Juul, Facing Regulatory Crackdown, To Lay Off 500

Juul Labs Inc. will reportedly about 500 employees by January in anticipation of damaging regulatory developments.

The layoffs could reduce the e-cigarette maker's workforce by 10% to 15%, The Wall Street Journal reported Monday. 

The move is a sharp reversal of a rapid expansion strategy. Before a September hiring freeze, Juul had accrued about 300 new-hires per month this year to bring its payroll to 4,000, the Journal said. The growth was critical to maintaining its standing in the $9-billion e-cigarette market.

What Happened

On top of the layoffs, Juul plans to reduce marketing spending and invest in methods to decrease underage use.

The reorganization is part of a “necessary reset” to improve Juul’s relationship with regulators, said K.C. Crosthwaite, an Altria Group Inc MO veteran who was named Juul CEO in September.

The company has been blamed for the teen vaping epidemic and faces multiple federal investigations.

Tobacco company Altria took a 35% stake in Juul in 2018. 

Why It’s Important

Recently, Juul has found itself playing defense, amending its strategy to suit regulatory interests.

Two weeks ago, it suspended the U.S. sale of most of its flavored products pending FDA review.

The cuts betray the extent of global regulatory damage.

Following the lead of individual states, the Food and Drug Administration said in September it would ban mint, menthol and fruity e-cigarettes — products representing about 80% of Juul’s sales — from store and online markets. China and India also halted sales.

Efforts to curb teens and vaping-related lung diseases could create additional challenges.

What’s Next

Juul’s objective is “earning a license to operate in the U.S. and around the world.” It has until May to submit any products it wants to sell in the U.S. for FDA review.

Altria shares were down 0.4% at $45.80 at the time of publication Tuesday.

Related Links:

FDA Warns Juul On Marketing To Youth

Tobacco Stocks Rebound As Trump Says 'We Have To Do Something On Vaping'

Photo courtesy of Juul.