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7th Circuit Court of Appeals blocks Indiana's e-liquid restrictions on out-of-state companies

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Posted at 2:34 PM, Jan 30, 2017
and last updated 2017-01-30 14:34:01-05

INDIANAPOLIS -- The 7th Circuit Court of Appeals blocked portions of a 2015 Indiana law Monday that had left only a handful of business able to cell e-cigarette liquid in the state.

The law has drawn heavy criticism from vaping advocates and business owners for the harsh restrictions it imposed on the sale of e-liquids in Indiana.

The effect of those restrictions was that only one company – Mulhaupt's Inc., located in Lafayette – was able to meet the requirements to be the security firm e-cigarette manufacturers had to contract with.

After the law was passed, nearly two dozen e-liquid manufacturers moved out of the state.

One of the law's sponsors, Sen. Ron Alting, apologized for the law, calling it a "mistake." Republicans in the Indiana General Assembly have vowed to scale back the regulations in the 2017 session.

MORE | Sponsor calls Indiana's new e-liquid law a 'mistake' | Vaping law proposal could scale back regulations for manufacturers in Indiana

On Monday, the 7th Circuit Court blocked the law from being enforced against out-of-state manufacturers, finding it an unconstitutional violation of the Commerce Clause of the U.S. Constitution. The lawsuit was brought on behalf of Legato Vapors, Rocky Mountain E Cigs and Derb E Cigs.

"With almost two hundred years of precedents to consider, our review of prior dormant Commerce Clause decisions has not revealed a single appellate case permitting any direct regulation of out-of-state manufacturing processes and facilities comparable to the Indiana Act," the court wrote in its decision.

It also noted judges have struck down extraterritorial state laws "much less intrusive than the Indiana Act."

The court's ruling does not affect in-state e-liquid manufacturers, who will have to wait for the General Assembly to act for relief.