IC 4-22-2.1-5 Statement Concerning Rules Affecting Small Businesses

1. There are six (6) e-liquid manufacturers that meet the statutory requirements and were approved by a vote of the commission. Those six (6) e-liquid manufacturers would be subject to this rule.

2. E-liquid manufacturers will be required by both statute and rule to keep records and report as described in the sections below.

3. E-liquid manufacturers will be required by rule to keep records and report as described below.

4. It is indeterminable at this time the annual economic impact that compliance with these requirements will have on all small businesses subject to the rule. The total annual economic impact of compliance with these requirements would vary based on the amount of e-liquid manufactured by each e-liquid manufacturer. The ATC has not specified the manner or form of this record keeping or reporting so the cost to the permittee should be minimal.

5. The product listing and the ingredient list are not specifically required by statute, but are necessary to the ATC's enforcement and administration of statutory and regulatory requirements for e-liquid manufacturers. The ATC's duties and responsibilities as stated in IC 7.1-7-3-2 include:

Through discussions with manufacturers and retailers in the e-liquid industry, the ATC determined that it is common for a manufacturer to produce e-liquid under different brands names, in different flavors within a brand name, and in different nicotine levels for each flavor. The product listing will assist the ATC in selecting random samples for audit by providing a list of the different e-liquids produced by each manufacturer. The product listing will also allow the ATC, retailers, and consumers to easily identify which products are produced by a permitted manufacturer and, therefore, can be sold at retail in Indiana.

The ingredient list allows the ATC to request ingredient information for a specific batch of e-liquid, without requiring continuous reporting to the ATC. This ingredient information may allow the ATC to review product ingredients to ensure that the product conforms to appropriate standards of identity, strength, and purity without always requiring a manufacturer to incur the expense of testing. Additionally, it allows the manufacturer or the ATC to identify ingredients in a specific batch back to the manufacturer of the ingredient components of the e-liquid in the event there are concerns about a specific flavoring, nicotine, etc.

6. Regulatory flexibility analysis: Due to the requirements of IC 7.1-7, the ATC does not have regulatory flexibility on the requirements of paragraphs 2(A) through 2(E) above.

The alternatives to the product listing, such as requiring reporting to the ATC on each batch produced, create additional burdens on the manufacturers. The ATC considered requiring the manufacturers to report the ingredients used in each batch to the ATC, but after discussions with members of the industry, concluded that this was too great a burden on the manufacturer. Another alternative to requiring the manufacturer to maintain an ingredient list is to require more than just the minimum random sample testing of products. By statute, the testing of random samples is done at the expense of the e-liquid manufacturer and additional testing would place additional administrative and financial burdens on small businesses.

The ATC considered alternatives to the requirement that the product listing be updated with the ATC within thirty (30) days of a new product being manufactured. Requiring the product listing to be updated sooner would place a greater burden on the manufacturer. Allowing the product listing to be updated later than thirty (30) days may result in unnecessary enforcement actions by Excise if a product is sold at retail that is not included in an updated product listing with the ATC.