Juul e-cig booming despite health backlash, lawsuits, investigations

Pax
Labs

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For a slim device that looks like a USB stick, the Juul e-cig
packs a powerful punch. Each refillable insert contains twice the
nicotine as a pack of cigarettes.

American vapers have embraced the device: The Juul now represents
nearly 71% of the entire e-cig market. Last month, sales of the
devices surged 738%.

But despite the
ballooning popularity of its vapes, Juul Labs — a Silicon
Valley startup recently
valued at $15 billion — is facing a growing backlash.

Several state and federal investigations and a handful of
consumer lawsuits highlight concerns about the Juul’s health
effects and its worrisome popularity among teens. The
Massachusetts Attorney General is investigating whether Juul
violated state consumer-protection laws by failing to keep minors
from buying its products, and the Food and Drug Administration
recently
cracked down
on sales of the Juul to minors.

On top of those concerns, the city of San Francisco recently

banned flavored tobacco products like the Juul, a move
public-health researchers and leading philanthropists like
Michael Bloomberg have said they hope other cities follow.

A startup that’s booming

JUUL
Labs

Behind the unassuming, aging brick facade of a shipping warehouse
in San Francisco’s Dogpatch neighborhood, Juul Labs is growing
exponentially. Its five floors are packed with employees. Staff
crowd the halls, spill onto balconies for meetings, and squat on
the building’s sweaty top floor.

Juul’s US staff has tripled in the last six months, and more
growth is coming. Juul has plans to open offices in 19 more
locations across the country, including big cities like Boston
and Chicago and smaller ones like Des Moines, Iowa and
Manchester, New Hampshire. The company is expanding
internationally, too. After
launching in London earlier this month, Juul has plans to
expand to three more countries.

The company has the money to do it. After
scoring a $15 billion valuation that puts Juul in the ranks
of startups like Pinterest, Lyft, and Snap Inc., Juul Labs

raised $650,000 within just two days.

But as Juul has grown, government groups, nonprofits, and
public-health experts have started
sounding alarms, calling out the Juul for being addictive and
uniquely appealing to teens.

Teen ‘Juuling’ could be the ‘genie you can’t put back in the
bottle’

Shutterstock

The first signs of trouble came from high school bathrooms. In
small groups,
students began gathering to “Juul” (the verb the product has
spawned) under clouds of creme-brulee-scented vapor. Some carried
the devices into class, where they’d sneak pulls from Juuls
hidden inside the bodies of emptied Sharpie pens.

Worried teachers brought their concerns to principals, who called
on public-health researchers to visit campuses and discuss the
risks of nicotine.

Then some of those teachers looked at YouTube, and found the
platform was full of videos made by teens showing themselves
sneaking Juuls into class and vaping
on the sly — sometimes even in front of teachers.

Using hashtags like #JuulGang and #VapeNation, teens boasted on
social media about the number of devices they could use at once.
Some appeared to be linked to viral hashtags that Juul Labs had
used in a 2015 advertising campaign when its device launched.

Juul maintains that it does not want teens to use its devices and
claims its products are designed solely for adult smokers looking
to transition to less harmful devices. The company has also said
that sales of its devices did not take off until at least two
years after the 2015 campaign was launched.

“Juul is a company that was started by smokers with an objective
to switch smokers to non-combustible products,” Ashley Gould,
Juul’s chief administrative officer, told Business Insider in
March.

A Juul Labs spokesperson also told Business Insider that the
company has been working with social media platforms to remove
Juul-related content that involves young people, and has deleted
more than 4,000 vape-related posts from Instagram and Facebook
collectively.

But experts say these moves have come too late.

“This is really the genie you can’t put back in the bottle,”
Matthew
Myers, the president of the nonprofit Campaign for
Tobacco-Free Kids,
told Business Insider.

Snowballing evidence of vaping’s health risks

Eduardo
Munoz/Reuters

Alarmed by the prevalence of e-cigs, researchers have
increasingly started studying the
health impacts of vaping. So far, evidence suggests that
although inhaling vapor is healthier than breathing in burned
tobacco, e-cigs come with their own health concerns.

