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The Bar Gets Raised (again) 0

ISO Certification Vaping Industry E-lliquid

 

It feels like only yesterday that the idea of “lab-made” liquid was something of a luxury and a benchmark for quality.   Back in those days, it wasn’t all that uncommon for liquid to be made in people’s basements or in the back of shops, and to some extent, that’s still happening.   Today, however, it's much less prevalent as the whole industry has grown into making liquids in more controlled environments.  What’s even more compelling is that this shift didn’t occur because of the government forcing the industry’s hand.  Smart entrepreneurs, sensing impending regulation, moved to raise the bar themselves and to separate themselves from the competition.  You’ll see terms like ISO 8, pharmaceutical grade, and GMP thrown around and you may be wondering what that means when it comes to buying your next bottle.  As a manufacturer of liquids since 2013 I have seen this transition first hand and am going through some of these of these as we speak so hopefully I can shed some light on some of these acronyms and help you make a more informed purchase.

ISO 6/7/8

You’ll see this one a lot, and there’s actually two things to explain here.   The first is the word ISO.  It stands for International Standards Organization.  ISO is an independent, non-governmental organization made up of the standards bodies from 163 countries.  When a need for a standard is identified experts from around the world convene to form technical committees and working groups to draft it.  Standards can be for anything and everything, from Quality Management, Information Security, Energy Management to Occupational Health and Safety.  The idea here is that you have a global standard that can be agreed upon wherever you are in the world.  In this particular example, the standard being referenced is for Clean Rooms and this standard goes from Class 1 to Class 9, with Class 1 being the cleanest.   The reason you probably see this one the most is that it’s relatively easy to obtain.  Clean rooms, aside from needing to be clean at the time of testing, are given their classification largely based on the number of air exchanges per hour and particulate size.  All you really need to do is get a strong enough filtration system (typically can be had for under 10k) and pay $1500 bucks or so for the 2-hour test and you’re good to go.   To be honest, on its own this standard doesn’t mean a whole lot.  It tells you that the liquid was made in a clean spot at the time of testing, but says nothing about the company’s processes for ensuring your liquid was made properly on an ongoing basis.

 

GMP

Stands for Good Manufacturing Practice and has far more impact on whether or not your liquid was actually made well.  These guidelines are enforced by different agencies in different countries (the FDA in the US, MHRA in the UK) and cover a wide range of quality measure including cleanliness and environmental controls, manufacturing processes, procedure documentation, and record keeping.  This goes way beyond just having a clean room and makes sure that the company is actually producing their products in a consistent, quality controlled, traceable way.  There are far fewer companies that meet and adhere to these standards then there are clean rooms out there at the moment, but that will likely change as the industry continues to mature.  Where things get a bit tricky here is that GMP can only be enforced when the industry has reached a certain point in regulation.  Unregulated industries, by their nature, do not have any enforcement in place yet so getting GMP stamp would be difficult in most parts of the world.

 

ISO 9001

This is the ISO equivalent (roughly) of the GMP standards in place in each country.  Both are quality systems and both require rigorous maintenance.  This standard is global as discussed earlier and can be obtained today for e-liquid businesses.  My company, Vape Brands International, is in the middle of implementing this standard and I can tell you that it’s quite a pain in the ass but well worth it.  Whereas getting our ISO certification for our clean room took no time at all, going through ISO 9001 is a process and a complete change in the way we do business.  The standard, like GMP, covers quality control, documentation, traceability and cleanliness and its ongoing in nature.  That means you can’t just call in a tester to pass you and get on with your day.  You need to adopt the standard into everything you do and have internal mechanisms for enforcement if you want to succeed in obtaining and maintaining it.   We viewed the move into ISO 9001 compliance as a forward thinking business move as compliance to IS0 9001 almost certainly means you’ll be in good shape for whatever the enforced GMP standard looks like.

 

So what does it all mean?

This depends entirely on how much you care, I guess.   If you’re not terribly concerned about where your liquid comes from or how its made, then it likely means nothing to you.  If these are things you think about then looking for them or asking about them when buying a bottle is probably a good idea.  The other impact here is in price.  These standards are not cheap, and that money has to come from somewhere.   I’ve often heard the DIY community lament how overpriced liquid is when compared to making your own stuff at home and there’s no doubt that this is true.    The fact is that quality costs money and if you’re dealing with a company that has ISO or GMP standards of any kind you’re definitely paying for that with each bottle you buy.   Implementing both an ISO clean room environment and ISO 9001 standards is easily hundreds of thousands of dollars, if not millions depending on what you do and these are costs that your local vape store brand doesn’t concern themselves with.  

