for supporting or opposing the law and whether they knew of anyone who was offered anything in exchange for their support.

Since then, leaders in the GOP-controlled Statehouse have pledged an overhaul.

The federal appeals court said the law "looks very much like a legislative grant of a monopoly to one favored in-state company in the security business."

A spokesman for Mulhaupt's did not respond to a request for comment.

Evan McMahon, chairman of the advocacy group Hoosier Vapers, said he felt vindicated by the ruling.

"This is definitely a victory," he said. "It reaffirms ... everything we've been saying."