With the country under lockdown due to the novel coronavirus pandemic, many companies are struggling to make ends meet. Because of that struggle, stores are shutting down, and employees are being laid off.

E-cigarette company Juul Labs has now become the most recent example of this, but it may not be for the same reason, according to reporting by Buzzfeed News.

Regulations and Lawsuits Against Juul Labs

Juul Labs is facing a number of investigations by federal officials for the role it has played in the teenage vaping crisis. The company denies intentionally contributing to teen vaping, claiming that their mission is instead to help adult smokers quit. Many government officials doubt this claim.

“Juul knew it was selling to kids,” CNet reports Massachusetts Attorney General Maura Healey said at a news conference. “They plastered the internet.”

Healey is currently bringing a lawsuit against Juul Labs for its advertising which the suit alleges targeted kids.

The suit argues that Juul Labs tried to target children by using social media influencers to push their products such as Juul pods. The suit also claims Juul Labs bought ads on websites aimed directly at children such as teen magazines, Nickelodeon, Cartoon Network, and other sites aimed allegedly at children as young as preschool. In 2018, the cofounder of Juul Labs James Monsees told the New York Times that selling Juul products to children was “antithetical to the company’s mission.”

According to Healey, roughly a third of all high school students in Mass. use e-cigarettes like those sold by Juul Labs.

Juul Labs Reduces International Presence

According to the anonymous Juul Labs employee, the e-cigarette maker has plans to stop selling its products in Belgium, Portugal, Austria, France, and Spain. Juul Labs will be leaving France at the end of the year but will pull out of the other countries in July. Employees in those countries will face hundreds of layoffs.

After Juul Labs pulls out of these five countries, its European presence will be restricted to Germany, Italy, Ireland, Czechia, Poland, Switzerland, Ukraine, as well as the United Kingdom (UK) and Russia. Russia and the UK are two of Juul Labs’ biggest markets globally, according to Buzzfeed.

France and Spain have seen relatively high sales, but not high enough. The cost of staff and the trouble of meeting local regulations makes staying in these countries unprofitable for the company. The other countries are considered too small to be worth continuing investment.

This reduction in international sales represents a trend Juul Labs has been following for some time. The company has postponed expansions in New Zealand and has stopped sales in Indonesia, as well, and has previously expressed interest in drawing out of South Korea.

The European Union (EU) has strict regulations regarding the sale of e-cigarettes. While the U.S. places no limits on the nicotine content of e-cigarettes, the EU limits nicotine to 20 milligrams per milliliter of fluid. U.S. Juul pods can contain nearly three times that much.

As a possible result, “No EU country has experienced the rise in popularity of e-cigarettes among youth that has been observed in the US,” Filippos Filippidis, a public health expert at Imperial College London, told Buzzfeed.

950 Jobs to be Cut from Juul Labs Workforce

The Wall Street Journal (WSJ) reports that Juul Labs is planning to cut nearly a third of its workforce. According to the WSJ, these layoffs are a result of regulatory crackdowns and falling market shares, not the coronavirus. The cut is expected to affect between 800 and 950 employees. The layoffs are part of a broader restructuring meant to make up for falling profits and rising regulations.

Juul Labs has had financial problems since at least last year when they had to cut 650 jobs after being forced to stop the sale of fruity flavors. It was these fruity flavors which regulators believe drew teenagers and children to use vaping products as well as marketing allegedly directed towards them specifically by manufacturers.

Currently, Juul Labs has 3,000 employees, but they plan to reduce that number by between 25 and 40 percent. Juul says a more specific number will be reached in the coming weeks.

“As part of our ongoing reset, we are constantly evaluating our operations and the best way to position our company for the long term,” a Juul spokesman told the WSJ. “We remain focused on earning the trust of our stakeholders to advance the potential for harm reduction for adult smokers while combating underage use.”

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This article is not legal advice. It is presented
for informational purposes only.