Juul CEO steps down, company promises to follow Trump ban

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Juul. | Scott Olson/Getty Images

Juul announced Wednesday morning that its CEO would step down and that the company would not lobby the Trump administration on its looming ban of flavored vapor products.

The nation’s largest e-cigarette maker, amid increasing pressure from Washington and state officials over an “epidemic” of teen vaping, also said it will suspend all broadcast, print and digital product advertising in the U.S.

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The abrupt shake-up comes as the e-cigarette industry also faces a major threat from the outbreak of a mysterious vaping-linked lung disease that has sickened hundreds and killed nine so far. Officials are still investigating the cause of the outbreak, but it appears to be linked largely to black market vapes.

Juul CEO Kevin Burns will immediately be replaced by longtime Altria executive K.C. Crosthwaite. He joined the tobacco giant when it was still Philip Morris in the 1990s, and until recently headed its growth division.

The leadership move could bring additional scrutiny to the Altria’s purchase of a 35 percent stake in Juul last year. Former FDA Commissioner Scott Gottlieb, who made a crackdown on teen vaping a signature issue, at the time raised questions about the deal. A House Oversight Committee probing the deal said that Juul has ignored its request to turn over documents, and the panel’s chairman, Rep. Raja Krishnamoorthi (D-Calif.), has threatened a subpoena if the documents aren’t produced by next week.

Public health groups criticized Juul’s decision to install a tobacco executive as its new leader and said the company’s new prohibition on advertising was nothing more than a PR move.

“We are deeply concerned that under the leadership of someone who was most recently responsible for growing the market for Marlboro and other deadly tobacco products, Juul will continue to prey upon youth and mislead the public about the health risks of e-cigarette use,” said Nancy Brown, CEO of the American Heart Association.

Philip Morris International, which split from Altria in the early 2000s, also announced this morning that the two companies had ended recent talks to rejoin the companies. Instead, it will focus on its own smokeless tobacco product lines in the U.S.

Juul on Wedneday said it will refrain from lobbying the Trump administration as FDA moves to formally roll out the flavor ban the president announced this month. The company said it will fully support and comply with the policy, which is expected in the coming weeks.

Juul did not say whether it would continue battling efforts in states and cities to curb vape sales, and it did not immediately respond to a request for comment. The manufacturer has spent more than $4.5 million in San Francisco on a campaign to overturn the city’s first-in-nation e-cigarette ban through a November ballot initiative.

Several California cities have also banned all e-cigarettes sales, and Massachusetts Gov. Charlie Baker, a Republican, on Tuesday announced a temporary statewide ban of vaping products entirely. Juul had sharply criticized those efforts.

Other states are meanwhile enacting their own restrictions on flavored products. Democratic governors in Michigan and New York this month announced temporary bans, and Rhode Island on Wednesday said it will soon issue its own emergency measure. Some states, including California on Tuesday, have also urged people to avoid vaping while health officials research the vaping-linked illnesses.

It’s possible flavor products will return to the market after the Trump administration’s ban, but likely in a much more limited way. The administration said it will only clear products that manufacturers can prove are not a threat to public health.

Acting FDA Commissioner Ned Sharpless on Wednesday expressed regret that the agency did not act sooner to regulate e-cigarettes. Gottlieb, his predecessor, had initially moved back regulation of the products to 2022 before a court ordered the agency to move up the deadline.

“With retrospect, FDA should have acted sooner, should have regulated these devices sooner,” Sharpless told lawmakers at the House Energy and Commerce oversight subcommittee. “But we’re going to catch up.”

Gottlieb on Twitter defended his decision to delay the regulatory deadline. He said the agency wanted to keep e-cigarettes as a viable options for smokers trying to quit, and that under the previous policy, which was set by the Obama administration, e-cigarettes would have remained on the market through the end of this year.

Altria CEO Howard Willard, who spoke at a tobacco conference in Washington on Wednesday, said he has worked with Crosthwaite for years and believed Juul’s new CEO would help the company “confront and reduce” youth vaping.

“This is a pivotal moment for the industry, and strong leadership and action are urgently needed,” he said.