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Juul to end advertising, lobbying efforts of e-cigarette, CEO resigns

E-cigarette maker Juul is shutting down broadcast, print and digital advertising and ending lobbying efforts in Washington as safety concerns over vaping intensify.

The company on Wednesday said its CEO was stepping down and will be replaced by a senior executive from Altria, the maker of Marlboro. Altria took a 35% stake in Juul in December at a cost of $13 billion.

Also on Wednesday, one month after announcing that they were in merger talks, the tobacco giants Altria and Philip Morris International said they were calling off those discussions.

Juul has long pushed its e-cigarettes as an alternative for adults looking to wean themselves off tobacco products. But e-cigarettes have become popular among teenagers, and illnesses potentially linked to the product are on the rise.

On Tuesday the governor of Massachusetts declared a public health emergency and ordered a four-month ban on the sale of vaping products in the state, apparently the first action of its kind in the nation. As of Tuesday, 61 cases of potential cases of lung disease related to the use of electronic cigarettes and vaping in Massachusetts had been reported to the state.

Reported cases

Three confirmed cases and two probable Massachusetts cases of vaping-associated pulmonary disease have been reported to the U.S. Centers for Disease Control and Prevention.

Dr. Anne Schuchat, of the CDC, told a congressional subcommittee Tuesday that she believes “hundreds more” lung illnesses have been reported to health authorities since Thursday, when the CDC put the tally at 530 confirmed and probable cases.

Earlier this month President Donald Trump said that the federal government will act to ban thousands of flavors used in e-cigarettes in response to a recent surge in underage vaping that has alarmed parents, politicians and health authorities nationwide. The Food and Drug Administration will develop guidelines to remove from the market all e-cigarette flavors except tobacco.

The restrictions announced by Trump officials would only apply to nicotine vaping products, which are regulated by the FDA. The FDA has had the authority to ban vaping flavors since 2016, but has previously resisted calls to take that step. Agency officials instead said they were studying if flavors could help smokers quit traditional cigarettes.

But parents, teachers and health advocates have increasingly called for a crackdown on flavors, arguing that they are overwhelmingly to blame for the explosion in underage vaping by U.S. teens, particularly with small, discrete devices such as Juul’s.

Sales to those under 18 illegal

Federal law prohibits e-cigarette and all other tobacco sales to those under 18.

Altria Group Inc. said that K.C. Crosthwaite will become JUUL’s new CEO, replacing Kevin Burns. Crosthwaite served as Altria’s chief growth officer.

Crosthwaite said in a prepared statement that Juul has long focused on providing adult smokers with alternatives, but recognized that there’s currently “unacceptable levels of youth usage and eroding public confidence in our industry.”

“We must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate. That includes inviting an open dialogue, listening to others and being responsive to their concerns,” he said.

Merger talks

Altria and Philip Morris said last month that they were in discussions to become a single company, more than a decade after splitting into two as lawsuits mounted.

Altria has exclusively sold Marlboro cigarettes and other tobacco brands in the U.S., while Philip Morris has handled international sales.

Philip Morris International Inc. CEO André Calantzopoulos said Wednesday that the companies will instead focus on launching IQOS in the U.S. IQOS is a heat-not-burn cigarette alternative made by Philip Morris.

It was Crosthwaite, who will take over Juul, who headed the development of IQOS.

Altria, based in Richmond, Virginia, spun off its international operation in 2008 amid waves of lawsuits and government scrutiny in the U.S. The breakup gave Philip Morris International more leeway to pursue sales growth in emerging markets. Anti-tobacco groups accused the company of maneuvering to unleash its marketing machine on nonsmoking women and children in poor, developing countries.

Since the split, Philip Morris has churned out new Marlboro-branded products catering to local tastes in Asia, Europe, Latin America and other regions, even as both companies invest in alternatives to traditional cigarettes.

Altria’s stock climbed 3.1% before the market opened, while shares of Philip Morris jumped 7.3%.

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