JUUL Labs is preparing to lay off about a third of its employees, the latest move in the company’s efforts to cope with increased regulatory scrutiny, a public backlash over the teen vaping crisis, mounting legal troubles, and shrinking sales.
While still the leading vape company in the U.S., JUUL has seen its control of the U.S. vaping market fall from a high of 75-80% a year ago to 60% now, according to Bloomberg.
The company currently employs about 3,000 people after previously eliminating about 650 jobs late last year. About 800 to 950 workers will lose their jobs in the latest round of planned layoffs, according to the Wall Street Journal.
“As part of our ongoing reset, we are constantly evaluating our operations and the best way to position our company for the long term,” JUUL said in a statement. The company said it had “nothing to announce at this time.”
Big Tobacco company Altria has also taken a hit on its massive December 2018 investment in JUUL, when it acquired a 35% stake in the company for $12.8 billion. Since then, Altria has twice written down the investment and now values its stake at $4.2 billion.
Earlier this month, the Federal Trade Commission sued Altria to unwind its investment in JUUL, saying its massive investment was intended to eliminate competition in violation of federal antitrust laws.
JUUL’s troubles began in earnest after federal authorities uncovered evidence linking its runaway success to its youth-oriented marketing campaign and product design. Although the company’s officials have repeatedly denied they intentionally marketed vapes to kids, the company made its nicotine smoother and more palatable for young consumers and designed vapes that resembled flash drives so they could be hidden in plain sight. The company also hawked its products on social media platforms where kids spent most of their online time, paying influential personalities to tout JUUL vapes.
Those efforts paid off big, at least initially. turning the company from a start-up to a $38 billion vaping empire in just a couple of years. Once it became clear that jUUL was mostly responsible for the epidemic of youth vaping and nicotine addiction, U.S. regulators, state and local governments passed measures to restrict kids’ access to vaping.
The federal government also barred JUUL and other vape manufacturers from producing sweet-flavored vapes that appealed mostly to children and teens. For JUUL, this meant getting rid of its popular mango, crème, fruit, cucumber, and mint-flavored pods.
The San Francisco Chronicle notes that JUUL’s latest round of lay-offs is not related to the coronavirus pandemic, although officials have warned that vaping increases the risk of catching the virus and makes it more difficult to fight off. Layoffs that are not related to the pandemic mean that workers wouldn’t be eligible for federal unemployment benefits under the CARES Act.
Beasley Allen lawyers Joseph VanZandt and Sydney Everett, together with Mass Torts Section Head Andy Birchfield, are currently representing several individuals who are suing the top U.S. vape maker JUUL for the negative impact its products have had on their lives. They also have filed lawsuits on behalf of school districts nationwide, which seek to protect students and recover resources spent fighting the vaping epidemic.