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Tobacco

Juul CEO Resigns

Altria executive assumes role at e-cigarette maker as tobacco manufacturer ends talks with PMI
Photograph by CSP Staff

SAN FRANCISCO Amid mounting pressure from the federal government, state officials and health organizations, the head of e-cigarette maker Juul Labs has resigned, with his replacement coming from the ranks of tobacco manufacturer and Juul stakeholder Altria Group Inc., Altria officials announced.

Kevin Burns, CEO of San Francisco-based Juul, has been replaced by K.C. Crosthwaite, Altria’s senior vice president of strategy and growth. The move comes amid public scrutiny that includes tweets from President Donald Trump; U.S. Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) concerns over recent deaths and illnesses tied to vaping; and at least three states deciding to halt the sale of certain vaping devices.

“This decision by Juul recognizes that this is a critical time for the company,” said Howard Willard, chairman and CEO of Richmond, Va.-based Altria, in a statement. “I believe K.C.’s experience, discipline and dedication to making harm reduction an industrywide reality will help Juul achieve its mission, while also urgently confronting and reversing underage use of vapor products.”

In the same statement, Altria announced a separate decision to terminate previously announced talks with New York-based Philip Morris International (PMI) on a potential merger. The two tobacco companies were originally one, but they separated in 2008 for strategic purposes.

“While we believed the creation of a new merged company had the potential to create incremental revenue and cost synergies, we could not reach agreement,” Willard said. “We look forward to continuing our commercialization of [the heat-not-burn device] IQOS in the U.S. under our existing arrangement [with PMI].”

Earlier in the month, U.S. Health and Human Services Secretary Alex Azar, along with officials from the CDC and FDA, announced concerns and a coordinated investigation surrounding deaths and illnesses possibly tied to the use of vaping devices.

In the same time frame, governors from Michigan and New York used executive orders to pull flavored vaping devices from shelves. Within days, California’s governor attempted a similar move but failed to garner the necessary legislative support. Then on Sept. 24, Massachusetts Gov. Charlie Baker declared a public health emergency in response to the illnesses possibly tied to the use of e-cigarettes, calling for a temporary, four-month statewide ban on the sale of flavored and nonflavored vaping products in both retail stores and online.

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