  • Beju Lakhani

Co-manufacturing with Vape Brands International 0

Fight the good fight! Article about e-liquid co-packing in Canada

Article about Canadian co-manufacturing company Vape Brands International

Vape Brands International co-packing and co-manufacturing e-liquid Canada

Co-packing and co-manufacturing e-liquid in Canada at Vape Brands International

  • Beju Lakhani

The Convenience (R)evolution 0

Guy vaping off a mod - Vape Brands International - Premium E-liquid buy online

While global sales of e-cigarettes and vaping products have surged over the last few years, it's impossible to avoid the reality that they still only account for about 1% of sales within the global “tobacco” market.   This is despite being offered in markets devoid of regulation for most of that time – something that is about to change in a big way in many markets around the world.   The question then, is why are so few people adopting vaping as an alternative?


The answer, in my opinion, is convenience. I remember 4 or 5 years ago when I was shown my first open system. I think it was an evod or something of that ilk and I remember thinking there was no way in hell I would ever use one of those. Instead I opted to go and buy a cig-a-like instead and give that a try, with predictable results. However, my initial reaction to an open system device isn’t all that different than the reaction that most smokers have today when looking at the latest and greatest box mod or quad coil tank. In fact, you could argue that today’s devices are even less beginner friendly than the devices of 5 years ago. This trend is great for the enthusiast, but does little to no good for people who are looking to make their first move into vaping away from cigarettes.   We’re going through a bit of a “what’s old is new again” cycle as we’ve been seeing a ton of new closed systems hitting the market in the last year. It goes without saying that closed systems are by their very nature more convenient than open systems. That convenience, though, extends beyond just the usability of the product. There are many practical business and consumer driven reasons for these products to be emerging the way they are, and I’m going to dig into a few of them and try to explain why they make so much sense right now.

 

Distribution

While vape shops have been popping up all over North America at a pretty rapid clip, they have nowhere near the 150,000-store footprint of traditional convenience stores. For vapor products to truly move past their current 1% market penetration their availability needs to increase, and increase dramatically. While open systems offer an abundance of choice, that choice is actually a negative when it comes to a reaching the mass market. Without standard options available at EVERY location, vapor products cannot compete with traditional tobacco in a meaningful way.   It’s the same reason why Coca-Cola is available at every convenience store, gas station, grocery store and restaurant instead of just every soda store in the country. It works because it’s simple, easily consumed, and easily identifiable. These same principles need to apply to vapor products to make them successful at that scale. Right now, the complexity and diversity of the products are a great pro for people who want a highly customized and individualized experience, but unfortunately those same traits are what keep them from being widely adopted.   The new breed of close systems directly addresses this by making a simple product with limited options easily consumed by the general public and easily distributed through traditional convenience channels.

 

Safety

I understand before I write this that most open systems are, in fact, quite safe. However, we are talking about general public perception as it relates to their willingness to adopt a new product and in that respect, closed systems are absolutely perceived as the safer option.   The argument here is very simple – liquids containing nicotine are a risk (however small) to children and pets and closed systems address this by eliminating the possibility of exposure.   Most members of the public are not going to try and do a calculation for a what lethal level of nicotine would be for a toddler, they’re just going to say “fuck that” and buy a product that doesn’t pose that perceived threat. The same logic applies to regulators when looking at this category of products.   It certainly doesn’t help that many manufacturers outright refused to use child proof caps when given the opportunity to make that decision themselves.   Regulators and public perception tend to both feed off of worst case scenarios and it only takes one selfish prick putting out a candy flavored liquid in a non-compliant package for the whole industry to be tainted with that brush.   The same sort of issue exists with hardware as many devices on the market today still operate without any kind of built in safety. The industry has always put the responsibility back on the consumer touting battery safety as the key to keeping things from getting all exlplodey.   This, sadly, is not the way the world works and expecting consumers to manage their own safety through education is far too high a bar for these products to ever have mass appeal.   Mass consumer products have to be safe for the lowest common denominator, which is why this new wave of closed systems has so much potential.

