JUUL Slapped with FDA Warning Letter for Health Claims

JUUL Labs, an e-cigarette products company that is 35% owned by Altria (NYSE: MO) and an expected partner of Cronos Group (TSX: CRON)(NASDAQ: CRON), was slapped with an FDA warning letter this morning as a result of its advertising and marketing practices which contain unsubstantiated claims related to the health benefits of vaping using JUUL products over that of smoking traditional cigarettes.

Specifically, the claims were found as a result of a hearing at a House Subcommittee focused on “Examining JUUL’s Role in the Youth Nicotine Epidemic.” In particular, it found that numerous claims were told to youth by JUUL sales representatives during sales pitches and presentations including,

• A JUUL representative speaking with students at his presentation stated that JUUL “was much safer than cigarettes” and that “FDA would approve it any day.”
• The JUUL representative speaking with students at his presentation called JUUL “totally safe.”
• The JUUL representative speaking with students at his presentation stated that a student “…should mention JUUL to his [nicotine-addicted] friend…because that’s a safer alternative than smoking cigarettes, and it would be better for the kid to use.
• The JUUL representative speaking with students at his presentation stated, “FDA was about to come out and say it [JUUL] was 99% safer than cigarettes…and that…would happen very soon….”

In addition, the FDA cited that JUUL was in violation of a number of marketing related misrepresentations of its products.

“…your firm has engaged in labeling, advertising, and/or other activities directed to consumers, in which JUUL explicitly and/or implicitly has represented that JUUL products are free of a substance, have a reduced level of or exposure to a substance, and/or that JUUL products present a lower risk of tobacco-related disease or are less harmful than one or more other commercially marketed tobacco products.”

Certain of the presentations were found to have been conducted directly in schools, wherein JUUL stated that using its products were “99% safer than cigarettes.”

The FDA finalized its letter by stating that an exhaustive list was not necessary included in the letter, and that failure to make corrections could result in “FDA initiating further action, including, but not limited to, civil money penalties, seizure, and/or injunction.”

JUUL has fifteen days to make corrections to its marketing programs, as well as to provide a written response to the FDA on the actions it has taken to correct the problems.

The full letter issued by the FDA to JUUL Labs can be found here.

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Information for this briefing was found via the FDA. The author has no securities or affiliations related to any organization discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.