Tobacco giant Altria, parent company to Marlboro manufacturer Philip Morris USA, announced a $12.8 billion investment in Juul Labs and acquiring a 35 percent stake in the e-cigarette maker.
The culmination of a yearlong negotiation, the investment in Juul will see Juul pods sold alongside Marlboro and give Altria control over one-third of Juul's board of directors. The deal also provides for $2 billion in bonuses to Juul employees, which will hand out an average of $1.3 million to each of Juul's approximately 1,500 employees.
Juul still describes eliminating cigarettes as its mission on its website. In a statement, Juul Labs CEO Kevin Burns described the deal as "seemingly counterintuitive," before arguing that the massive, all-cash deal will actually help in the company's mission.
"We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US. We were skeptical as well," Burns writes. "But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers. We understand the doubt. We doubted as well."
The statement argues that Altria's distribution network and retail reach will help expand Juul's reach, thereby decreasing the rate of combustible cigarette sales by encouraging smokers to migrate to e-cigarettes, citing industry-funded research finding e-cigarettes cause smokers to switch, resulting in declining cigarette use.
Since teenagers are 16 times more likely to smoke Juul, the statement also describes how Juul plans to prevent underage e-cigarette vaping, including social media accounts and halting the sales of flavored products after an FDA crackdown earlier this year. "As we have said before, our intent was never to have youth use Juul products," Burns writes. "But intent is not enough, the numbers are what matters, and the numbers tell us underage use of e-cigarette products is a problem."
Juul offered no comment to Newsweek beyond the statement. Newsweek has also reached out to Altria Group for comment.
The National Academies of Science, Engineering and Medicine have concluded there is "substantial evidence" that youth adoption of e-cigarettes increases the risk of smoking traditional cigarettes. While research into the health effects of e-cigarettes is still in its infancy, the American Lung Association argues that the chemicals in e-cigarettes can cause "irreversible lung damage and lung disease," while the Food and Drug Administration have not found e-cigarettes to be "safe and effective" in helping smokers quit.
In 2017, a federal court ordered cigarette companies, including Altria, to pay for ads admitting the dangers of smoking, including the statement "Smoking kills 1,200 people a day."
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