The crackdown on youth usage on e-cigarettes may help parents sleep soundly at night, but it’s terrible news for the top e-cigarette manufacturer Juul.
The company recently spent about $560,000 lobbying against the restrictions and regulations towards e-cigarette usage. Juul spent $210,000 in its third quarter. This means Juul’s expenses on lobbying are up by 167 percent this quarter.
Juul initially made a mistake in reporting their expenditure of $1.2 million in the third quarter but requested to amend the figures a while later.
The increase in Juul’s lobbying expenditures is mainly due to the heightened restrictions in the e-cigarette industry, which, if unsettled, could put the company’s business at risk.
A disclosure report released last month showed that Juul hired some prominent federal regulators and officials to help lobby the Senate, the White House, as well as the Office of Management and Budget.
One of Juul’s top lobbyists was Jim Esquea who served as an assistant secretary during the Obama administration in the Department of Health and Human Services.
The issue on e-cigarettes started early September when the Food and Drug Administration (FDA) Commissioner Scott Gottlieb dubbed e-cigarettes as an epidemic. A statement followed this that the FDA would discontinue sales on e-cigarettes if the leading manufacturers of this product cannot prove that they are restricting youth’s access to e-cigarettes.
According to federal data, over the previous year, the use of e-cigarettes has increased by 77 percent and the use of traditional cigarettes has also increased. Although correlation does not mean causation, and one cannot assume the increase in both cigarette product sales are related in any way.
The FDA together with Commissioner Gottlieb is considering solutions like restricting the selling of liquid flavored nicotine since this accounts for the majority of Juul’s sales and revenue. Juul is by far the most popular e-cigarette brand among teens.
The FDA has also released a statement in September that it will not tolerate young people getting addicted to e-cigarettes as a trade-off for adults’ cure for traditional smoking addiction. The agency has even conducted a surprise inspection of Juul’s headquarters where they confiscated several documents.
While this seems like a sound solution for the FDA, this could lead to many revenue losses for Juul. Nielsen’s Well Fargo Securities Analysis show Juul’s close to $1.5 billion retail sales throughout the 52-week period, which ended last October 6. The company represents 77 percent of the e-cigarette industry. So, a change in the current business setup will incur lots of losses for Juul’s end.
Juul utilizes Nicotine salts to create e-cigarettes, which means it has a higher concentration of Nicotine compared to other brands. A Truth Initiative survey showed that 10 percent of people falling under the age between 15 and 24 had used Juul products at least once in their lives.
Despite the popularity of Juul with the youth, the company defends itself saying, the primary purpose of their e-cigarettes is to help people evade the traditional smoking habit. On top of that, Juul declared that they are against e-cigarettes usage amongst teens.
Victoria Davis, the spokeswoman of Juul Labs, released a statement saying their focus is on connecting with lawmakers, the FDA, public health officials, regulators, and advocates. They plan to spread the word about the risks of traditional smoking while improving the lives of smokers through the alternative use of e-cigarettes.
Most importantly, their aim is to prevent children and teens from adopting a smoking habit whether it is traditional or electronic. However, Tobacco-Free Kids Campaign Vice President of Communications Vince Willmore said Juul’s lobbying expenditures show how the company is behaving more like other tobacco companies.