Facing increasing scrutiny from international and domestic regulators, the Altria Group has decided to write down its investment into the e-cigarette company JUUL by $4.5 billion.
That’s roughly one-third of the $12.8 billion that the tobacco giant had invested into JUUL a little less than one year ago.
What a difference a year has made.
JUUL, which has become synonymous with the vaping phenomenon that has swept the U.S., was once hailed as being at the forefront of a wave of companies that were making smoking obsolete and nicotine consumption safer for consumers.
The company began running into problems as its popularity increased exponentially (in part by allegedly turning to some of the same tactics big tobacco used to target underage consumers).
As the complaints began to roll in, and as JUUL was held responsible for an explosion in the use of tobacco products among underage Americans, the regulatory scrutiny also began to increase.
First the company was compelled to limit its sale of flavored tobacco products. Now it may be forced to pull all of its flavored products outright.
None of the company’s troubles have been helped by the wave of vaping related illnesses that have swept through the U.S. causing several deaths in users across multiple states.
Indeed, a new lawsuit against the company (filed two days ago) alleges that JUUL knowingly sold contaminated pods despite warnings from at least one employee.
First reported by BuzzFeed, the lawsuit was brought by Siddharth Breja, a former senior vice president of global finance at Juul from May 2018 to March 2019.
Breja alleges he was fired for complaining about the charge — a claim that a spokesperson for JUUL called “baseless”.
“[Breja] was terminated in March 2019 because he failed to demonstrate the leadership qualities needed in his role,”a spokesperson for JUUL wrote in an email. “The allegations concerning safety issues with Juul products are equally meritless, and we already investigated the underlying manufacturing issue and determined the product met all applicable specifications.”
The write down by Altria follows an announcement from JUUL that it intends to lay off around 500 people — or roughly 10% of its workforce.