Life Enhancement Moves

T his summer, the world-renowned nutritional supplement firm Life ­Enhancement Products—founded in 1994 in Las Vegas, Nevada (but which has operated since then in Petaluma, California)—packed its bags and moved to Minden, Nevada in the middle of beautiful Carson Valley.

Life Enhancement is a rare breed in the supplement industry because it excels at the “quintuple play” of a biomedical business:

  1. Research—everything starts with reading, studying and interpreting the scientific literature across vast disciplines
  2. Formulation—Life Enhancement’s principal formulators are rigorously scientific in that they study the roadmaps of the body, without which superior, dosage-correct formulation is impossible
  3. Manufacturing—in full compliance for Current Good Manufacturing Practices; with 140 in-house formulations and numerous private labels
  4. Marketing—writing and publishing a monthly nutritional supplement magazine Life Enhancement (now in its 18th year), with primary scientific literature citations, along the regular inclusion of Durk Pearson & Sandy Shaw’s Life Extension News
  5. Distributing—worldwide, to every state in the U.S., as well as to numerous countries throughout the world

The relocation, CEO Will Block told local news media, was partly about the Carson Valley destination’s superior quality of life, its eager and talented workforce, and its pro-business attitudes. But the firm was also dislodged and pushed out by California’s ratcheting taxes and continuously growing contortions of government regulations.

“The tipping point was a visit from California’s Department of Health, which came to enforce its misperceived and harsh understanding of the Food and Drug Administration rules, including the threatened enforcement of the tentative (and unapproved) NDI draft guidance,” Block said. “In Douglas County, Nevada (where Minden is situated), at my first networking event I met the Chairman of the County Commissioners and the Executive Director of the Northern Nevada Development Authority, and they asked what they could do to help my company. No elected official or director of a private entity had ever asked me that in California.”

Often in Order to Survive

California has long been at the top of America’s most extensive taxers and regulators of business. But in the past its economic deterrents have been offset by beguiling advantages: a great climate, a world-class public university system that created a talented local workforce, an infrastructure that often made doing business easier, and a legacy of innovative companies.

But now, the sun has set on all but the weather and California has malformed itself into an unremittingly antibusiness state. The absence of what was once good about California is driving companies to leave the state, often in order to survive. At first, the exit was a trickle, but now that has turned into a torrent. Executives regularly think of California as one of the country’s most toxic business environments and one of the least likely places to open or expand a new company. Many firms still headquartered in California have abandoned expansion there.

A recent poll by various California business groups found that 82 percent of executives and owners confess that if they weren’t already in the state, they would never consider beginning a business there. Also, 64 percent said that the main reason they remained in California was that it was tough to relocate their particular kind of business. Furthermore, these executives do not believe that things will get better. For a consecutive number of years, California has ranked dead last in Chief Executives who were polled about the business environments of all the states.

Labor groups, environmentalists, and some politicians say that such polls merely reflect businesses’ craving to get fair taxes lowered and reasonable regulations repealed. But if taxes were fair and regulations reasonable, why are so many businesses anxious to leave?

From The Wall Street Journal,* “The evidence also shows that California is losing the battle for new investment. From 2007 through 2010, according to a study by the California Manufacturers and Technology Association, 10,763 industrial facilities were built or expanded across the country—but only 176 of those were in California. That amounted to 4.8 facilities per 1 million people, the lowest rate of any state; the national average was more than 40. The same study found that of the nation’s $350 billion in investments in manufacturing facilities, just $8.7 billion was spent in California, a per-capita rate of investment less than one-fifth the national average.”

*Malanga S. Cali to Business: Get Out! Firms are fleeing the state’s senseless regulations and confiscatory taxes. The Wall Street Journal, November 18, 2011.

The Belief that Jobs and People Leaving Is Good

Despite pleas for mercy, the business community’s appeals have been ignored. It is the environmental lobby that controls Sacramento. “The state’s environmentalists think capitalism is harmful to the environment,” so says the chairman of a task force on jobs and the economy. They actually believe that jobs and people leaving the state are good. Some of these environmentalists think it would be better if the goose left too. With the support of the environment-first-contingency, the state’s regulatory bureaucracy has become gruesome, with officials commonly interpreting regulations in the most punitive way.

Beyond regulation, taxes are another big reason that companies leave California. While the highest income bracket reaches 10.3 percent (applying only to a few), the second-highest, 9.3 percent, starts at incomes above just $47,000 annually. Then consider California’s corporate income tax, one of the few that has its own alternative minimum tax feature, which excludes companies from taking deductions beyond a certain point. And then there is California’s sales tax, the country’s most arduous, with all the damage to in-state sales that it creates. Even so, Sacramento is ever scavenging for more tax revenues, one reason why financial executives surveyed by CFO recently ranked California’s tax bureaucracy among the country’s most aggressive.

A Torrent of Torts

California’s regulation and taxes are sufficiently deadly to businesses, yet the state can lay claim to having the America’s most expensive litigation environment for firms. According to The Wall Street Journal article, cited above, “The American Tort Reform Foundation recently named California one of the country’s five worst ‘judicial hellholes,’ in part for its long history of ‘wacky consumer class actions.’ Blame the state’s infamous consumer-rights law, which allows trial lawyers to sue firms for minor violations of California’s complex labor and environmental regulations. Abuses of the law earned California the reputation of being a “shakedown state,” with lawyers regularly sending out threatening letters in mass mailings to thousands of small businesses, demanding payments in return for not suing over purported minor paperwork violations.”

What Does Life Enhancement’s Move Mean to You?

Life Enhancement has survived California … but not by a lot. Given the uncertainty of the national economy, nothing can be assured. As things are, the nutritional supplement business is highly competitive, but with increased savings and reduced harassment, Life Enhancement should be able to shine even more brightly. That means more value and more innovation than ever before with the company’s move to Nevada. This also means more life extension and life enhancement news and products for you. This is something to cheer about.

Will Block

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