In just over a year, JUUL has blown through the $12.8 billion it got when tobacco giant Altria purchased a 35% stake of the company, and now JUUL is grappling to cover its marketing and distribution costs, The Motley Fool reported.
In the months after Altria’s deal with JUUL went through in December 2018, JUUL was hit with a variety of problems. First, JUUL started getting hit with lawsuits from states over its marketing to teens, as well as from parents whose children became addicted to the nicotine in JUUL vapes.
In July 2019, JUUL co-founder James Monsees testified before Congress about the company’s marketing practices targeting youth, which allegedly included a representative from the company telling high school students that the USB stick-sized vape device filled with nicotine was “totally safe.”
By September, a vape-associated lung injury was sweeping the country. More than 2,700 fell ill and 60 people died. The Centers for Disease Control and Prevention (CDC) narrowed its focus on vape liquids containing vitamin E acetate as the likely culprit but said “evidence is not sufficient to rule out the contribution of other chemicals of concern” in vape products.
The problems took a toll on JUUL’s profits. In November, Altria took a $4.5 billion writedown on its JUUL investment. Last month, the company took another $4.1 billion writedown. As of now, JUUL is valued at $12 billion – less than Altria paid for its share of the company 14 months ago.
Altria also announced it would no longer support JUUL’s marketing and distribution efforts, and will instead focus on making sure JUUL’s vape products follow new federal protocol and file for Food and Drug Administration (FDA) review to keep the products on the market. To cover its marketing and distribution costs, JUUL raised nearly $1.5 billion in convertible debt. Meanwhile, JUUL’s profits are taking a hit, with sales dropping by a quarter in January alone.
Beasley Allen lawyers Andy Birchfield, Joseph VanZandt and Sydney Everett are handling cases involving injuries related to vaping. We are looking at cases involving adolescent addiction and injuries including seizures, strokes, lung problems, and cardiovascular problems related to the use of JUUL vaping devices.