Will E-Cig Maker Juul Succumb to Regulatory Hurdles?

In light of the new FDA statistics showing that high school e-cigarette use has increased by 80% this year, the ever-popular vape pen "Juul" may be subjected to regulation. This includes being sold only in "age-restricted, in-person locations and, if sold online, under heightened practices for age verification."

Juul Labs, the company masterminding the vaping craze that has swept the nation, has said that it will now suspend selling most of its flavored pods in retail stores and will stop social media promotions. However, mint, tobacco, and menthol flavors will remain in retail stores to appeal to consumers who might otherwise turn to menthol cigarettes.

The company has strategically timed the announcement, which effectively precedes any potential official move by the FDA to ban flavored e-cigarettes. The FDA has long hinted that it wants to crack down on e-cig use, which it views as an untested and possibly dangerous gateway to smoking.

The regulatory battle in the US seems unlikely to seriously cripple Juul, which, according to co-founder and CTO Adam Bowen, still has a vast global cigarette market to penetrate: "We're 75% of the e-cigarette market, which sounds like a lot, but we're only 4 to 5% of the U.S. cigarette market...So we're really just getting started here, and we've just scratched the surface outside of the US, where 95% of smokers live." In another sign that Juul is thriving, the company recently filed a complaint with the United States International Trade Commission (ITC), claiming that 18 organizations are infringing on its patents. These are mostly directed at Chinese companies that have been churning out counterfeit models of existing Juuls.

Part of the problem lies in the fact that the Juul was initially designed to help smokers quit cigarettes, feeding their oral fixation and their nicotine addiction without filling their lungs with harmful tar. Instead, it has become a flagship craze for millennials who are using it as a stepping stone for smoking, subverting its initial value proposition.

"Our intent was never to have youth use Juul," said Kevin Burns, chief executive of Juul Labs. "But intent is not enough. The numbers are what matter and the numbers tell us underage use of e-cigarettes is a problem."

Caroline Renzulli, a spokeswoman for the Campaign for Tobacco-Free Kids, seems to be skeptical about Juul's latest announcement, questioning the integrity of Juul shelving its products: "Juul's social media marketing fueled its popularity with kids...Now that it has captured 75% of the e-cigarette market, Juul no longer needs to do social media marketing because its young customers are doing it for them."