FDA Regulations Ready to Steamroll Small Vape Shops

The following was originally posted at the MacIver Institute.

New federal rules clamping down on the e-cigarette industry are already costing jobs and livelihoods, and will likely run scores of small vape shops in Wisconsin out of business if fully enacted this year.

A recent survey of Wisconsin vape shop owners conducted by the Electronic Vaping Coalition of America (EVCA) reveals the frustrations of respondents, who fear the steep costs the new rules will impose on their industry. Survey respondents estimated the FDA’s impending “deeming” regulations will cost them anywhere from a few thousand dollars to $3 million or more, mostly depending on how many products they offer.

Others said they simply don’t know the cost – also known as “hell” for a small business owner who counts on a thin profit margin to put food on their table and provide for their employees.

The majority of vape shop owners said they’d already reduced or eliminated inventory and would be forced to lay off employees as a result of the new regulations.

What exactly is a vape shop? Many are simply retailers of e-cigarettes and related products like refill cartridges. Others also manufacture their own e-liquid, the nicotine-containing fluid vaporized in e-cigs. All will likely be crushed by the FDA’s deeming regulations.

Senator Ron Johnson has been a leader in the push to stop the FDA deeming regulations before it’s too late for the vaping industry. “The FDA threatens to crush the emerging e-cigarette industry, leading to negative unintended consequences for public health by making it harder for consumers to buy products that serve as an alternative to smoking,” he said in a statement when the rules went into effect.

Vape shop owners share Sen. Johnson’s frustration, but aren’t sure who to blame. Many pointed the finger at the power of a reckless big government. The ultimate enemy of the free market is an all-powerful bureaucracy with the power to destroy an entire industry at the whim of massive special interests fearful of competition and innovation.

Newer vape shops won’t be the only small businesses to feel the pinch, however. One survey respondent said his company has been in business since 1939 blending pipe tobacco. Under the new rules, that business would be classified as a tobacco product manufacturer subject to the new regulatory regime. The FDA is essentially giving this long-established business a choice between death by murder or death by suicide.

Like the tobacco blender, vape shops responding to EVCA’s survey tend to be smaller businesses – those responding to EVCA’s survey employ anywhere from one to 72 people at between one and twenty locations. Almost all survey respondents opened shop within the past eight years, and many pointed out that their livelihood depends on their business. One, a 24-year-old who said he has just a high school education, worried he and his seven employees would be relegated to poverty level jobs were it not for their successful vape shop. Starting a business and growing it to create a more prosperous life for yourself and others sounds like the American dream, doesn’t it?

But then again, ruined livelihoods and crushed dreams are just a little collateral damage to the powerful bureaucrats at the FDA. After all, the government can just raise the minimum wage – small comfort to a ruined small business owner who made the mistake of working in an industry the government doesn’t like.

What exactly makes the FDA’s deeming regulations so dangerous to the young vaping industry? As with anything bureaucratic, it gets complicated and makes almost no sense.

The FDA regulations set February 15, 2007 as the “predicate date” for new, tougher rules for any items the agency deems to be tobacco products. Any new such products that entered the market after that date will be subject to a stringent, byzantine new approval process with a massive cost that increases with each individual product a business sells.

If you’re a successful vape business with a wide variety of product lines, you’d better get the accountants and lawyers on the phone post haste – both of which add additional costs that most small businesses simply can’t afford.

The e-vapor market was still in its infancy on the February 2007 predicate date, so nearly all e-vapor products will be subjected to the burdensome approval regime. Because of that arbitrary date, the vast majority of companies in the e-vapor business will likely be out of business within three years.

One curious fact about the regulations gives credence to vape shop owners’ suspicions that the new regulations might be motivated by more than just concerned bureaucrats trying to protect public health – traditional cigarette companies conveniently won’t have to comply.

That’s because most traditional combustible cigarettes were already on the market on February 15, 2007. That essentially lets manufacturers of traditional cigarettes (also known as Big Tobacco) off the hook, protected from the new rules. The rules will protect traditional cigarettes while snuffing out the e-vapor industry, which many of the vape shop owners credit for helping hundreds of their customers to quit smoking.

