Juul Labs announced on September 25 that CEO Kevin Burns will step down, according to the Wall Street Journal. The same day, Altria Group, which owns a 35 percent stake in Juul, ended talks with Philip Morris International about a potential merger between the two tobacco giants.
Juul cited its need to address proposed e-cigarette regulations as the reason for its leadership change. However, Juul has said that it will not lobby against the Trump administration’s ban on non-tobacco flavored e-cigarettes.
The blockbuster merger would have created a global corporation worth almost $200 billion. Phillip Morris became increasingly wary of a deal as the threat of increased government regulation grew, the Wall Street Journal reports.
Increased regulation stems from recent revelations about the negative health impacts of e-cigarettes. On September 19, the Center for Disease Control and Prevention cited 530 cases of lung injuries and eight confirmed deaths in the U.S. due to e-cigarettes. A day later, the Food and Drug Administration proposed new rules that force e-cigarette manufacturers to maintain records of their legal marketing status, Reuters reports.
Juul has gradually dominated the e-cigarette market, gaining notoriety for its popularity among teenagers. According to the Wall Street Journal, youth use of e-cigarettes increased by 78 percent from 2017 to 2018. This spike in young people vaping has caused many to question whether the advertising practices of Juul and other e-cigarette companies target youth.
Juul has denied allegations that it’s social-media marketing targets teenagers, but it has not done so without controversy. According to the Wall Street Journal, Juul formerly paid influencers to advertise its products, a policy which ended after huge backlash. On September 23, federal prosecutors in California commenced a criminal probe into Juul to investigate the corporation’s advertising practices.