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The San Francisco-based e-cigarette company will lay off 150 more employees than previously announced as it faces regulatory pressure in the U.S. The company will lose about 16 per cent of its workforce with the cuts, which are intended to “right-size” the business after a pace of adding about 300 staff per month. Juul told The Logic the cuts will focus on the marketing team, which has already suspended broadcast, print and digital advertising in the U.S. (The Mercury News, The Logic)

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Talking point: The cuts follow a US$14-billion decrease in Juul’s valuation after Altria, its biggest shareholder, wrote down its US$12.8-billion investment by US$4.5 billion. Last month, Juul stopped selling most of its flavoured products in the U.S.—which account for about 80 per cent of its sales in the country—in anticipation of legislation to ban the products, which are known to be attractive to young people and non-smokers. Lisa Hutniak, Juul’s head of communications in Canada, declined to answer The Logic’s questions about whether the cuts will affect the company’s business in Canada, where there have been proportionately fewer cases of vaping-related illnesses than in the U.S., and where lawmakers are taking a less urgent approach to regulation.

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Siddharth Breja, who was vice-president of global finance at Juul from May 2018 to March 2019, claims the company shipped a batch of about one million contaminated e-cigarettes in 2019, which he said it never issued a recall for or told customers about. Breja’s suit—which claims he was fired for whistleblowing and objecting to the company’s conduct—also alleges Juul sold pods that were almost a year old. Breja claims that when he advised then-CEO Kevin Burns against selling the old products, Burns replied, “Half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods.” (The Logic)

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Talking point: This is another in a string of bad headlines for Juul. The company pulled much of its product in the U.S. earlier this month in anticipation of sweeping bans on flavoured vaping products. It also plans to lay off between 10 and 15 per cent of its workforce—about 500 people—to focus on regulatory compliance rather than marketing. Despite the popularity of Juul’s products—its products account for about 75 per cent of the U.S. e-cigarette market——it has largely avoided blame for the rise in vaping related illnesses in the U.S., with health officials pointing instead to THC-containing products and devices bought on the black market. But this suit calls into question the company’s quality control at a time when regulators are on high alert for what exactly is causing vapers to get sick.

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The company plans to cut between 10 and 15 per cent of its staff as part of a “necessary reset,” said CEO K.C. Crosthwaite. Juul, which is facing broad regulatory pressure, will also reduce its marketing budget and focus instead on “earning a license to operate in the U.S. and around the world,” said Crosthwaite. (Wall Street Journal)

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Talking point: The U.S. Food and Drug Administration (FDA) is expected to enact regulations banning e-cigarette companies from selling certain flavoured products; they’ll also need to apply for FDA approval before selling their products in the U.S. Juul, the market leader, has tried getting ahead of the laws by pulling candy-, dessert- and fruit-flavoured “e-juice” and halting federal lobbying efforts against the FDA—a measure that could be hurting its growth in the short term. Health Canada is also reviewing its vaping regulations after a rise in vaping-related lung injuries in the U.S. So far, it’s business as usual for Juul in Canada, despite public health groups calling for an immediate ban on flavoured products, which accounted for about 80 per cent of the company’s sales this year.

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The company has stopped selling dessert- and fruit-flavoured vaping pods, pending a review from the U.S. Food and Drug Administration (FDA). The company will keep selling mint, menthol and tobacco flavours. (Bloomberg)

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Talking point: The move partially preempts the FDA’s plan to ban all flavoured vaping liquids—regulations on which Juul promised not to lobby the Trump administration in September. Juul has previously made changes to its practices in advance of new rules. In November 2018, it pulled most flavoured pods from brick-and-mortar stores in the U.S. amid reports that the FDA was set to announce a similar requirement. In Canada, Nova Scotia and British Columbia are considering provincial bans on flavoured products. The federal Vaping Products Act, the country’s first vaping law, already prohibits the promotion of pods flavoured like desserts, candy, soft drinks or energy drinks. Lisa Hutniak, director of communications for Juul in Canada, said the company follows local regulations wherever it operates, and “believes flavoured products can play an important role in helping adult smokers move away from combustible cigarettes.”

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Kevin Burns has stepped down in favour of K.C. Crosthwaite, who was chief growth officer at Altria, the tobacco giant that is one of the company’s major investors. Altria and Philip Morris ended talks of a US$187-billion merger. Juul also said it will stop advertising its products on television, in print and digitally, and will not lobby the U.S. government on the Food and Drug Administration (FDA)’s upcoming vaping regulations. “Juul Labs is a global company and this announcement impacts the U.S. only,” StrategyCorp’s Jeff Lang-Weir told The Logic on behalf of Juul Canada. (The Logic)

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Talking point: The three companies’ decisions reflect the challenges facing vape firms in the U.S., where the Trump administration is planning to ban all flavoured products. Juul is facing multiple investigations, including by the Federal Trade Commission, the FDA and criminal prosecutors. Altria is hedging its bet on Juul by proceeding with the launch of an FDA-approved heated tobacco device in partnership with Philip Morris. Health Canada has not announced any new investigations or policies in response to the U.S. government actions. The agency is currently considering new regulations to restrict vape advertising on social media and at the checkout in stores, as well as banning more flavours. Juul is also not changing its Canadian plans—it will continue to lobby and advertise in Canada.