Any American who hasn’t been living under a rock for the past half-century is well aware of the nanny government’s incessant finger-wagging about cigarette smoking. The feds have spent untold taxpayer fortunes warning kids and adults alike about the dangers of smoking. But putting aside arguments over whether government should be lording over individual decision making, the evidence that traditional cigarette smoking is a killer is the closest thing to a “settled science” as can be found.

Yet, true to form, the very government that spent years looking down its nose at anyone who lights up is now actively trying to destroy an effective new way for smokers to put away their caustic cancer sticks for good.

Evidence is mounting that e-cigarettes are considerably less harmful than traditional cigarettes. An August 2015 study by Public Health England, an agency of England’s Department of Health, found e-cigarettes are 95 percent less harmful than combustible cigarettes.

The study also found that most of the chemicals that cause smoking-related diseases are absent from e-vapor and that e-cigarettes release negligible levels of nicotine into ambient air.

The studies back up a commonsense understanding of smoking versus vaping. After all, smoking involves lighting tobacco on fire and inhaling the smoke. Vapers instead inhale vaporized water containing nicotine and flavor – and practically none of the thousands of carcinogens found in cigarette smoke.

Simply put, the new FDA deeming regulations are a glaring example of either government ineptitude or, less charitably, corruption. That choice seems to be a common theme when it comes to government and bureaucracy. Whichever it is, the regulations will have a profound impact if enacted.

“If you want to see how regulations can destroy an entire industry, this is it,” said Christian Berkey, owner of Johnson Creek Vapor Company, in an earlier interview with the MacIver Institute. Berkey’s company is one of the first and largest producers of e-liquid in the world. The regulations would cost his company, which employs 47 people full-time in southeast Wisconsin, more than $200 million.

However, Berkey is optimistic about the chances that the Trump administration will eliminate the new regulations or modify them to save his industry.

If Trump really wants to “drain the swamp” and fight for hard working, tax paying Americans frustrated with the federal government meddling in their lives, his administration will turn the tables on the FDA and crush these new rules before they crush the vaping industry.

Read the original column here.

Feingold: Politics As Usual

Russ Feingold’s reputation as an independent non-politician who transcends politics is nothing more than smoke and mirrors, as the kerfuffle over his pet political action committee demonstrates.

At issue is the Badger Pledge, a challenge to eschew outside spending in the 2016 Senate race issued by Feingold to Senator Ron Johnson. Feingold rolled out the Pledge knowing Johnson can’t sign it; the Senator will need the help of the NRSC next year, plain and simple. The pledge wasn’t genuine because, unlike Johnson, very little about Feingold is genuine.

Any political strategy wonk or armchair operative could tell you that Feingold made the challenge as a media ploy. It was nothing more than a red herring to distract from the critique by Dan Bice of Feingold’s personal slush fund political action committee that Feingold’s well-paid loyalists knew was about to hit the papers.

That Feingold operates within the murky mire of politics just like those evil Republicans was apparently news to the Democratic Party of Wisconsin’s new leader.

Appearing to genuinely believe it, the DPW’s new chairwoman Martha Laning told Capitol City Sunday host Greg Neumann that the Milwaukee Journal-Sentinel hit Feingold over his PAC shenanigans because Sen. Johnson needed to change the subject from the Badger Pledge.

Neumann was diplomatic in telling her she had her order of events backwards…no, you rube...Feingold came out with the pledge because he knew the Journal Sentinel was about to hit him on his use of his Socialists Progressives United leadership PAC as a personal slush fund to pay his loyalists six figure salaries in exchange for putting their careers in park pending a 2016 grudge match. He also used the fund to pay himself.

By contrast, Johnson is the real deal. He literally balks at being called a politician – he considers himself a citizen legislator on a mission to address the nation’s fiscal situation, which his predecessor helped to ruin.

Any residue of Feingold’s former reputation as a perpetual outsider is wearing thin. As the race gets going, Feingold’s comedy-of-errors career in the Senate will be a punchline – it was a prolonged period of thumb sitting punctuated by the occasional failed policy, like campaign finance “reform” that inadvertently shoved political spending into the dark corners of politics (dark corners where a decade later Feingold now visits on occasion to collect it); an $830 billion bailout for public sector unions “stimulus” package, after which we have rougher roads and rustier bridges; and Obamacare, which is nothing short of a disaster for people who just want 40 hours a week and a deductible they can afford.

