The protracted negotiations between “Big Tobacco” company Altria and Juul Labs finally came to an end with both companies announcing that Altria had injected $12.8 billion in Juul Labs in exchange for a 35 percent stake in the electronic cigarette maker. Insiders privy to the details of the deal say that Altria is contractually bound not to sell its stake or acquire more shares for at least six years from the date when the deal was signed. The partnership with Altria marks a huge turnaround for Juul since it had positioned itself as being opposed to Big Tobacco. However, Juul’s recent issues with regulators and legislators may have convinced it to sign the deal so that Altria can deploy its lobbying and financial muscle to help deal with the authorities breathing down Juul’s neck. Altria also brings superior distribution and retail systems to the deal, while the tobacco giant will get a slice of the massive sales made by Juul (75 percent of the entire e-cig market in the US). One can only hope that this “marriage” won’t result in the total takeover of the vaping industry by Big Tobacco and its ills.
The legalization of cannabis in some US states and not in others has created a thriving market for counterfeiters who flood the black market with products that are packaged in a way that resembles the name-brand products found in states where cannabis is legal. The major brands affected include Heavy Hitters, King Pen and Brass Knuckles (among others). The black market products don’t conform to any quality standards, so consumers face the risk of consuming cannabis oil that is tainted with all sorts of contaminants, such as pesticide residues and heavy metals. What can one do? Only buy your cannabis vape cartridges from authorized retailers if you live in a state where cannabis is legal. Those in states where prohibition still exists need to exercise extreme caution regarding the cartridges that they buy. In the meantime, the affected companies have started taking legal action against the counterfeiters, but history has shown that such a battle is hard to win in the long-term.
The Wall Street Journal published a news item revealing that combustible cigarette maker Altria is having discussions with Juul Labs in order to acquire a significant minority stake in the electronic cigarette giant. It is widely expected that the outcome of those talks will be announced in a few weeks. But why would Juul be reversing its earlier distance from “Big Tobacco” firms in its marketing efforts? Juul has the lion’s share of the e-cig market (75 percent) and it has come under intense pressure from regulators regarding the popularity of its products among teens. Teaming up with Altria could be a mutually beneficial arrangement in which Juul Labs benefits from the decades Altria has in dealing with tough regulatory scrutiny and pressure, while Altria stands to line its coffers with earnings from the sale of Juul products. Interestingly, both companies announced separately in recent weeks that they were halting the sale of some of their flavored e-cigarette products in light of concerns over teen vaping. How will this new deal affect the future of both companies?
Juul Labs has initiated lawsuits against several companies that it claims are infringing on its copyright. Some suits were filed with the International Trade Commission while others were filed in district courts. In total, more than 30 companies are affected by the suits. Most of the said companies are based abroad, with China and Uruguay taking the largest share of the companies listed in those complaints. The ITC (International Trade Commission) cannot award monetary damages in case Juul Labs wins the cases. However, the suits in the district courts can result in monetary awards, so that could explain why mirror suits were filed in these courts too. Juul claims that those look-alike products aren’t subjected to any controls and can endanger public health since minors can access them. In response, some of the companies cited are saying that Juul is using underhand tactics to lock out any competition in order to raise the price of its products. All that is left is for the competent entities to listen to both sides and decide appropriately.
The US FDA has written a warning letter to Electric Lotus LLC warning it about how it been packaging its e-liquids in a way that can mislead kids into thinking that those e-liquids are common consumer products. One product is labelled as “Cereal Treats Crunch” and it resembles the cereal products made by Cinnamon Toast Crunch. The e-liquids were also faulted for having cartoon characters on their packages, a move that can be regarded as targeting kids. The FDA also noted that Electric Lotus brought its products to the market after August 8, 2016. This means that those products should have been subjected to premarket approval by the FDA, but the company didn’t seek that approval. The FDA has therefore given Electric Lotus LLC 15 days (starting on November 29 when the warning letter was written) within which to file its response to the concerns raised. Otherwise additional measures, such as an injunction and/or seizures of the products in question would be undertaken. It remains to be seen whether Electric Lotus will wiggle out of the tight spot into which it has found itself.
