I recently became interested in making my own incense and did a bit of research on good old search engine and found this website that offers some good instructions on how to make loose and cone style incense. One of the things that stood out to me was actually a warning on the page. If you decide to go the charcoal route be careful in the type of charcoal you buy!! Charcoal that contains SALTPETER is a no go! It contains toxic chemicals! Bamboo charcoal is recommend!
"Note: Using saltpeter as an oxidizer is a common ingredient in many charcoals sold today.Saltpeter on today's market is either sodium nitrate or potassium nitrate, both of these are toxic chemicals and warn against inhalation. We recommend using bamboo charcoal or makko to burn your incense. A good way to tell if your charcoal has saltpeter in it is to see if it crackles when lit, if it does it most probably contains saltpeter. Here are MSDS reports on sodium nitrate and potassium nitrate that we've found on the web."
Here is a link to the website! Enjoy~