Great news! Our long and hard fought battle in Indiana is on the verge of coming to an end. On Friday, April 21, 2017, the Indiana General Assembly passed Senate Enrolled Act (SEA) 1, which hammered the final nail in the coffin of Indiana’s Vapor Pens and E-Liquid Act (the Act) by removing the provisions found unconstitutional as a result of our lawsuit. Specifically, among other things, SEA 1 eliminates the security, clean room, and kitchen code requirements, as well as various audit provisions, that were found unconstitutional by the United States Court of Appeals for the Seventh Circuit in our case. See Legato Vapors and Right To Be Smoke-Free Coalition v. Cook, Case No. 16-3071. The amendments also remove the June 30, 2016 statutory deadline for both in-state and out-of-state e-liquid manufacturers to file permit applications with the Indiana Alcohol and Tobacco Commission (ATC). Keep in mind, however, that although the new law will effectively re-open the Indiana e-liquid market once it is signed by the Governor, e-liquid manufacturers are still required to obtain a permit from the ATC to sell products there. Once the bill is signed into law we will report back on the best and quickest way for manufacturers to apply for a permit with ATC.
Below is a summary of the law’s main provisions for e-liquid manufacturers. Note that there are also requirements for in-state retailers (e.g., ID and age verification, tobacco sales certificate) and distributors (e.g., license) not summarized here; if you have any questions about the requirements for those entities, please contact our legal counsel, Azim Chowdhury of Keller and Heckman LLP at firstname.lastname@example.org.
Summary of Manufacturer Requirements in Indiana SEA 1
- Key Definitions
- E-Liquid – A substance that (1) may or may not contain nicotine and (2) is intended to be vaporized or inhaled using a vapor product. [Note this includes zero-nicotine e-liquids.]
- Manufacturer – a person located inside or outside Indiana that is engaged in manufacturing e-liquid.
- Manufacturing – the process by which an e-liquid is mixed, bottled, and packaged.
- Vapor Product – a powered vaporizer that converts e-liquid to a vapor intended for inhalation. [Note that SEA 1 does not apply to “closed system” vapor products except for certain labeling and reporting requirements detailed below.]
- ATC Permit Requirements
- A manufacturer of e-liquid may not mix, bottle, package, or sell e-liquid to retailers, consumers, or distributors in Indiana without a permit issued by the ATC.
- A manufacturing permit issued by the ATC is valid for five (5) years and must include the following:
o The name, telephone number, and address of the applicant.
o The name, telephone number, and address of the manufacturing facility.
o The name, telephone number, title, and address of the person responsible for the manufacturing facility.
o Verification that the facility will comply with applicable tobacco products good manufacturing practices promulgated under 21 U.S.C. 387f(e) of the federal Food, Drug, and Cosmetic Act. [Note no federal GMPs have been established yet.]
o Verification that the manufacturer will comply with the applicable ingredient listing required by 21 U.S.C. 387d(a)(1) of the federal Food, Drug, and Cosmetic Act. [For a summary of the FDA ingredient reporting process, see Keller and Heckman’s alert here and upcoming May 9, 2017 webinar here.]
o Written consent allowing the state police department to conduct a state or national criminal history background check on any person listed on the application. ATC will forward a copy of the permit application to the state police department for state or national background checks; ATC is required to cover the cost of the background check. [Note that the permit will be denied if the manufacturer or any person listed on the application has been convicted within ten (10) years before the date of application of various federal crimes or Indiana felonies set forth in the statute.]
o A nonrefundable initial application fee of one thousand dollars ($1,000). The five year renewal application fee is $500.
- If a completed application for a permit is denied, ATC must state the reasons for the denial. The applicant may reapply within thirty (30) days after the date of the denial. There is no application fee for a reapplication.
III. Packaging and Labeling Requirements
- An e-liquid container must use a child proof cap that has the child resistant effectiveness set forth in the federal poison prevention packaging standards, 16 CFR 1700.15(b)(1). [For more on the federal child-resistant packaging requirements for e-liquid containers, see Keller and Heckman’s alert here.]
