- On Thursday, the FDA officially banned all Juul products in the United States on concerns of its impact on youth nicotine use
- Juul plans to file a stay and appeal the ruling; if granted, a stay would temporarily keep its products on shelves
- Altria, which owns a 35% stake in Juul, saw its stock tumble 8% Wednesday, though Thursday brought modest gains
On Thursday, the U.S. Food and Drug Administration (FDA) issued an order to Juul Labs, Inc. to stop selling and distributing all products in the United States. The order impacts the popular vape maker’s devices as well as four types of vaping pods. (though the ban does not apply to consumer possession or use.)
The FDA’s decision could shift how health advocates and regulators manage the social and physical impacts of e-cigarettes. It’s also another blow to Big Tobacco, which is grappling with the Biden administration’s plan to cap nicotine levels in tobacco products.
However, both advocates and opponents of Juul’s ban believe the FDA acted for reasons beyond general concern for national nicotine use: the company’s impact on youth addiction.
No love for shiny Juul-ry
Vape products are unique in the tobacco world because they produce no smoke, no tar and little to no smell. This makes them ideal for teenage users, many of whom turned to Juuls for their small design and broad array of flavors.
This led to what Juul opponents labeled the “youth vaping epidemic,” which they blamed on highly-addictive flavored products. Many advocacy groups also believe that Juul targeted minors through marketing practices and “youth-friendly” flavors.
The pushback prompted Juul to eliminate the bulk of its flavors in 2019, cutting back to just tobacco and menthol. But vaping remains popular among teens, with nearly 10.7 million youths aged 12-17 admitting they have tried or would try e-cigarettes.
Currently, some evidence suggests that vaping may be safer than lighting up. (Many e-cigarettes were originally developed or marketed as safer or less addictive alternatives to traditional cigarettes.) The FDA has acknowledge this potential and authorized other companies’ vape devices that meet its standards.
However, the effects of pure nicotine – not cigarettes, which contain over 7,000 other chemicals – aren’t well-studied. And some research indicates that nicotine use could harm brain development or segue into traditional cigarette use.
Regulatory action years in the making
Prior to 2016, the FDA had no regulatory authority over nicotine products like e-cigarettes, cigars and hookahs. Temporarily from regulatory constraint, these products flooded the market.
In August 2016, the FDA was granted authority over e-cigarettes, meaning the products now required FDA approval to be marketed. The agency deferred enforcement of authorization requirements until 2019, when a court placed a 10-month deadline on e-cigarette companies to apply for public health review. (The pandemic saw the deadline extended to September 2020.)
Since then, the FDA has received applications for nearly 6.7 million products and denied roughly 1 million for premarket authorization. (The FDA notes that its sales approval does not confer belief that these products are safe.) Pending approval, Juuls products were allowed to remain on the market – until now.
The FDA’s decision
Upon reviewing Juul’s premarket tobacco product applications, the FDA determined that Juul lacks evidence regarding its products’ toxicological profile.
The FDA further notes that Juul submitted “insufficient and conflicting data” as to the safety of its products. Additionally, some of the company’s own findings indicate there’s a risk that “potentially harmful chemicals” could leak from its pods.
As a result, Juul has not proved that its products are “appropriate for the protection of the public health.”
However, in its press release, the FDA also admitted there’s no clinical evidence that Juuls products pose an immediate hazard.
Michele Mital, acting director of the FDA’s Center for Tobacco Products, noted in a statement that: “The responsibility to demonstrate that a product meets [legal] standards ultimately falls on the shoulders of the company…. However, [Juul] did not provide that evidence and instead left us with significant questions. Without the data needed to determine relevant health risks, the FDA is issuing these marketing denial orders.”
Behind the haze
However, the FDA’s decision may be weighted by more than just sloppy paperwork or clinical evidence. Many – including those at the FDA itself – credit Juul with the rise of the youth vaping epidemic. As a result, it came as no surprise to some that the FDA would shut down their distribution.
FDA Commissioner Robert M. Califf noted in his own statement that, “We recognize [Juuls] make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”
Further proof is found in the fact that the FDA has already permitted some of Juul’s rivals to keep their products on the market.
Former FDA Commissioner Scott Gottlieb, who led the first charge against Juul, noted ahead of Thursday’s decision that, “[The FDA has] authorized three vaping products, so if they indeed deny Juul, it will likely be based…on the legacy of abuse of that product…. That product can’t shake how it was abused in the market by children and how Juul positioned it for such abuse.”
Juul has come out against the decision, stating that the company “respectfully disagrees with the FDA’s findings” and believes that its data “meets the statutory standard of being ‘appropriate for the protection of the public health.’”
A company representative has noted that Juul intends to seek a stay and is “exploring all our options under the FDA’s regulations and the law.” If the company’s stay is issued, Juul’s products would remain on the market while it appeals the ruling.
Altria’s investment going up in smoke(less)
But the FDA’s decision doesn’t just concern Juul Labs – it also directly impacts one of its biggest investors: Altria.
Altria is the parent company of Phillip Morris USA, best known for making Marlboros, Virginia Slims and Parliament cigarettes. In 2019, Altria invested $12.8 billion into Juul in return for a 35% stake.
Unfortunately, between 2019 and year-end 2021, the value of Altria’s investment plunged from $12.8 billion to a paltry $1.7 billion. The company sustained multiple losses and write-downs as concerns and regulator disapproval on vaping mounted.
Currently, Altria and/or Juul are named defendants in over 50 class-action lawsuits and 3,000 vape-related lawsuits.
But the hits don’t stop there: Altria’s stock tumbled 8% on Wednesday (though it gained just over 2.4% by Thursday’s close).
Hot take: wafting into the cannabis aisle
Take a spliff of this.
Assuming Juul’s stay doesn’t go through, the company will have to pull its products from the market entirely. While that won’t impact other greenlighted companies or nicotine products, it has some wondering: what does that mean for cannabis vape sales?
Cannabis is already in a slightly precarious position, as it’s federally illicit but legal in an increasingly-large number of states. However, this discrepancy may be what protects the cannabis industry – at least for now.
As a federally illegal substance, the FDA likely won’t wade into the sticky world of cannabis consumption and regulation, including its vape products. However, if cannabis becomes federally legal in the next few years, today’s ruling could pave the way for tighter regulation of smokeless THC products.
But until that happens, it’s all guesswork in the world of semi-legal recreation.
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