Juul will not have to file for Chapter 11 bankruptcy because early investors gave the company money at the last minute. Juul has been in hot waters since the Food and Drug Administration banned its e-cigarettes in the US in June.
While the decision has stayed pending, sales decreased considerably, causing the company to declare bankruptcy. According to the Journal, two early investors have stepped up with a lifeline.
Juul will lay off 400 employees and reduce operating costs by 30% to 40% as part of the bailout.
Read: Tech Layoffs 2022 + Updates in Mortgage, Finance and more
FDA ban Juul e-cigarettes
The second-largest e-cigarette manufacturer in the United States, claims the FDA’s decision was flawed and influenced by federal lawmakers who publicly urged the FDA to prohibit Juul.
People who know about the situation say that Juul has been getting ready to file for chapter 11 bankruptcy in the past few weeks while looking for an alternative, like a sale, investment, or loan, that could stop the filing. eared up with “a simple phone call.”
According to the FDA, each e-cigarette application is reviewed fairly and uses the same public-health criteria.
FDA Decisions
“All FDA decisions and actions are based on science and evidence,” a representative for the agency said.
The FDA has customised, its position on vaping; in fact, FDA officials claim it is far less dangerous than cigarette smoking. The FDA has approved certain e-cigarettes and is currently reviewing others.
“I’m frustrated,” said Juul’s CEO, K.C. Crosthwaite, who informed employees at an all-hands meeting earlier this month. “I’m upset that outside forces keep putting up barriers between our creativity and the people who deserve it.”
Why was Juul Banned?
When the Food and Drug Administration removed Juul Labs Inc.’s e-cigarettes from the market in the United States in June, legislators and parents who had fought for a crackdown on underage smoking celebrated.
However, the FDA did not specify a risk to children as the reason for the restriction.
The prohibition was put on hold while Juul filed an appeal. The company’s revenues have since slowed.
Juul Ban Updates
When Juul’s inventors launched the sleek vaporizer in the United States in 2015, they entered an uncontrolled e-cigarette market.
There were no limits on the amount of nicotine or flavours that could be found in its devices. It used marketing methods that huge cigarette firms couldn’t, such as social media and billboard advertisements.
Juul’s sales skyrocketed in 2017. It had become an adolescent status symbol by the following year. A government poll from 2018 found that about 20% of high school students had tried e-cigarettes.
Concerned about the rise in teenage vaping, the FDA and other federal agencies began looking into the fast-growing company.
The rise
Juul’s sales skyrocketed in 2017, and by the next year, it had become a teen status symbol.
Cigarette sales were declining as a result of Juul. Altria Group Inc., the maker of Marlboro cigarettes in the United States, purchased a 35% stake in Juul in a deal valued at $38 billion.
All but a few hundred million dollars of Altria’s $12.8 billion investment in Juul went to the company’s employees and stockholders as bonuses and dividends.
According to people familiar with the case, the company decided not to hold more of the cash since sales were robust, it already had cash on hand, and it could raise more money in the future if it needed financing.
Where it all started?
Parents, school administrators, and groups that don’t want people to smoke have asked lawmakers and authorities to crack down on the e-cigarette industry.
Scott Gottlieb, the FDA commissioner from 2017 to 2019, stated that the government preferred e-cigarettes to remain on the market since they were less dangerous than cigarettes.
“Juul changed everything,” he said, referring to the rise in vaping among young people that it caused. “We could no longer accept these items on the market in the absence of more severe control.”
2019 Update
The Trump administration announced a ban on sweet and fruity e-cigarette flavours that appealed to minors. Later that year, Congress passed a law that required you to be at least 21 to buy tobacco products, including e-cigarettes.
Juul tried to get back on good terms with the government by hiring a new CEO in 2019, stopping most of its advertising in the U.S., and stopping the sale of its fruity flavours before the federal ban. The business also attempted to make agreements with states that had filed litigation against it.
Juul’s detractors were unmoved.
“No one should be deceived into believing that Juul has changed,” said Matt Myers, president of the Campaign for Tobacco-Free Kids, in 2019.
Other public-health specialists asked the FDA not to take a too harsh stance against the vaping sector. They say that adults who smoke cigarettes and want less harmful alternatives should still be able to use e-cigarettes.
They point out that smoking cigarettes kills 480,000 people in the United States every year.
The FDA asserted regulatory power over e-cigarettes in 2016, but gave manufacturers several years to submit their products for assessment in order to keep them on the market.
Concerned about youth vaping, public-health organisations filed a lawsuit to force the FDA to change the deadline. The court set a September 2020 deadline.
Evidence
Juul showed scientific proof that its e-cigarettes contained fewer carcinogens than cigarettes and that helping adult smokers switch to a safer option was more important than getting young people hooked on nicotine.
The study followed about 17,000 cigarette smokers for a year after they bought Juul for the first time. After a year, almost 58% had shifted from smoking to Juul.
After reviewing millions of petitions, the FDA approved tobacco-flavored e-cigarettes made by Reynolds American Inc., NJOY Holdings Inc., and Japan Tobacco Inc.
Hope for Juul
Juul said that it hoped at least some of its products would also be approved. People who knew about the situation said that after it was allowed to stay on the US market, it wanted to get money to settle lawsuits and grow in other countries.
Sources say that FDA approval may have helped Juul’s case in a few of the court cases that are still going on.
The FDA’s prohibition on Juul, as well as the agency’s explanation, came as a surprise.
Some people in the industry and public health groups thought that the EPA would say that Juul posed an unacceptable risk to young people. However, youth Juul use has decreased. Students in middle and high school who vape now favour disposable brands like Puff Bar.
FDA’s Stance
Matthew Holman, who was then the head of the FDA’s Centre for Tobacco Products, wrote to Juul on June 23: “It is the applicant’s responsibility to show, with appropriate evidence, that allowing the marketing of a new tobacco product would have a net benefit to public health.”
He said that the agency couldn’t decide because Juul hadn’t given enough information.The letter of denial listed four problems, or flaws, in Juul’s application that hadn’t been fixed.
All of these problems were related to toxicology tests that Juul had done to find out if its hardware, nicotine liquids, or aerosols would expose users to compounds that could be bad for their health.
The letter said that there might be problems with other parts of Juul’s application, but that the answers to the four questions listed were enough to turn down the application.
The FDA had previously written to Juul with these and other issues, and Juul had responded with replies. Mr. Holman said that Juul’s written answer to the FDA’s questions about toxicology was not good enough.
About Juul
Are Juuls still banned?
June 23, 2022 — According to the FDA, Juul Labs has been ordered to stop selling e-cigarettes and vaping products in the United States.
Will vaping be prohibited in 2022?
No state has outright prohibited the sale of e-cigarettes. Many states, however, have banned flavoured vaping goods. These regulations restrict the sale of vapes to only traditional tobacco flavours. Menthol, mint, and wintergreen flavours are also legal in some states.
Is vaping more harmful than smoking?
Although vaping is less dangerous than smoking, it is still not risk-free. E-cigarettes use heat to create an aerosol of nicotine (extracted from tobacco), flavourings, and other chemicals that you inhale. Tobacco cigarettes contain approximately 7,000 chemicals, many of which are toxic.
Is it possible to purchase vapes over the internet?
In the United States, it is legal under federal law to buy tobacco products like nicotine vapes and nicotine e-juice. In reality, it is largely unregulated. Nicotine vapes, like disposable vapes, e-juice, pre-filled cartridges, accessories, and other products, are easy for adults over 21 to find and buy online.
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