 

Competition

If you got a dollar and dream you can start an e-liquid company. This has been the truth for most of the last 5 years, and the 5000 or so e-liquid brands on the market today are ample proof of that.   This, however, is not sustainable if the products are going to reach the masses.   The convenience stores we talked about earlier are not interested in curating the hottest new “hype” brand for their customer.   They, frankly, couldn’t give a shit if your version of lemonade is better than the next guys. They want products that are consumer friendly, packaged to sell, and consistent. They are not there to sell the merits of the product or educate or provide samples, they are there to make the product available and that’s about it. Their business model is a lot simpler than what vape stores have been looking for in the past. They want to buy products that people already have demand for and move those products off the shelf quickly. Things like store exclusivity are BAD in a world where pre-built demand is required to move products. In that respect, the vape shop model has been backwards for a long time.   Vape shops want unique products while traditional distribution channels want ubiquitous products. Closed systems work perfectly in this world because they do a couple of things very well.   Firstly, they limit flavour choice, which immediately simplifies the buying decision and makes it easier for stores to stock the product.   You don’t need a juice wall if you have a little display at the front of the store that has all 4 of your flavours. Secondly, they limit competition by providing a barrier of access to the technology. It’s not an accident that Big Tobacco bought into closed systems as a way into this market. They understood right away that distribution matters and being consistent in your offering in every market is more important for market penetration that an abundance of choice. They also viewed the added technology hurdle as a valuable barrier to entry that still applies today. Once a customer buys into a platform on a closed system they’re lifetime value as a customer is many multiple’s higher than it is for any open system. This gives those companies that offer them a massive leg up as it allows them to spend for more on customer acquisition than in a one-and-done scenario.

 

I think that what we’re seeing now is only the beginning of the next evolution of this industry.   In the coming months I think we will see more and more of these closed systems hit the market and we will start to see a surge in sales through traditional convenience channels that adopt these products.   Overall, I think this is a good thing, as I don’t really see the enthusiast vape shop going anywhere either. There is absolutely an opportunity for these products to coexist but I think when it comes to which product variation is going to successfully reach the masses its not even close. Closed systems follow the traditional consumer packaged goods model whereas open systems do not, and for that reason we’re a lot more likely to see Juul’s at a rate of 10 to 1 versus box mods when standing in our newly created government mandated vaping sections. I’ll save that last bit for another time…

  • Beju Lakhani
The Advocacy Challenge

The Advocacy Challenge 0

I run a reasonably sized business in Canada with about 30 employees and customers around the world.   All kinds of challenges come up every day at VBI and there are many moments that leave me frustrated and flabbergasted. I do, however, manage to leave these frustrations at work and I’ll never be losing sleep over an issue related to my business.   There’s only one thing that truly keeps me up at night, and that’s my work as President of the Canadian Vaping Association (CVA). While its rewarding intrinsically to fight the good fight and feel that you have the moral high ground as you do it, the practical reality of being an advocate in this industry often leads me down the path of wanting to give up and find a rock to crawl under. In this piece, I’ll try my best to outline why I feel that way after 2 years of the daily advocacy grind.

 

Politicians.

I did my degree in political science and for some time I actually wanted to run for office, but the truth is I knew nothing about the job or the people doing the job until I took on this role. Over the last year I’ve met with dozens of political leaders and their staff face to face and I have some takeaways from those experiences. Firstly, they are all generally good, well-meaning people. I haven’t really met one person in Canada holding political office that I felt was out to get the industry outright. I did, however, find plenty of politicians that were rushing into legislation having done minimal levels of actual research. I remember one of the first meetings I had was with a policy advisor that had actually drafted the Act in question. He had never been to a vape shop. In fact he had never seen a mod or a tank. And yet here we were, debating the merits of a fairly thick document that had been drafted to decide the fate of the industry. I could not wrap my head around this and asked a friend of mine who is actually a sitting politician and he said that most of the time the politicians themselves are so burdened by their schedules and commitments that they rely on their Policy-Advisors (PA’s) to draft the positions and the laws that they end up bringing forward.   Depending on the ministry and the budget for the ministry, these PA’s can be 20-something’s that came straight out school on their first real job.   The thought of me in the same position scared the living shit out of me.   Did I as a graduate of a pretty good school in Ontario have all the answers needed to weigh in on this issue without doing a boatload of research and verification?   Absolutely not, but I certainly would have thought I did.   That’s really what leads us down the path we end up in in most cases. Politicians under pressure to get something out push the work downhill and somebody spits back something that looks like it could work. In order to expedite this they often lean on groups they trust, which unfortunately in our case tend to be the health groups that have the actual agenda. Democracy at its scary best.

