The Seventh Circuit has ruled that Indiana’s law regulating the production of vape liquids for e-cigarettes imposes broad requirements on out-of-state manufacturers that are unprecedented and unconstitutional.
The Enroll Act 1432 had detailed requirements for manufacturers to qualify for a permit to sell their product in Indiana, including requiring manufacturers to hire an independent security firm rather than use in-house security, which must provide 24-hour video monitoring, and dictating details for the construction and operation of the facility, such as a clean room that abides by Indiana commercial kitchen standards.
Three out-of-state makers of e-liquids – Legato Vapors, Rocky Mountain E Cigs, and Derb E Cigs – challenged the law as an unconstitutional regulation of non-Indiana businesses in a 2015 federal complaint. They asserted that the law’s stringent permitting requirements discriminate against small companies in favor of Big Tobacco.
The law has benefited in-state e-liquid makers, as only six companies may now lawfully sell their vaping products in the state, as opposed to more than 100 before the act’s passage. Four of those six are Indiana-based companies.
A federal judge found for the state, but the Seventh Circuit reversed and ruled the law unconstitutional for violating the US Constitution’s Commerce Clause.Judge David Hamilton wrote, “The Act is written so as to have extraterritorial reach that is unprecedented, imposing detailed requirements of Indiana law on out-of-state manufacturing operations. The Act regulates the design and operation of out-of-state production facilities, including requirements for sinks, cleaning products, and even the details of contracts with outside security firms and the qualifications of those firms’ personnel.”