Juul Labs is slated to announce its plans to stop retailing the majority of its flavored “Juul pods” in most brick and mortar stores as a response to the FDA’s call that electronic cigarette manufacturers reveal their plans on curbing teen vaping. Juul’s plan comes hot on the heels of an announcement by Altria a few weeks ago that the company would no longer sell flavored vapes until the teen vaping issue is resolved or the FDA designs clear rules on flavored e-cig products. Juul will continue to sell those fruity flavors on its online stores since, it says, sufficient age-verification technology can prevent access by minors. The big question on the mind of people hearing this yet-to-be announced plan by Juul Labs is, “Are they pulling the trigger just because they have got wind of the restrictions due to be announced by the FDA or they are doing it from the goodness of their hearts?” We can only hope that the remedial measures aren’t coming too late to save teens before they are addicted to nicotine.
In a move that is expected to be announced soon, the FDA plans to restrict the sale of flavored electronic cigarette products in all gas stations and convenience stores across the US. This decision comes at a time when government data paints a gloomy picture showing that teen vaping has increased by 77 percent since last year. The FDA will only allow tobacco shops and vape shops to sell flavored e-cigs. However, menthol and mint-flavored e-cigs will continue to be sold in convenience stores as well as gas stations. This exception is intended to avoid giving combustible cigarettes an advantage since menthol and mint-flavored tobacco cigarettes can be sold at gas stations and convenience stores. Refillable e-cigs will not be affected by the ban. Only prepackaged e-liquid pods will be restricted. The regulator also wants online stores to implement strict age-verification systems in order to prevent minors from purchasing e-cigs.
This decision is likely to be criticized by both sides of the aisle. Pro-vaping groups may protest that it will get harder for adults who want to switch to e-cigs to access those products. In contrast, those opposed to vaping are likely to say that the FDA should have imposed a total ban on the manufacture and sale of flavored e-cigs. The coming weeks will show how this matter pans out once the official FDA restrictions are announced.
The U.S. Food and Drug Administration has written letters to 21 e-cig manufacturers asking for information that would help the regulator to determine whether some of the products marketed by the companies in question are on the market illegally. The FDA ruled that any electronic cigarette product which was to be introduced on the market after August 8, 2016 needed to get clearance (premarket approval) from the FDA while those already on the market could continue as the makers prepared to undergo the premarket approval process come 2022. However, the media had reports of new products on sale yet such products aren’t approved by the FDA as required by law. The call for information is therefore designed to identify those products which could have been rebranded (due to the sale of their parent companies and other factors) and those which are new (and therefore non-compliant). We await the outcome of that investigation.
In a first of its kind, Phillip Morris, the largest cigarette maker in the world, has rolled out a campaign to urge smokers in the UK to abandon tobacco cigarettes and switch to vaping. The campaign dubbed “Hold My Light” is urging family members to support smokers to quit and switch to safer alternatives like e-cigs. For example, family members and friends can pledge to perform certain chores for the person who wants to quit smoking. This social support can provide the impetus needed for smokers to follow through on their desire to quit. The company cites research conducted by Public Health England as proof that vaping poses fewer risks to the individual and the public.
The £2 million campaign also hopes to strengthen the foothold of the e-cigarettes made by Philip Morris. The company plans to stop making tobacco cigarettes and focus on e-cigs and heated tobacco. The Hold My Light campaign has been received positively by a cross-section of the UK community, including a former health minister. The UK is one of the few jurisdictions around the world that has embraced vaping as a way to stop smoking harm. Doctors are even encouraged to suggest vaping as an alternative to their patients who smoke. I wonder whether policymakers and regulators in the U.S. can borrow a leaf from the approach taken by the UK?
Juul Labs, the manufacturer of Juul electronic cigarettes, have been under scrutiny by the FDA and Congress regarding why Juul products are so popular among teens and the youth. The FDA went on to describe teen vaping as an “epidemic” and the agency threatened to ban the sale of any flavored e-cigarette juice or product which is seen as appealing to teens and the youth. Juul Labs has responded by cooperating with the regulator as well as increasing its expenditure on lobbying by 167 percent in the third quarter of this year when that spending is compared to what was spent in the second quarter of this year. According to Juul’s declaration, it spent $560,000 on lobbying while the second quarter cost for lobbying was just $210,000. The e-cig maker appears to be in a fight for its very life. It will be interesting to look back and judge whether the lobbying had any effect in softening the rate at which regulators clamped down on different e-cig manufacturers.