The Food & Drug Administration (FDA) decided to ban the popular vape product Juul and issued a marketing denial orders (MDOs) to JUUL Labs Inc. for all of its products currently marketed in the United States. That’s a long-winded way of saying the products are now banned. The company must stop selling and distributing these products. The ban doesn’t mean that people who continue to use Juuls or have them in their possession will get into trouble, the product just can’t be sold.
In addition, those currently on the U.S. market must be removed, or risk enforcement action. The products include the JUUL device and four types of JUULpods: Virginia tobacco flavored pods at nicotine concentrations of 5.0% and 3.0% and menthol-flavored pods at nicotine concentrations of 5.0% and 3.0%.
“Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic nicotine delivery system products currently being marketed to consumers meet our public health standards,” said FDA Commissioner Robert M. Califf, M.D. “The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize these make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”
What trigged the FDA response was the company’s lack of data regarding the toxicological profile of the products. “In particular, some of the company’s study findings raised concerns due to insufficient and conflicting data – including regarding genotoxicity and potentially harmful chemicals leaching from the company’s proprietary e-liquid pods – that have not been adequately addressed and precluded the FDA from completing a full toxicological risk assessment of the products named in the company’s applications.”
Cannabis Industry Worries
Vaping products in the cannabis industry are hugely popular, so the ban has attracted a great deal of attention among producers. Seattle-based data-analytics firm Headset recently reported that vapes were the second-largest category by revenue behind flower in the U.S. cannabis market during 2020 and 2021. The category logged nearly $2.6 billion in retail sales across six adult-use markets last year. Vape pens are also growing with sales rising 28% in 2021. Despite the sustainability issues, disposable vapes are proving to be very popular as well growing by 64%. Likely because disposable vape products tend to be cheaper.
Arun Kurichety, chief operating officer and general counsel of Petalfast said, “ While the FDA’s decision to prohibit Juul from marketing its products in the US does not directly impact the cannabis industry, it suggests we may continue to expect scrutiny on all vaping products — nicotine and cannabis alike. For licensed businesses in the highly regulated cannabis industry, this shouldn’t be huge news. Rather than prohibition, this further highlights the need for consumer education regarding the risks of obtaining vape products in the illicit markets where product testing for safety is non-existent.”
E-cigarettes were originally hailed as an effective way for nicotine-addicted consumers to inhale with fewer terrible side effects. Tobacco companies all created versions for their tobacco-smoking customers with limited success. Yet, when Juul began marketing cotton candy flavored nicotine vapes, teens and young adults swarmed the products. Instead of helping already addicted adults, it created a whole new generation of Juul-addicted consumers. Parents complained and the FDA jumped in to address the situation. At first, it was just a clamp down on the flavors, but now it is banning the entire product line.
Cannabis vapes also proved to be a nice option for consumers who didn’t want to smoke regular flower. Cannabis vapes were discreet, easy to carry, and didn’t create the distinct smell that burned flower did. They could be expensive, but cannabis consumers were willing to spend money for the convenience of being able to pop a vape in their pocket and ramble on.
Arnaud Dumas de Rauly, CEO and co-founder of the Blinc Group said, “If the FDA took the time to look at the science surrounding vaping instead of having knee jerk reactions to statistics over youth consumption, they would see that vaping has been beneficial to countless individuals looking to quit smoking. For years, the European markets have embraced vape as such a necessary tool for the cessation of smoking that they offer health insurance breaks to those who vape.”
He went on to add, “If you look down the road to what this decision could mean for the cannabis vape industry, the federal illegality of cannabis will keep the space safe for now since the FDA is unwilling to regulate the industry while it remains a schedule one drug. However, this doesn’t mean that will be the case forever. I would hope when that time comes that the FDA will recognize that vape is considered one of the safest consumption methods, particularly for medical patients who are looking for the purest stream of cannabinoids and terpenes, and the absence of combustion means less hazardous substances and it’s easier on the lungs.”
A Post Juul World
One company that the trouble has already impacted in the Juul market is Greenlane (NASDAQ: GNLN). At one point in 2019, Greenlane was selling almost $50 million worth of Juul products. With the first ban on flavored products, sales fell over 30% to $33 million in 2020. Just this week, Greenlane noted that it was selling off assets in order to generate cash. The company has been weaning itself off its Juul dependence, but $50 million is a big number to make up elsewhere.
Juul has said it will appeal the ban and try to keep its products on the shelves while it fights the ban. Cannabis vapes may luck out purely due to the fact that the FDA can’t decide what to do about the federally illegal product. Since the FDA can’t seem to make a decision on CBD products, tackling cannabis vape pens seems unlikely. Cannabis consumers haven’t been complaining about the product as evidenced by the growing sales. Like Dumas noted, the FDA was mostly reacting to angry parents of Juul-addicted teens. In the cannabis industry, not many people are complaining and that seems to have kept the product off the radar for now.