Embattled e-cigarette maker Juul Labs is reportedly considering bankruptcy Friday as it petitioned a federal appeals court to temporarily halt the Food and Drug Administration’s ban on the sale of its products.
Juul is working with legal advisers to assess whether it should file for bankruptcy if the courts do not grant its request for relief on the FDA ban, the Wall Street Journal reported, citing sources familiar with the matter. Such a filing would mark a stunning fall for a company that once drew a $38 billion valuation before a series of regulatory crackdowns.
Juul officials asked a federal appeals court in Washington, DC, to issue a emergency stay on the FDA’s order until it can request a review of the decision. The company argued it would suffer irreparable harm if a stay is not granted and noted that similar e-cigarette products are still on the market.
“FDA’s decision is arbitrary and capricious and lacks substantial evidence,” Juul said in the filing, according to the Journal.
The Post has reached out to Juul and the FDA for comment.
Juul was mulling bankruptcy just one day after the feds rejected its bid to continue selling certain e-cigarettes and pods. The FDA’s decision followed a years-long push among lawmakers and other public figures for a crackdown on the harmful effects of a youth vaping trend.
Juul’s filing argued that the FDA issued the ban after “immense political pressure from Congress once it became politically convenient to blame [Juul] for youth vaping, even though several of its competitors now have a larger market share and much higher underage-use rates.”
The FDA said its ban applied to the Juul device and “all of their products currently marketed” in the US, including pods with 5% and 3% nicotine concentrations.
The FDA argued Juul had an opportunity to provide evidence supporting its application to continue selling products but fell short of requirements.
“As with all manufacturers, Juul had the opportunity to provide evidence demonstrating that the marketing of their products meets these standards,” said Michele Mital, acting director of the FDA’s Center for Tobacco Products.
“However, the company did not provide that evidence and instead left us with significant questions. Without the data needed to determine relevant health risks, the FDA is issuing these marketing denial orders,” Mital added.
Immediately after the ban, Juul’s chief regulatory officer, Joe Murillo, said the company disagreed with the decision and planned to appeal.
“We intend to seek a stay and are exploring all of our options under the FDA’s regulations and the law, including appealing the decision and engaging with our regulator. We remain committed to doing all in our power to continue serving the millions of American adult smokers who have successfully used our products to transition away from combustible cigarettes, which remain available on market shelves nationwide,” Murillo said.
Juul currently accounts for roughly 50% of the e-cigarette market. Some consumers reportedly rushed to stock up on products still on the market after the ban was announced.
Juul faced a regulatory crackdown following allegations that its products were targeted toward underage users — a claim the company denied.
In a bid to address the federal scrutiny, Juul had already pulled its flavored e-cigarettes from the market. But Juul has faced many lawsuits over the allegations that it marketed its products toward teenagers.
While e-cigarettes and other vaping products were billed as a healthier alternative to traditional tobacco products, hundreds of people have died or been hospitalized nationwide for lung ailments associated with the trend.