September 26, 2019

Juul's CEO is stepping down, to be replaced by a former tobacco executive

Daily Briefing

    Juul Labs on Wednesday announced that it will suspend all advertising in the United States and that its CEO, Kevin Burns, will be resigning.

    Both changes are effective immediately.

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    Background

    The announcements come amid growing scrutiny into Juul's marketing practices, particularly how they relate to teens.

    The Federal Trade Commission (FTC) earlier this month announced it had launched an investigation into whether Juul used influencers and other marketing tactics to target minors.

    FDA also recently announced it had warned Juul for illegally marketing its nicotine pads as a less harmful alternative to traditional cigarettes and for doing so in a presentation to youth at a U.S. school.

    FDA requested that Juul provide a written response to the warning letter within 15 business days describing how the company plans to correct its actions, as well as its plan for maintaining compliance with federal law. The agency said failure to comply with federal law could result further enforcement actions, "including, but not limited to, civil money penalties, seizure, and/or injunction."

    In addition, FDA also sent a separate letter to Juul noting concerns about "about several issues raised in a recent congressional hearing regarding Juul's outreach and marketing practices, including those targeted at students, tribes, health insurers, and employers," which also could convey that using Juul products is safer than using traditional cigarettes.

    Juul suspends all US advertising, CEO steps down

    On Wednesday, Juul announced that it will suspend all broadcast, print, and digital product advertising in the United States. Juul also said it would end one of the company's marketing campaigns, "Make the Switch," which FDA said was an illegal effort to portray Juul's e-cigarettes as safer than traditional cigarettes.

    In addition, Juul announced that its CEO, Kevin Burns, will resign and will be replaced by K.C. Crosthwaite, former chief growth officer for Altria, the tobacco company that owns a 35% stake in Juul.

    According to a release from Juul, Crosthwaite will continue "a broad review of the company's practices and policies to ensure alignment with its aim of responsible leadership within the industry."

    "Working at Juul Labs has been an honor and I still believe the company's mission of eliminating combustible cigarettes is vitally important," Burns said in a release. "I am very proud of my team's efforts to lead the industry toward much needed category-wide action to tackle underage usage of these products, which are intended for adult smokers only"(LaVito, CNBC, 9/25; Kaplan et al., New York Times, 9/25; Novak, Gizmodo, 9/25; Juul release, 9/24).

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