Published on January 6th, 2017 | by Jimmy Hafrey
$200 Million Decision For Johnson Creek Vapor
The vaping industry is in danger of extinction here in America, and no case proves that better than that of Johnson Creek Vapor.
This Wisconsin-based business was the first American company to produce vape liquids, which was created in late 2008 in China. Today, Johnson Creek Vapor is the largest vape liquid producer in America and the second largest producer in the world. It is estimated that the company ships about 50,000 gallons of vape liquid to over 120 countries each year.
But, as the MacIver Institute reports, the reign of Johnson Creek Vapor may be coming to an end.
As a vape liquid-only company, Johnson Creek Vapor may be expected to pay over $200 million in FDA application fees and court costs due to the sweeping FDA regulations that have forced vaping into the same regulations as tobacco companies. For a company that employs less than 50 people in Wisconsin, that figure would signal the dissolution of the business that helped to put vaping in the mainstream market.
The FDA fees and legal costs come from the PMTA process that a company would have to undergo for every vape liquid that it creates. Johnson Creek Vapor makes hundreds of liquids and so would have to submit an application for every single product in every flavor and at every nicotine level, making the PMTA process arduous and too expensive for any company except tobacco companies to maintain.
Christian Berkey, Johnson Creek Vapor’s CEO, put it best when he said: “If you want to see how regulations can destroy an entire industry, this is it.”
Johnson Creek Vapor is not the only business that would be hit hard by the FDA’s draconian and outdated regulations. It is estimated that virtually the entire industry will have to pay hundreds of thousands, if not millions, of dollars in order to pass the PMTAs and stay in business.
The trouble is, most of these businesses cannot afford the fees for the application process and would therefore close. This means a loss of not only business for the companies that house the vape companies, it would also mean a loss of jobs in an economy that is still struggling to recover from the 2008 recession.
There is still time to turn things around, however; the incoming Trump administration could put a hold on the deadline of cataloging all vape products for the FDA that has recently been pushed back until June. Congress could also reconsider the Cole-Bishop Amendment, which would push back the so-called “predicate date” back from February 15, 2007, before the vape industry was fully realized, to a more recent date that would ease the financial burden on vape businesses.
The vape industry has faith in the new administration. Donald Trump has used the economy as his main platform throughout the campaign and it is generally thought that the incoming president will do all that he can to keep jobs in America. Many in the community believe he will stand by this promise and keep the vape industry alive.
For now, however, 99% of all vape businesses are in jeopardy of closing due to the FDA’s regulations. This will means hundreds, if not thousands, of jobs lost across the country. States will also lose revenue from taxing vape products, leaving taxpayers to make up the difference in those state budgets.
The FDA regulations and the PMTAs are placing an undue burden on a flourishing market that has proof it is helping smokers to quit their bad habits. By continuing to press for more taxation and unbelievably high application fees, the agency is snuffing out an entire industry without a rational reason that is supported by science. In the process of doing so, the FDA is also proving to the American people that it either does not understand, or refuses to understand, the necessity of vaping in a world where over a billion people each year die from smoking-related causes.
While this publication firmly believes that the Trump administration could reverse the actions of the FDA, it remains to be seen if it will act in order to preserve an American industry under threat of extinction. The next step that Congress and the new administration can take is to pass the Cole-Bishop Amendment and begin a dialogue with the vape industry in order to save the jobs it has created. Until then, all the vape community can do is wait.