An advertising sign for Juul brand vaping products is seen outside a store in New York on February 6, 2019.
Mike Segar | Reuters
The Food and Drug Administration will have to look into more time before deciding whether Juul can continue to sell its electronic cigarettes in the United States, the Wall Street Journal reported Thursday.
A court order has created a timetable for the agency to review vaping products, after years of pressure from politicians and public health groups to regulate the segment more closely than other tobacco products.
The FDA did not immediately respond to a request for comment from CNBC.
The agency has until Thursday to review about 6.5 million product applications from about 500 companies and decide whether producers have demonstrated that their products are in the interest of public health. If an application has not been approved or denied by that term, the products must be withdrawn from the U.S. market until the FDA makes its decision.
Because of these rules, the FDA has said it will quickly follow decisions for market leaders like Juul, even if it does not expect to make decisions on all the millions of product applications before the deadline. So far, however, the FDA has only issued decisions on smaller players.
At the end of August, it had rejected 55,000 applications from smaller players such as JD Nova Group and Great American Vapes for their flavored vape products. Flavored e-cigarettes have been the focus of anger in many public health groups because of concerns for minor use. According to vaping trade groups, the agency released more rejections Wednesday.
“A lot of very brave people who respect deeply and who have helped thousands of smokers quit, have been told by our government that their products were illegal,” tweeted Amanda Wheeler, president of the American Steam Producers Association. .
The FDA gained the power to regulate new tobacco products in 2009. Over the past decade, thousands of e-cigarettes have appeared on store shelves without any approval from the agency, which has allowed the sale of these products since it introduced standards for the growing industry.
Juul has been the market leader in e-cigarettes since 2018, according to Euromonitor International. As of 2020, the company holds 54.7% of the U.S. e-steam market from $ 9.38 billion. Juul has sought FDA approval for its vaping device and tobacco and menthol-flavored pods, which are available at 5% and 3% nicotine strengths.
If the FDA rejects Juul’s application, it would deal a severe blow to the company. Its international expansion efforts have been hampered by regulators and a lack of consumer interest, and the United States remains its largest market. He will likely also make Juul’s defense in U.S. courts, as he faces lawsuits from 13 states and Washington over allegations that he marketed his products to minors and played a major role in the vaping epidemic. It has already settled with North Carolina for $ 40 million.
In 2019, Juul pulled most of its flavored nicotine pods off the shelves, interrupting fruits, creams, mangoes and cucumbers. Shortly afterwards, the FDA banned the sale of most nicotine-flavored e-cigarettes with fruit and mint flavors. For his part, Juul says his target customers are adult smokers, who use their electronic cigarettes to stop smoking traditional tobacco cigarettes.
Marlboro owner Altria bought a 35% stake in the company for $ 12.8 billion at the end of 2018. However, Altria has diminished the value of the investment since Juul and the industry more wide range of e-cigarettes have engaged in controversy. In September 2020, Altria estimated its stake at $ 1.6 billion, an eighth of its initial investment, and Juul itself at less than $ 5 billion.
Shares of Altria fell less than 1% in morning trading, while shares of British American Tobacco, which faces rival Juul Vuse, fell 1.7%. The FDA has not yet released a ruling on Vuse.
Representatives for Juul and Reynolds American, a subsidiary of British American Tobacco, did not immediately respond to a request for comment from CNBC.
Read more about the FDA decision here.