Come to think of it, there’s really nothing funny about Feingold’s bopping from one lefty cause to another or his naïveté as it concerns foreign threats.

Feingold is worse than politics as usual. He’s a populist maker of loud statements, but not much of a thinker, technocrat, or leader. And when he does do something, he does great harm to the working people he’s always claimed to represent.

Feingold’s Limits

With the announcement by Russ Feingold that he will pry the plywood off the windows of his house in Middleton, dust off his chaise, and run in a rematch for U.S. Senate against Senator Ron Johnson, one can’t help but wonder if he’s spent the past five years going through the shakes.

Feingold is the prototypical career politician, addicted to the soirees, social circles, and power that comes with being in the most austere deliberative body in the world. He has 28 years of experience in politics, including a decade representing the state’s 27th State Senate district and 18 years in the U.S Senate, and a post-retirement juggling a career in the Obama State Department, stewarding a progressive political action committee, and teaching at the House of the Everyman – Stanford.

Feingold just can’t seem to let go.

Interestingly, in that role as “Special Envoy” to the Great Lakes Region of the Democratic Republic of the Congo, Feingold gave speeches with the intention of helping the region’s failed states bolster their democracies against rampant corruption.

Just this February, Feingold proclaimed at his farewell address, where he was departing the make-work job he had at State:

These countries and their leadership can signal to their citizens, the region, and the world, their commitment to the future of their countries and the value they place on the electoral process. By adhering to their constitutions, including constitutional provisions regarding term limits.

He also said:

As a friend and ally of Burundi the U.S. is urging the Burundian government to ensure that the upcoming elections are in accordance with the Arusha Accords, which state unambiguously that no president will serve more than two terms.  It is our belief that upholding Arusha including its provision on term limits is key to maintaining a still fragile stability in the near term.

Feingold supports the principle behind term limits – that corruption is born in politicians who serve so long that their interests become indistinguishable from those who line up seeking their favor. As someone who has spent most of his life as a political insider, how can Russ Feingold credibly speak in favor of term limits?

His rhetoric is hypocritical and stands at great odds against his resume – particularly after he procured himself a job from the Hillary/Obama State Department that probably didn’t exist before he took it and likely doesn’t exist now that he’s gone.

If Feingold were to run for the U.S.  Senate in 2016 and win, he would have served 36 years in government at the completion of that term. In 2010 the voters in Wisconsin imposed a default term limit on Feingold by voting him out of office for his support of miserable policies like Obamacare and the “stimulus” package that flushed $830 billion down a golden toilet in Washington. Then there’s the big kahuna of losers, campaign finance reform, which set the stage for all the “dark money” Feingold’s Progressives United PAC now peddles.

None of those policies look better as they recede in the rear view mirror.

Perhaps those are examples of what happens when a pol stays in office too long – like the corrupt warlords of the Great Lakes Region of Africa, they sell out their democracies to insurance companies, public sector unions, and bigwig PAC donors.

So where exactly does Feingold stand on term limits?  What term limits would he impose on himself? Does he think Wisconsin term limited him into retirement, or does he think that we rubes who fail to see the wisdom of his terribly failed agenda just made a big mistake?

Related: Succession in Wisconsin Podcast

Feingold’s Ship is Sailing

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The hulls of Pat Roberts, Eric Cantor, Mary Landrieu – and two years ago, Tommy Thompson – all splintered on the rocks after accusations that they weren’t in touch with their home states, after it was brought to light that they didn’t live in their districts, and after an image was painted of them of someone who had come unmoored from the people who originally elected them.

While Roberts – an long-time incumbent – pulled it off thanks to big-money national help, these cases should be instructive for former Senator Russ Feingold, who is rumored to be considering a rematch with Senator Ron Johnson, who handily vanquished him in the Republican wave of 2010.

The message voters are sending in these elections cycles is clear: representatives in government need to stay connected to their people. Feingold at one time nurtured a reputation as one of the most responsive senators, holding listening sessions in each of Wisconsin’s 72 counties. But at the time of the election, that will have been more than six years ago, more than enough time for the average voter to have forgotten even his name, let alone his dusty reputation as a man of the people.