 

 

Other Advocates

This is the one that really gets me, as it can often be nasty and personal. It’s dealing with other groups or individuals that jump into the fray and start spraying the world with their advocacy Gatling gun.   The infighting can be naive, petty, and misguided but its also typical of every industry that’s gone through growing pains as it aims to legitimise itself.   It doesn’t stop it from stinging and driving me crazy though.   There are certain rules that seem to bind a lot of these pop-up groups and individuals together though. They almost never look before they fire. I have a tendency to offer my direct phone number to all critics and new advocacy groups if they want to talk about their issues with what our organisation has been up to. The number of times that phone has rung is exactly zero. And to be honest, I’m not surprised.   The easiest way to build a coalition is to rail against the establishment. So many choose to go this route as a shortcut versus trying to explain what they specifically want to accomplish. Typically this happens right around the time some new piece of legislation gets introduced.   All of a sudden these advocates hear the bell and rally the troops without first checking to see if anyone’s already on the battlefield.   Its not that its coming from a bad place, its quite the opposite actually.   People genuinely want to make a difference and feel that they can. And they should feel this way, it’s just that its often done with a complete disregard for the greater effort, and that tunnel vision has a tendency to hurt more than it helps. I’ve heard it from dozens of politicians that I’ve worked with over the years.   If they have six different groups hitting them with six different messages the likely outcome is that all will be ignored. In the end, as cliché as this sounds, working together is by far the best and most efficient way to accomplish our goals.

 

Media and the Scientific Community

This was an eye-opener for me when I got into this.   I had, for the longest time, believed that what I read in the news was accurate or at least fact-checked before it ended up in my hands. I also held the belief that science was science, and if something showed up in a peer-reviewed journal that there must be some validity to it. Jumping into this role was a crash course in my depth of my own naivety.   I’m utterly amazed at how easily the mainstream media can take a story and run with it, despite all of its inaccuracies. I’m even more appalled at the way science is often manipulated to serve the very specific purposes of its creators.   I actually think this is perhaps the most unnerving part of this experience. When you have a group like the UCSF, led by Stanton Glantz, who continually churns out junk science strictly to produce sensational headlines it always feels like you’re fighting uphill.   The relationship between the media and groups like Glantz’s is toxic and I’m not sure there is a way to fight against it effectively.   Every time we receive news like the endorsement from the Royal College of Physicians we get hit with some other fabricated study about the gateway theory and the reality is that these do cancel each other out in the eyes of the general public. The irony is that guys like Glantz are, in their minds at least, fighting against big tobacco and as a result walk away thinking that the ends justify the means. The fact that they may end up handing the industry to big tobacco through the regulations they push forward seems to be completely lost on them.

 

In a nutshell, advocacy is a grind. I knew this when I got into it but I have to tell you it’s a lot more taxing professionally and personally than I could have imagined.   Having said that, its incredibly important that good people stay in the fight. We’re up against pretty incredible odds but we can move the needle if we stay focused and fight together.

  • Beju Lakhani
The Joys of Starting  a Business in an Unregulated Industry

The Joys of Starting a Business in an Unregulated Industry 0

I can’t tell you the number of times I’ve heard someone say, “oh you own a juice company, you must be rolling in it” or something to that effect.   They must picture me sitting at home on my gold plated couch, sipping gold plated champagne or something like that. As much as I wish that were true (sort of), it’s not an accurate reflection of the reality of being a start up in an unregulated industry, and it certainly doesn’t capture my experience.

Moshi is a successful company, don’t get me wrong. By all standard measures, our performance over our first year and a bit of existence would exceed even the staunchest “Shark Tank” criteria.   But it’s also a far cry from the way we thought it would be.   In this brief post I’ll cover off a few of the headaches that we’ve experienced and hopefully pass on some insight on what we’ve learned growing an e-liquid company into an international brand.

 

            Competition

There are pros and cons to entering an unregulated space, and one of the biggest cons is that there is quite literally no barrier to entry. There are presently no government manufacturing or safety standards, so just about anybody can start a company tomorrow in their living room and chip away at your business. You also can’t spend money on traditional advertising as the media companies view the product as tobacco, which eliminates the ability to use your size to your advantage and communicate what makes you different. All in all, it makes for the environment you see at every vape show in North America now – about 200-400 e-liquid companies with almost nothing to tell them apart. I firmly believe that competition is a good thing and it serves to make all companies more efficient and better, but its not so good when one company has manufacturing and safety standards and another doesn’t and the consumer can’t tell which is which. I suspect that regulation and consolidation will sort this out to some degree, but getting there is going to take time and in the meantime the market will continue to get more and more saturated and tougher to navigate.