- An e-liquid container must use a tamper evident package, which is defined a package having at least one (1) indicator or barrier to entry that, if breached or missing, can reasonably be expected to provide visible evidence to consumers that tampering has occurred. The tamper evident package feature must be designed to and remain intact when handled in a reasonable manner during the manufacture, distribution, and retail display of the e-liquid container.
- The label on an e-liquid container must meet the nicotine addictiveness warning statement requirements set forth in 21 CFR 1143.3 (“WARNING: THIS PRODUCT CONTAINS NICOTINE. NICOTINE IS AN ADDICTIVE CHEMICAL.”). That nicotine warning must be present on the label or container by May 31, 2018.
- E-liquid labels or containers must also include an identifiable and trackable code, the manufacturing date and the Indiana e-liquid manufacturing permit number. This requirement also applies to closed system vapor products.
- E-Liquid labels should not contain any claims of “modified risk” (i.e., this product is less harmful than smoking or cigarettes). A Modified Risk Tobacco Product is defined to mean any tobacco product that is sold or distributed to reduce harm or the risk of tobacco related disease associated with commercially marketed tobacco products. [Note this is slightly different than the definition in the Tobacco Control Act, see here]. A manufacturer, distributor, or retailer may not market e-liquid with claims of modified or reduced risk that has not been designated as a Modified Risk Tobacco Product by FDA.
- Ingredient Requirements
- A manufacturer or retailer may not add an adulterated product to any e-liquid produced for sale in Indiana. Under the new law, a product is “adulterated” if it (a) consists in whole or in part of any filthy, putrid, or decomposed substance; or (b) is contaminated by any added poisonous or added deleterious substance that may render the product injurious to health.
- A manufacturer may use any “flavoring” as an ingredient in an e-liquid. A flavoring is defined as a food grade additive or synthetic flavoring substance that is used to add flavor, and that is not prohibited by FDA as an additive in vapor products.
- Note that Indiana retailers are prohibited from selling e-liquid that contains more than seventy-five (75) milligrams per milliliter of nicotine.
- Facility Inspections for Manufacturers and Contract Manufacturers
- A manufacturer must submit to random site visits by ATC. The manufacturer may: (a) own and control both the e-liquid manufacturing process and the bottling process; or (b) subcontract with another manufacturer for the performance of the e-liquid manufacturing service, the bottling services, or both services. Both entities must meet the requirements of the law. In other words, both types of manufacturers may be subjected to random visits by the ATC.
- Annual Reporting Requirements
- E-liquid manufacturers must annually submit confidential reports to the ATC setting forth:
o Each new product that a manufacturer is producing and selling in Indiana with a list of the contents and ingredients by volume, and whether the manufacturer has stopped producing products previously produced and sold in Indiana, unless a manufacturer (for both open and closed system vapor products) submits to the ATC a certification, by October 1 of each year, that each of the manufacturer’s vapor products sold in Indiana has been “filed” with FDA.
- Although not entirely clear at this point, a product being “filed” with FDA may be a product that, if manufactured in the U.S., is listed as part of a U.S. manufacturing establishment registration (see Keller and Heckman FDA registration alert here), or whose ingredients have been listed with FDA.
o The milligrams per milliliter of nicotine in each product the manufacturer produces; and the milliliters of each product sold that current year.
- If a manufacturer, distributor, or retailer violates the new law, the manufacturer, distributor, or retailer may be reprimanded, assessed a civil penalty, or have the manufacturer’s permit, distributor’s license, or retailer’s tobacco sales certificate suspended.
- ATC may assess a civil penalty against a manufacturer, distributor, or retailer for a violation of the new law in an amount that does not exceed ten thousand dollars ($10,000). A civil penalty may be assessed in addition to other penalties allowed under this article.