Feingold is no fool. I’m sure he saw what happened to another once-loved politician who spent too many years in Washington, Tommy Thompson. Thompson departed Wisconsin in 2001 to join President Bush’s administration; he maintained ties to the state, but his profile was sufficiently low that when he returned to state politics in 2012 he was unable to cash in on the remnants of his former glory.

Thompson was portrayed by enemies with access to deep pockets as someone who once had the interests of Wisconsin in mind, but who had sold out to interests in Washington and who “isn’t for you anymore.” The campaign was a success, in certain ways presaging those powerful insurgent messages that did so much damage to incumbents on both sides of the aisle in 2014.

I’m not in the business of tracking down the whereabouts of former senators or looking up real estate records in the DC suburban area, but I know from simple observation that Feingold has kept an exceptionally low profile around Wisconsin. He’s currently the special envoy to the Great Lakes region of Africa, and from his PAC’s website it’s ascertainable that he’s now formerly a visiting professor at various colleges around the country, including Stanford, Marquette, and Lawrence Universities.

Were he to run, Feingold would face an onslaught that combined with his years out of the spotlight could be a serious impediment to his return to politics.

Senator Johnson would bury him under a mountain of spending, both from his own deep personal wealth, the in-state donors who helped bankroll three Scott Walker victories, and national outfits with a strong interest in keeping the conservative senator, business owner, and powerful committee chairman in office. And given the right advice, the message would center around the same line of attack that state Rep. Tammy Baldwin used to sink the Wisconsin phenomenon, Tommy Thompson: that Feingold simply doesn’t have Wisconsin’s interests in mind anymore.

A well-paid professor at Ivy League Colleges all around the nation, a political action committee power broker, and an oftentimes resident of Washington, DC, Feingold simply isn’t the everyman state senator who eschewed big political money and fought for reform on behalf of the average people back home…anymore. Today, Feingold has gallivanted around the country gladhanding with Ivory Tower intellectuals, raking in untold millions from anonymous billionaire liberal donors, and living in Washington penthouses as he tours the globe, apparently caring more about the concerns of sub-Saharan Africa than the needs of folks back home. Tens of millions would pour into the race supporting this kind of message.

Feingold likely doesn’t have an interest in losing an attempted comeback and, with it, his hard-won reputation and place in Wikipedia’s list of Progressive Heroes From Wisconsin.

Thus my thesis: Feingold is not planning on running for Senate.

He’s smart enough to know the facts I just laid out, and while he was far to the left of the average Wisconsinite, he was savvy enough as senator to barnstorm the state annually. Likewise, he’s savvy enough to know his disconnect from Wisconsin would be a huge problem for him. He’s savvy enough to know the Republican Party of Wisconsin is a much, much more effective organization than the one he remembers, having successfully navigated three gubernatorial elections. He’s savvy enough to know voters’ memories are, on the margin, brief. If he were planning on running for Senate, he’d likely be back in-state, raising his profile and re-establishing his hometown bona fides.

But he’s not.

His reputation as some sort of anti-career politician – perpetually broke, stubbornly independent, and constantly in touch with the folks back home – will have already faded into sepia tones by 2016. Feingold is doing nothing noticeable to combat that, and with the 2016 election now less than two years out, the ship is already sailing on his opportunity to make a comeback.

He likely enjoys his current role as a world-changing do-gooder envoy – that’s to be respected. His future is also wide open; if needed, he could return to being a professor and he could return to his PAC, Progressives United, from which he could profit handsomely in the new era created by the Citizens United decision which rightly smashes limits on the amount of money groups like Feingold’s can collect. Also, as the resignation of Sen. Jim DeMint suggested, there’s a lot more money and influence to be had by running a powerful political group than in being a lonesome elected official. Why not run a group that helps elect scores of those voices rather than being just one voice within a choir of hundreds?

Russ Feingold has had a fruitful political career and now has the chance to focus his talents and influence on electing progressives while making a lot of scratch. It’s simply difficult to believe Feingold would shove aside the cart full of gold and jump back into the cesspool.

Only time will tell if Feingold calculates that the wind of a presidential election will fill his sails enough to carry him to a high-stakes victory. If he desires a re-match, his very legacy will hang in the balance. If I’m proven correct and he opts out of a risky try at elected office, that leaves one Wisconsin Democrat who can feasibly challenge Johnson: Ron Kind, of La Crosse, who may well be tempted to climb out of the mob in the people’s house into the ivory tower of the Senate.

