Taken from The Indy Star-
"Retailers who must now find new sources for their product say the few producers who have been approved are charging much more. Ultimately, it is consumers who will have to pay higher prices, they say.
At issue are new regulations passed by state lawmakers in 2015 and revised earlier this year. The rules require any company that wants to produce e-liquid for sale in Indiana to be certified by a security firm by June 30.
The catch: So far only one security firm in the entire country qualifies to perform the work under the law – Lafayette-based Mulhaupt’s Inc. At this point, the company has approved only six producers, shutting out many existing competitors.
The law was billed as an effort to establish safety regulations for what had been a largely unregulated vaping industry. The law outlines specific conditions for manufacturing – that it occur in a clean room, for example – as well as requiring child-proof caps, detailed bottle labels and traceable batch numbers.on the products.
But now, critics are questioning why lawmakers would allow so few companies to dominate what had been a highly competitive market.
The lawmakers most closely associated with the legislation did not return phone calls from IndyStar. One legislator, Rep. Kevin Mahan, R-Hartford City, issued a written statement, emphasizing his desire to provide safety for everyone in the supply chain, including consumers.
Doug Mulhaupt defended his company’s role in the process, saying he didn’t know until very recently his security firm currently is the only one to meet all the requirements. The Indiana Alcohol and Tobacco Commission says a second security firm — Security Specialists — is under review for eligibility.
"There are people in this industry that are upset about everything and my name got attached, and that's unfortunate," Mulhaupt said. "We're a privately run company, and we get to decide who we do business with."
Mulhaupt said his company didn’t lobby for the legislation.
A primary force behind the legislation was Zak Laikin, the son of former Brightpoint CEO Bob Laikin. Zak Laikin and his Indiana Vapor Co. hired a team of four high-powered lobbyists to advocate for the law.
Mulhaupt’s has certified six companies and says it doesn’t plan to consider any others. Of those it has certified, at least two aren’t up and running yet.
Meanwhile, well-established e-liquid producers say Mulhaupt’s is turning them away with little or no explanation.
"We went through all the steps that we needed to be compliant with the law," McCullough said. "We did everything that the law requires, and then when we put in the application with the one security company, they said that they would not be our security company."
Jeff Piper, sales manager for C.B. Distributors, Inc., an e-liquid distributor based in Beloit, Wis., said he had a similar experience.
"We started calling Mulhaupt's – our supplier did – back in March, and they have done nothing but put us off," Piper said. "I can tell you that my supplier offered them double their normal rates and they still refused to take us on as a client."
Mulhaupt said roughly 30 e-liquid companies had contacted his firm. He said Mulhaupt’s reviewed about 14 applications and chose as many as was manageable to sustain."