The FBI Is Questioning Indiana's Sketchy New Vaping Law

The law has drawn suspicious from the industry for its strict security requirements.

Aug 24 2016, 12:00pm

Image: rpavich/Flickr

The FBI seems to share an opinion with many vapers in Indiana that the state's new vaping laws look a little fishy. The agency has been interviewing lawmakers and business owners in Indiana, according to the Indianapolis Star, trying to get answers on a bizarre, strict law that is shuttering vape businesses in the state and giving a special power to one local business.

Last year, Indiana passed a law setting out standards for vaping manufacturers wishing to sell in the state. This law was updated this year and is set to go into effect this fall, but it goes far beyond more state or even federal vaping requirements: The law includes the usual provisions, such as not selling e-cigarettes to minors, but also requires e-liquid manufacturers to obtain a five-year permit through a private securities firm, with expertise in such areas as rolling steel fire doors, in order to sell in the state.

This would be weird enough, but the law goes further to detail very specific requirements of said firm—requirements that only one securities firm in the entire country actually meets. That means the fate of every e-liquid manufacturer hoping to sell in Indiana rests in the hands of a single, private company: Lafayette-based Mulhaupt's Inc.

"If you want to sell e-liquid in Indiana, it doesn't even matter if you are from another state, you have to go through Mulhaupt's," state Senator Vaneta Becker told the Indianapolis Business Journal earlier this summer. "To me, that is an antitrust issue."

And Mulhaupt's isn't exactly generous with permits. So far, it has only approved permits for six vaping companies, and rejected dozens, if not hundreds, of others. The company is under no obligation to report or explain why it's greenlit some companies and stonewalled others. This not only irked the vaping industry—which will be virtually decimated in the state after the law goes into effect—it drew the attention of the FBI, which began interviewing politicians and business owners.

Even for vaping businesses that don't make their own e-liquid, the law has had major impact: since only a small handful of e-liquids have the required permit for sale in the state, brick-and-mortar shops have had to clear their shelves. Others have chosen to pack up and cross over to neighbor states, while many other have had to just shut down.

"From the moment the Indiana bill was introduced, it was patently obvious that there were dubious motives at work," Gregory Conley, the president of the American Vaping Association, an advocacy nonprofit, told me. "If the FBI digs hard enough, I predict they will find something worth pursuing."

But along with the FBI sniffing around, the vaping industry has had a small victory that may signal the beginning of the end for this unusually strict law: a court ruled against the requirements for one Florida-based company, GoodCat. GoodCat filed a lawsuit protesting the law after Mulhaupt's rejected its application for a permit, stating the requirements were overly burdensome and discriminatory to out-of-state businesses. Earlier this month, Judge Richard Young granted a preliminary injunction for GoodCat, ruling that the requirements made the law unconstitutional.

This decision doesn't overturn the law, but if more businesses follow in GoodCat's footsteps and receive similar injunctions, it will put more pressure on rethinking the law entirely.