All the cool kids are doing it. And that’s bad news for the nation’s top e-cigarette maker.
Facing lawsuits from parents of teenage vaping-product users and threats of crackdowns from regulators over kid-friendly packaging and flavors, Juul Labs has gone on a hiring spree on K Street, ramping up its lobbying spending fourfold in recent months.
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The San Francisco company that’s become synonymous with vaping — “juuling” is now a verb — has hired political hands in Washington and started a political action committee that has donated to members of Congress and state attorney-general candidates.
Twenty years after four big tobacco companies reached a massive settlement with 46 states over smoking-related health problems and marketing issues — which was followed by a series of tighter restrictions and led to the rapid decline of the industry in the United States — Juul is frantically trying to avoid a similar fate.
“You’ve got the impression that they’re scrambling. I would be,” said Liz Mair, a spokesperson for Vapers United, a coalition of e-cigarette users and vape shops.
Juul says it’s building out its staff “to drive awareness of our mission to improve the lives of the world’s one billion smokers and to combat underage use.”
“The numbers tell us underage use of e-cigarette products is a problem that requires immediate action,” company spokesperson Victoria Davis told POLITICO in a written statement.
E-cigarette pioneers including Blu and Vuse sold products that looked like cigarettes, but Juul broke through with battery-powered sticks that look like flash drives. Teenage use exploded, and the company now has more than 70 percent of the market.
Juul touts its vaporizers, which contain nicotine but are considered safer than cigarettes, as a tool to help smokers quit. But early ad campaigns didn’t mention cessation, instead showing youthful models dancing with its vaporizers, lit by colorful backgrounds that made the images pop in social media feeds. That’s bought scrutiny from regulators in Washington and attorneys general in at least two states.
“Juul’s behavior is so often inconsistent with its public statements and rhetoric that it has no one else to blame for the regulatory steps that have been taken,” said Matthew Myers, president of the Campaign for Tobacco-Free Kids.
The biggest blow to the vaping industry came this fall, when FDA Commissioner Scott Gottlieb and HHS Secretary Alex Azar declared teen vaping an epidemic and signaled a impending crackdown. Juul laid out a plan to voluntarily pull most flavored products from retail stores last month and end social media promotion, but it wasn’t enough to put off FDA action. Days later, the agency ordered e-cig makers to pull all flavors except mint and menthol from convenience stores, gas stations and online sales.
Vape-makers and retailers are hustling to launch teen prevention plans before regulators tighten the screws on the industry.
Juul opened its Washington office in February, soon after the arrival of CEO Kevin Burns.
Burns himself upped his campaign-giving, contributing nearly $300,000 to GOP coffers before the November midterms, a fivefold increase from his activity during the previous cycle. And Juul’s employee PAC, which launched in March, has spent $97,400 so far this year.
In addition to spending by its PAC, Juul gave $25,000 to the Republican Governors Association and $50,000 each to the Republican and Democratic associations of attorneys general. More than 40 percent of the company’s federal PAC spending was directed to the campaigns of more than a dozen attorneys general, including Alan Wilson in South Carolina, Mike Hunter in Virginia and Hector Balderas in New Mexico.
The company’s marketing practices have faced scrutiny from state regulators. In April, Juul pledged $30 million for research and public education and endorsed state legislative efforts to raise the purchase age to 21. That announcement grew out of a surprising alliance with a potential antagonist, Iowa Attorney General Tom Miller, a consumer crusader who helped negotiate the historic $200 billion settlement between states and tobacco companies in 1998.
Meanwhile, Juul has been staffing up with longtime Washington insiders. In June, the company hired Jerry Masoudi, chief counsel to the FDA under former President George W. Bush. A month later, Jim Esquea, an assistant secretary to HHS under former President Barack Obama, registered as the company’s in-house lobbyist.
Former White House deputy communications director Josh Raffel joined the firm in October, just days after the FDA conducted a surprise inspection of the company’s San Francisco office and confiscated more than a thousand documents related to the company’s marketing practices.
In recent months, Juul has retained InSight Public Affairs, Covington & Burling, Empire Consulting Group, Kountoupes Denham Carr & Reid and the S-3 Group to lobby. It spent $560,000 on lobbying in the third quarter, more than four times what it spent in all of 2017. The company also recently took out full-page ads in The Wall Street Journal and The Washington Post.
After 11 senators sent a letter to Juul questioning its marketing approach and kid-friendly e-cigarette flavors like fruity medley, creme brulee and mango, Juul paid a visit to Capitol Hill. The company said it never intended its products to appeal to kids and didn’t realize they were using the products, according to a staffer for Sen. Dick Durbin (D-Ill.).
“They like to bill themselves as ‘not Big Tobacco,’ but everything they’ve done to date — resist FDA regulation, target children, spread misleading information — suggests the exact opposite,” said the staffer.
The senator didn’t buy it. Durbin and Sen. Lisa Murkowski (R-Alaska) last month called for a ban on kid-friendly flavors, and Durbin recently met with Gottlieb to discuss more extensive regulations.
Scientists say it’s too soon to know whether e-cigarettes are a net positive or negative for public health. The nicotine aerosol from vaporizers is less toxic than cigarette smoke and can be a tool to help smokers quit. But that relationship could go both ways: Teenagers who get hooked on vaping might have a higher risk of taking up smoking.
And there’s no doubt teenagers are vaping in greater numbers. From 2017 to 2018, the number of high-school-age children using e-cigarettes rose more than 75 percent, according to the National Youth Tobacco Survey. Use among middle-schoolers increased nearly 50 percent. In October, the Rand Corporation said teenagers who vape are more likely to take up smoking.
Defenders of e-cigarettes have criticized some of that research. On Tuesday, the libertarian Competitive Enterprise Institute published a report accusing health care charities including the Campaign for Tobacco-Free Kids and the American Cancer Society of conspiring with government agencies to scare the public off of e-cigarettes.
Other e-cigarette makers have also hired lobbyists. Scottsdale, Ariz.-based NJOY has hired A. Bradford Card of Card & Associates, according to a disclosure filing.
But Mike Hogan, a lobbyist for the Smoke-Free Alternatives Trade Association, which represents vapor manufacturers and retailers, said Juul’s recent flurry of activity might be drawing too much attention, feeding the narrative that flavored vapors are a problem. Hogan wants lawmakers to hold a hearing to examine whether a vape crackdown would push people back to smoking cigarettes.
“They’re definitely going their own way,” Hogan said of Juul. “We think that the superficial understanding on the Hill of the current dynamic will cause people to introduce legislation.”
Industry groups said they’re still uncertain if the FDA, after its latest regulatory moves, will pursue further regulations. For instance, Gottlieb last month said the FDA could further crack down on mint- and menthol-flavored e-cigarettes, which were exempted from the new restrictions, if teens started flocking to those flavors.
“We’re getting left with a hell of a lot of regulatory uncertainty,” Vapers United’s Mair said. “That’s not a good thing in small business.”
Theodoric Meyer contributed to this report.