Chief among those issues is e-cigs’ high concentration of
nicotine. This may be part of the reason why teens who vape are

seven times more likely to smoke regular cigarettes than
young people who never use e-cigs.

Ana Rule, a professor of environmental health and engineering
at Johns Hopkins University, said the makers of these devices
fail to address “the increased risk to this huge market they are
creating among teenagers and young adults that never have smoked,
and would have never even considered smoking” had they not vaped.

Researchers are also not convinced that e-cigs actually help
adult smokers quit. So far, the evidence suggests they don’t. In
January, a
study in the journal The Lancet found that e-cigs were linked
with “significantly less quitting” among smokers. Several months
later, a
study in the Annals of Internal Medicine found that e-cig
users were less likely than non-vapers to abstain from tobacco
use over six months. And a study
published in the journal PLOS One this month found no
evidence that vaping helped adult smokers quit.

“E-cigarettes are widely promoted as a smoking cessation aid but
for some, they actually make it harder to quit, so most people
end up doing both,” Stanton
Glantz, a professor of medicine and the director of the
Center for Tobacco Control Research and Education at UCSF, told
Business Insider.

Nicholas Chadi, a clinical pediatrics fellow at Boston
Children’s Hospital, spoke about the Juul at the American Society
of Addiction Medicine’s annual conference in April.

“After only a few months of using nicotine, [these teens] describe cravings, sometimes intense ones. Sometimes they also
lose their hopes of being able to quit,” Chadi said.

For these reasons, several nonprofit anti-tobacco agencies have
come out in recent months in strong opposition to the Juul,
including the
nonprofit Campaign for Tobacco-Free Kids and the California
Department of Public Health.

Mounting legal and ethical challenges

California Department of Public
Health

These scientific findings are being used in a snowballing number
of legal and regulatory challenges against Juul.

In April, the FDA launched an investigation into Juul’s marketing
practices to see if the company targeted teens.

In a letter to the company, the agency wrote: “Widespread reports
of youth use of Juul products are of great public health concern
and no child or teenager should ever use any tobacco product.
Juul products may have features that make them more appealing to
kids and easier to use, thus causing increased initiation and/or
use among youth.”

Since April, Juul consumers have also filed several lawsuits
against the company —
most of them on behalf of teens — for what they allege are
deceptive marketing practices that didn’t clearly outline how
addictive nicotine is.

Then in June, voters in San Francisco approved a ban on
flavored tobacco products that includes Juul cartridges,
called Juul Pods.

“Most scientists believe flavorings are used to target teenagers
into becoming users,” Rule told Business Insider. “There are of
course many other factors such as marketing and peer-pressure,
but when you look at the flavoring names, one has to wonder.”

San Francisco has led the nation with similar types of
initiatives in the past, such as its 2007 ban on plastic bags,
which went statewide in 2014 and has since been copied in

13 other US cities.

Finally, just this week, Massachusetts Attorney General Maura
Healey
launched a probe to find out whether Juul had marketed its
products directly to young people in a way that could violate
consumer protections in the state.

“Just when teen cigarette use has hit a record low, Juuling and
vaping have become an epidemic in our schools with products that
seem targeted to get young people hooked on nicotine,” Healey
said in a statement. “I am investigating Juul … to keep these
highly addictive products out of the hands of children.”

Juul’s rapid fundraising suggests that many investors aren’t
deterred by these challenges, but others have said they’re leery
for ethical reasons.

“Selling drug addiction with unknown causes isn’t something I
want to be associated with,” Villi Iltchev, a partner with San
Francisco-based investment firm August Capital, told Business
Insider.

Villi said he used to smoke, but quit five years ago.

“Would I have switched from smoking to the Juul? Hell yes,” he
said. “But in terms of kids, they’re starting from scratch. Being
addicted as a teen, your probability of quitting is so low. It’s
part of you.”

If you’re a Juul or Pax employee with a story to share, email
this reporter at [email protected].