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In a Monday letter to Juul, the U.S. Food and Drug Administration (FDA) said companies need to “demonstrate with scientific evidence” that their products are lower-risk or less harmful than regular tobacco products, and receive its approval, before marketing them as such. The FDA cited evidence from a July congressional hearing that a Juul representative told students the company’s products were “much safer than cigarettes,” and that the agency would soon announce that they were “99 per cent safer.” Juul has 15 business days to respond to the FDA’s letter. Lisa Hutniak, director of communications for Juul in Canada, said the company has not promoted its products by comparing the health effects to those of other tobacco products. Companies require Health Canada’s approval to do so under the Tobacco and Vaping Act. (The Logic)

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Talking point: In Canada, Juul has backed some government proposals for stronger promotion restrictions, while opposing others. It supports Health Canada’s plan to ban vaping ads on social media, but said a rule against displaying them at check-out in stores would prevent the company from offering adult smokers an alternative to cigarettes. Juul has quoted Health Canada as saying, “Vaping is less harmful than smoking” in many of its Canadian press releases. That statement is drawn from an information page about vaping on the department’s website. The company has also cited a review by Public Health England that e-cigarettes are significantly less harmful than tobacco. Hutniak said the company does not believe the legislation’s promotion provisions apply to those statements. “Health Canada has taken a clear position on vaping products being less harmful than cigarettes,” she said. “We believe it’s important for adult smokers to be made aware of Health Canada’s public position on vaping.” Health Canada did not respond to a request for comment. Juul has engaged with policymakers in both the U.S. and Canada on vaping rules. As The Logic reported in August, Juul has registered 19 lobbyists across the federal and provincial governments as officials consider new restrictions on advertising and labelling, and bans on flavoured products.

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The U.S. Federal Trade Commission is looking into whether the firm, which controls about three-fourths of the U.S. e-cigarette market, has employed deceptive marketing tactics, including targeting minors and using influencers. The regulator is also deciding whether to seek monetary damages. Juul maintains its campaigns target adults exclusively, and that its short-lived influencer program only used influencers over the age of 30. (Wall Street Journal)

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Talking point: The probe comes amid skyrocketing use of e-cigarettes among youth—a study showed a 78 per cent vaping increase in U.S. high-school students between 2017 and 2018; a Canadian study showed a 74 per cent surge for the same period in 16- to 19-year-olds. Regulators in both countries are trying to determine why the products are so appealing to minors; Juul has repeatedly stated that it doesn’t market to youth, and considers the underage use of its products unacceptable. Earlier this week, in an effort to curb sales to minors, Juul started offering US$100 million in incentives to retailers who install a new electronic age-verification system. Flavoured e-cigarettes have been a particular point of focus for regulators; the U.S. Food and Drug Administration (FDA) tightened restrictions on flavoured vape products in March. It’s also recently proposed moving the deadline up one year to 2021 for manufacturers to apply for market approval; they currently operate without FDA oversight. Meanwhile, Juul has launched a major lobbying push within Canada as Health Canada and a number of provincial regulators consider new regulations for the industry. My colleague Murad reported that Juul has deployed 19 lobbyists in the past year, and has lobbied the federal government at least 16 times since August 2018.

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The e-cigarette company’s goal is to explain to Quebec officials how Bill 2, which prohibits anyone under 21 from purchasing cannabis, could affect vaping in the province. Juul’s participation in the debate comes as Ottawa consults on a draft regulation that, as of October 2019, would allow the production and sale of cannabis e-cigarettes, also known as “vape pens.” (La Presse)

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Talking point: Juul is not interested in getting into the cannabis industry nor does it oppose having the legal age for cannabis be 21, John Perenack, a principal at StrategyCorp, the advisory firm lobbying for Juul in Quebec, told The Logic. In an emailed statement, Juul said, “Our engagement around Bill 2 is in relation to our efforts to collaborate with government on ensuring that age-restricted products are kept out of the hands of young people.” Though Juul hasn’t yet met with any government representatives, consultations around the bill begin today. The company owns 70 per cent of the e-cigarette market in the U.S. and is already an active lobbyist in Ottawa. It’s being investigated in the U.S. for its allegedly aggressive marketing tactics on young people; the company said its lobbying in Quebec is only to make sure age-restricted products aren’t made available to the youth.

Correction: The previous headline stated that Juul is lobbying against having the legal age for cannabis be 21. This is incorrect and the piece has been updated. 

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Tobacco company Altria is getting close to taking a 35 per cent stake, which would value Juul at US$35 billion, making the electronic cigarette company one of the most valuable private companies in the United States. (Wall Street Journal)

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Talking point: Juul’s valuation would make the three-year old company worth US$4 billion more than Airbnb and three times more than Pinterest. The company has about 1,500 employees and US$2 billion in annual revenue. Some of that revenue comes from Juul’s popularity with children, who report enjoying the different flavours offered by the company and the ability to surreptitiously smoke in school (although administrators are trying to crack down). Last month, the U.S. Food and Drug Administration decided not to ban the sale of flavoured e-cigarettes, which would have been a blow to Juul.