           

          Financing

One of the big projects we had this year was automating our facility and building out a very large ISO clean room. We’ve always had strong manufacturing practices but we felt the investment was necessary to stay ahead of the above-mentioned regulation. So we did what any normal business would do. We issued RFP’s, selected vendors, and then went to sort out how to pay for this massive investment. In a traditional business, this wouldn’t be much of an issue. Show the banks your financials and obtain a capital equipment loan or negotiate terms with your vendors. Not so with an unregulated business. Arranging this type of financing without having to pay through the nose is very difficult because banks are wary of an industry that still doesn’t have a permanent home. The moral is that if you want to make big investments, be prepared to work for no pay and self-finance them. Then there’s the merchant account issue. Want to take credit cards? You’ll need one of these and they aren’t easy to obtain and you’ll almost never pay what you thought you were. I remember our first US merchant account provider told us that we were on the hook for 2.5% and it ended up being closer to 10% after they took all their fees. These kinds of shenanigans happen everywhere largely because you can’t deal with the banks directly and the next tier of guys make their living off of misleading you about what you’re actually going to pay. I can’t give you an exact number, but I can tell you that being unregulated creates a “tax” of sorts where you do end up paying a pretty hefty premium just for being in business.

 

            Government

Government regulation is both a great thing and a terrible thing. It’s great if they get it right, which is almost certainly not how it’s going to go.   Ideally, regulations would provide standards and restrictions proportional to the product’s benefits and risks and we’d be on our merry way. In reality, governments seem to react out of fear and uncertainty and, whether intentional or not, end up further confusing the market as to the potential benefits of the product. The real mess here is as big as we grow our business, as many jobs as we create, as many smokers that we win over, we’re really only one flawed government decision away from being shut down.

 

Having said all of this, I still find this to be one of the most rewarding experiences of my life. It’s an incredible challenge and just when you think you’ve got a handle on things the industry changes and you have to adapt. I honestly wouldn’t have it any other way.       

  • Beju Lakhani

Being a Canadian Vaper 0

Canadian flag blowing in the wind

Being a Canadian Vaper presents its own unique set of challenges and opportunities, but also parallels a lot of what we’ve seen happening in the US. In this first blurb, I’ll share a little about myself, how I got into vaping and started Moshi, and what you can expect going forward.

So about me then… 

I was a pack a day smoker for fifteen years before I discovered vaping, although what I discovered initially wasn’t vaping per se. I, like a lot of people I know, started out by dipping my toe in the cig-a-like water and buying a starter kit from green smoke. Despite the inferiority of those early products to what we have access to today, I knew from the very first drag that this thing was going to change my life.   That was around 2012-2013 and I didn’t fully migrate to vaping for at least a year after that. The reason was simply that those products weren’t readily available, with the only source of product being a handful of online stores and weekend flea markets.

At the time, I was content to continue ordering my little underpowered cig-a-likes with their faux tobacco flavouring while I gradually cut down on smoking the real thing. That was until that fateful day that Health Canada decided to reach out and let me know that they didn’t approve of my efforts. The letter, in short, said that I needed to go see a doctor and buy a traditional Pharma NRT, because of that product’s resounding success I suppose.

It was at that moment that I decided I was going to start Moshi (it wasn’t called Moshi at the time, that came with the help of Google translate a bit later), and I immediately started looking at ways to produce high quality products in Canada. Keep in mind; at that time I still had no stores to sell to, I just knew that we needed better products to use in Canada, and I really had nowhere to get them. The idea of doing a liquid line was also out of necessity more than anything else. Health Canada didn’t have a problem with hardware - their problem was nicotine, so the obvious solution was to start producing nicotine-containing liquids in Canada and avoiding the border altogether. The flavour development process took up the better part of a year, with us finally going live as Moshi in the summer of 2014. 

Since that time, we’ve grown substantially and now sell to over 200 stores in 5 countries. We’ve acquired a purpose built 4000 square foot facility with a staff of 20 awesome people to help us grow the business even further.

I’ve also had the opportunity to become heavily involved in advocacy and was recently elected as the President of the Canadian Vaping Association. The CVA is a national advocacy group representing retailers and manufacturers across the country.   We’re currently fighting provincial regulation across the country and also dealing with looming federal regulation. While the political systems are different, many of the usual arguments are emerging and we’re finding a lot of parallels in what’s happening in the US. As a result, we’re also working hard to build relationships with our counterparts in the US and abroad to continue the fight and work towards common-sense regulation.

Going forward, I’m hoping to share with you some insights on what’s happening in the Great White North and also some of my personal thoughts on the industry, advocacy, and growing a business in an emerging market.

Cheers, and happy vaping!

 

Beju

  • Beju Lakhani