VILLAGE OF HARTLAND - The e-cigarette industry is a burgeoning enterprise, and that growth is on display at Johnson Creek Enterprises in Hartland.
The e-cigarette liquid manufacturer was founded nine years ago by Christian Berkey in the basement of his Johnson Creek home. Today, the company employs about 50 people in a 52,000-square-foot industrial building on East Industrial Drive.
The company's president and chief operations officer, Heidi Braun, said the company is the epitome of a small-business success story. It was the first e-cigarette liquid company in the U.S. It was founded from humble beginnings, and it has expanded to become a leader in the industry.
But, she said, new regulations put into place by the U.S. Food and Drug Administration threaten to limit the company's growth.
In August, the FDA introduced rules that require manufacturers of tobacco products, including e-cigarettes, to apply for permission to sell any product that was put on the market after February 2007. That would affect every product Johnson Creek produces.
Braun said Johnson Creek produces more than 200 products, and the application process for those products could cost more than $1 million each, possibly totalling more than $200 million.
“My biggest fear is it's going to wipe out an industry," Braun said. “We're a small business. We do very well, but we're still a small business, and we want to make sure we still continue to grow during this period.”
Braun said company leaders do not oppose regulation of e-cigarette products. For example, she believes in requiring warning labels, child-safe caps and manufacturing standards, to name a few. But, she said, the new rules go too far.
E-cigarettes are electronic devices that heat up a liquid nicotine solution and create a vapor that users inhale. Expert opinions on the safety of the devices vary significantly. A 2014 study by the National Institute of Health said, "Currently available evidence indicates that electronic cigarettes are by far a less harmful alternative to smoking and significant health benefits are expected in smokers who switch from tobacco to electronic cigarettes."
In 2013, the FDA expressed concern that e-cigarettes could increase nicotine use among young people and could contain ingredients that are known to be toxic to humans.
Making e-cigarette liquid is more than just pouring together nicotine and flavoring, according to Tom Pangborn, director of business development at Johnson Creek Enterprises.
Every ingredient the company uses for its e-liquid goes through pH testing, gravity testing and refractive-index testing. Pangborn said this is done to make sure employees know every chemical they put into their product is what the label says it is.
Chemists who work in the lab to produce the e-liquid go through a three-step process to remove contaminants from their bodies before stepping foot in the workspace. They wear head-to-toe protective gear, including Tyvek suits, booties and gloves, as well has head and eye protection.
The lab has hospital-grade floors and ceiling tiles and has HEPA filtration cleaning the air. All these steps are not legally required for their business, but Pangborn said the company wanted to set an example in the industry.
“We essentially wanted to pioneer what we thought was right for something that's going to be ingested in your body," he said. "So, essentially, we take safety and quality very seriously.”
The company holds International Organization for Standards certification, which states the company meets standardization and quality assurance requirements.
Braun said she doesn't know what will happen with the FDA regulations, but she said she is hopeful the new rules may be pared down.
The Hartland Village Board on Feb. 13 voted unanimously to try to work with the FDA to change the rules, and President Donald Trump has spoken about reducing regulations and creating an environment for job growth.
“Although I don't know Mr. Trump personally, it sounds to me, just by everything that he has said, that he wants to see small businesses flourish," Braun said. "He wants to put people back to work. He wants American companies to have jobs for everyone. And I think that this fits very well with that idea.”
Village trustees showed support for the business. Board President David Lamerand at the village board meeting thanked Braun for choosing Hartland and told her, "We love your business.”
If the FDA rules remain intact, Braun said, it could cost jobs. Of the more than 200 products the company produces, it's possible only three to five would survive because of the high cost of applying for the right to sell them.
“I don't think it would put us out of business, but it would drastically change the way we do business,” she said.