Juul withdraws support for ballot measure aimed at overturning anti-vaping law in San Francisco
San Francisco—Juul Labs Inc. announced Monday that it will stop supporting a ballot measure that seeks to overturn San Francisco's anti-vaping law, effectively killing the campaign.
The nation's largest maker of e-cigarettes said it will end its financial support for Proposition C after donating nearly $19 million to it. Juul was virtually the only financial backer of the measure. However, the proposition will still appear on the November ballot.
"We must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate," Juul's new CEO K.C Crosthwaite said in a statement. "That includes inviting an open dialogue, listening to others and being responsive to their concerns."
Crosthwaite, a long-time Altria tobacco executive, was named CEO last week after Kevin Burns stepped down. The shakeup comes amid a regulatory crackdown on vaping, now linked to hundreds of illnesses and at least eight deaths, as well as mounting scrutiny of Juul's marketing practices.
Proposition C would allow the sale of vape products to adults, partially overturning a city ordinance that as of next year would ban sales of e-cigarettes and vape products not reviewed by the U.S. Food and Drug Administration. Juul's decision to abandon the campaign was part of a broad review of company policies in the wake of the company's leadership shakeup.
The appointment of an Altria executive to head Juul also comes as the tobacco company's $13 billion stake in Juul appears increasingly at risk, given the regulatory issues facing the vaping industry.
"I am committed to seeing that JUUL engages productively with all stakeholders, including regulators, policymakers and our customers," Crosthwaite said in a statement. "This decision does not change the fact that as a San Francisco-founded and headquartered company we remain committed to the city."
However, Larry Tramutola, who directs the No on Prop C campaign, was skeptical, noting that about $7 million in Juul's campaign donations remain unspent.
"This could very well be yet another of a series of lies and exaggerations from Juul and Big Tobacco," he said in a statement. "Until they return the $7 million unspent dollars that is in their political account, until they suspend their mail, their advertising, their paid phone calls and lay off their consultants we do not believe them."
The move comes after federal health officials reported more than a dozen deaths and over 800 cases of lung illnesses affecting e-cigarette users nationwide. The American Lung Association has declared that "e-cigarettes are not safe," but the American Cancer Society said they're "likely to be significantly less harmful for adults than smoking regular cigarettes." Many patients affected by the recent spate of lung illnesses reported vaping products that included THC, the intoxicating chemical in marijuana.
Michigan, New York and Rhode Island recently banned flavored vaping products, which are especially popular with young people. An Illinois State's Attorney's Office filed a lawsuit this year accusing Juul of using using deceptive marketing aimed at teens. The lawsuit argues that beginning in the 1990s, adolescent smoking rates began to fall, only to sharply rise due to a combination of Juul Labs' nicotine delivery technology as well as its innovative social media campaign targeting teens through "advertisements, hashtags, and paid influencers."
The Trump administration announced last month that the federal government would take action to prohibit flavored e-cigarettes because they appeal to underage users, though it's unclear how long that process may take.
Juul has said it doesn't market to youth and that its products are meant to be an alternative to smoking for adults. However, the company's advertising is under federal investigation, and the company recently announced it will stop advertising its e-cigarettes in the U.S.
E-cigarettes have been largely unregulated since arriving in the U.S. in 2007. The Food and Drug Administration has set next May as a deadline for manufacturers to submit their products for review.