Juul Labs Chief Executive Kevin Burns stepped down Wednesday as government officials’ scrutiny of e-cigarettes grows and a mysterious vaping-related lung illness raises alarm throughout the nation.
Altria Group Inc.'s K.C. Crosthwaite joined Juul, succeeding Burns as CEO. Crosthwaite had served as chief growth officer of Altria, which makes Marlboro cigarettes and paid nearly $13 billion for a 35% stake in Juul in December.
Juul, the nation’s dominant e-cigarette company, has long presented its products as a way for adults to wean themselves off traditional tobacco products. But e-cigarettes have become popular among teenagers — leading to a crackdown by the U.S. government — and illnesses potentially linked to using the product are on the rise.
In response to the Trump administration’s proposed ban on flavored e-cigarettes to counter an “epidemic of nicotine addiction” among young people, Juul also announced Wednesday that it will pull all print, digital and TV advertising in the United States and would not fight legislation cracking down on e-cigarettes.
The Food and Drug Administration this month accused Juul of illegally calling its electronic cigarettes a safer alternative to smoking. Last year the agency seized documents from the company’s San Francisco headquarters, and it has been scrutinizing key aspects of the business such as its marketing, educational programs and nicotine formula. Juul has said it is cooperating with the FDA.
In recent months, hundreds of people have been hospitalized across the nation with serious lung conditions that are associated with vaping. It’s unknown what causes the illness. According to the Centers for Disease Control and Prevention, most of the patients had a history of vaping THC, the substance in marijuana that creates a high, but some vaped both nicotine and THC, and others vaped only nicotine. (Juul does not sell THC products.)
More than 530 people have been diagnosed with vaping-related lung illnesses in 38 states and one U.S. territory, federal health officials said last week. Eight deaths have been reported. In California, two people have died and 90 have been hospitalized with this illness, officials say.
Juul’s CEO announcement came the day after California health officials issued a warning saying that people should stop vaping immediately and the governor of Massachusetts declared a public health emergency, ordering a four-month ban on the sale of vaping products in the state. The Massachusetts ban is believed to be the first action of its kind in the country.
California Gov. Gavin Newsom has directed state regulators to “reduce youth vaping consumption” by finding ways to ban illegal and counterfeit vaping products. He also set aside $20 million for a vaping-awareness campaign and instructed state health officials to develop signs warning against the hazards of vaping to be placed at retailers and on advertising for e-cigarettes and accessories.
The management shake-up also comes after reports that the company was planning to cut jobs and restructure its workforce.
“I have long believed in a future where adult smokers overwhelmingly choose alternative products like Juul,” Crosthwaite, the new CEO, said in a statement. “Unfortunately, today that future is at risk due to unacceptable levels of youth usage and eroding public confidence in our industry.”
Crosthwaite added the company should “strive to work with regulators, policymakers and other stakeholders” to earn trust by “inviting an open dialogue, listening to others and being responsive to their concerns.”
The Associated Press was used in compiling this report.