A Government Big Enough…

A government big enough to give you everything you want, is a government big enough to take away everything that you have.

Lore and legend says Thomas Jefferson uttered these famous words. That’s in dispute; the quote is also attributed to President Ford, paraphrasing a mid-20th Century magazine that claimed to be quoting the nation’s second president.

Whoever said it, the axiom is a good reminder in our era of bipartisan government growth that at some point the well dries up and as another conservative said, you run out of other peoples’ money. The adage that big government can take away your livelihood in the blink of an eye is in the past couple days hitting home among America’s veterans.

Out of the freakshow of the bizarre-o that is Washington, a new ring has been added to the circus of federal budgeting, but it’s one about which we should all be concerned because it short changes the people who risk their lives as the rest of us wax our boats and lavish in air conditioned corporate office buildings.

Budget dealing of late cuts around $6 billion from the pensions paid to retired military. The vaunted Ryan-Murray budget compromise, of which this provision is a part, passed the House with a large bipartisan majority, but the pension cuts didn’t stir wide controversy until it came before the Senate.

According to CNN, “The deal cuts pension cost of living raises by one percentage point for military retirees who aren’t disabled and not yet 62 years old. Cost of living hikes are automatic raises intended to keep up with inflation.”

Senator Roger Wicker (R-Miss) introduced an amendment to restore the cuts, with Sen. Jeff Sessions (R-Ala) co-sponsoring. Sessions took the lead in rabble rousing, proposing to keep the budget’s bottom line by eliminating a child tax credit loophole that is taken advantage of by undocumented immigrants.

The Daily Caller reported “Sessions’ motion failed on a 46 to 54 party-line vote, with North Carolina Sen. Kay Hagan crossing the aisle as the lone Democrat to vote with the Republicans….“Reid’s majority just voted to keep pension cut for vets instead of cutting welfare payments to illegal aliens,” a Sessions aide emailed.

But the freakshow has only just begun. As astutely noted by Slate, the ads are probably already being written attacking Democrats for the vote. But a Democratic Senate contingent likely more interested in protecting their lock on Hispanic voters – they’re obsessed with the electoral dimensions of demographics like ethnicity, gender, and skin color – than in restoring pension benefits for the military ought to have ads run against them.

Though the cuts seem on their face small, one wonders why and is angered over the fact that military pensions would be on the table at all. As Military Spouse magazine editor Babette Maxwell said, “the $7 billion in savings that this plan will generate doesn’t even cover the interest — the interest — in the additional expenses that this same bill authorizes.”

This spending isn’t an entitlement, it’s compensation promised to veterans for the dangerous work they perform or have performed. It’s part of the Constitutional duty of the federal government to protect the country from foreign enemies. On the other hand, the federal government does an awful lot that is not so explicitly outlined in the Supreme Law of the Land. Cut one of those things instead.

Back in Wisconsin, a peruser of social media will quickly feel the heat the GOP is taking from grassroots Republicans and veterans. Sen. Ron Johnson, who voted for the budget deal Wednesday, defended his vote on Fox News Wednesday, saying “I’m not going to defend cutting the military pensions. It’s outrageous that Sen. Harry Reid would not allow us to offer an amendment to take care of this.” Those amendments included the Sessions amendment and others.

“I’ll tell you why I voted for the compromise deal…it’s impossible to convey the dysfunction that is Washington and that’s in the United States Senate, and that dysfunction causes all kinds of economic harm.” Fox host Megyn Kelly praised Mr. Johnson for being the only senator with the courage to discuss the deal the night it passed the Senate.

Mr. Johnson assured Fox viewers that he’ll work to excise the pension cut, which doesn’t take effect for two years, giving politicians plenty of time to remove politically unpopular budget cuts like this one.

But it’s a cautionary tale for anyone, including the millions of people who work for government at any level or rely on payments from the government. A government big enough to give you all you need to live on is also big enough to pull the rug out from under you, to modify the uncredited quote.

In the meantime, there’ll be plenty of ads taking advantage of the situation next year, targeting Senate Democrats and maybe a handful of House Republicans.

It’s a freakshow.