With a $12.8 billion investment, Altria, the nation’s leading tobacco company, now owns 35% of Juul Labs, maker of the country’s most popular e-cigarette.
With the new investment, Juul is now valued at $38 billion, according to Altria’s announcement. The company will remain independent, though it will now have access to Altria’s “infrastructure and services,” as well as retail space alongside its combustible cigarettes, direct marketing to cigarette customers through pack inserts and mailings and access to Altria’s sales network.
The deal has raised eyebrows given Juul’s long-stated mission of giving adult smokers a healthier alternative to cigarettes. (E-cigarettes typically deliver nicotine but contain fewer cancer-causing chemicals than traditional cigarettes. It’s still unclear exactly how they affect health.) But both companies claim that, despite the investment’s seemingly contradictory nature, it will help, not hinder, efforts to switch smokers.
“We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US,” Juul CEO Kevin Burns said in a statement provided to TIME. “We were skeptical as well. 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.”
Altria reiterated that sentiment in its own statement. “We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes,” Altria CEO Howard Willard said in the statement “We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction. Through JUUL, we are making the biggest investment in our history toward that goal.”
But Dr. Harold Farber, a pediatric pulmonologist at Texas Children’s Hospital and a member of the American Thoracic Society, says he is “amazingly worried” about what the partnership will mean for already record-high teen vaping rates. Pairing a company with billions of dollars and decades of experience in marketing with a lucrative startup already beloved by teens could get even more kids hooked on nicotine, Farber says.
“I’ve got a product that’s addicting a new generation of young people to nicotine and now I’ve got a company with the promotion, both dollars and experience, to throw behind getting this even more out there and even more popular,” Farber says. “To ask these companies to voluntarily not market to young people is essentially asking the fox to go out of the hen house.”
Nonetheless, that’s exactly what both companies have pledged to do. Juul maintains that its products are only meant for adults, and should not be used by kids and teenagers. (E-cigarettes can only be legally purchased by those older than 18.) In November, in an effort to help curtail youth use, the company elected to stop selling many of its flavored pods in retail stores, just ahead of new Food and Drug Administration (FDA) regulations to that effect.
Altria’s announcement says the companies may mutually support policies to raise the minimum purchasing age of all tobacco products, including e-cigarettes, to 21. It also emphasizes that Altria, which owns brands including Marlboro, L&M and Parliament through its subsidiary Philip Morris, was the “first and only company in the industry” to support FDA regulation of tobacco products, even before they fell under the agency’s purview.
Research into e-cigarettes is ongoing. While they do contain fewer carcinogens than combustible cigarettes, preliminary evidence has linked their use to conditions including respiratory illness and heart attacks. Their use among young people is of particular concern, since studies show that they can raise teenagers’ chances of becoming addicted to nicotine and using other tobacco products. It’s also unclear if and how well they help current smokers quit.
Juul is by far the most popular e-cigarette on the market, with an estimated 16.2 million sold in 2017. By December 2017, according to the Centers for Disease Control and Prevention, one out of every three e-cigarettes sold in the U.S. was a Juul.
