The FDA threatened to pull e-cigarettes from store shelves. That could be bad news for the cannabis industry.
On Friday, FDA Commissioner Scott Gottlieb threatened to pull e-cigarettes and vaping products from store shelves unless he sees a decrease in youth smoking rates, the implication of which could have far-reaching consequences for the cannabis industry.
At a public hearing in Silver Spring, Md., the Commissioner boldly stated that the entire category of popular vape products could be affected, arguing that companies need to stop marketing to teenagers and adolescents.
“I fear that the survey data that we’ll get for next year will show continued increases in youth use of e-cigarettes,” Gottlieb said in a speech. “We’ll be in the field between March and May with the 2019 National Youth Tobacco Survey. I’ll tell you this. If the youth use continues to rise, and we see significant increases in use in 2019, on top of the dramatic rise in 2018, the entire category will face an existential threat.”
According to Gottlieb, although data showed that use of e-cigarettes among young people had been on the decline, that trend began to reverse in late 2017.
“But, in late 2017 and early 2018, anecdotes from policymakers, from parents, and from the press suggested an alarming rise in youth use of e-cigarettes generally and, in particular, the product made by JUUL Labs,” he said.
According to the numbers, there was a 78 percent increase in usage among high school students between 2017 and 2018, and a 48 percent increase among middle school students over the same period.
Though it has yet to do so, the FDA can force e-cigarette makers to go through a formal approval process.
Stopping the cannabis industry in its tracks
Late last year tobacco giant Altria Group Inc. (NYSE:MO) announced the closing of a $12.8 billion investment in JUUL, as well as $1.8 billion investment in cannabis comoany Cronos Group (TSX:CRON). It was widely implied that Altria would now have a head start among all other companies when it came to cannabis vape products.
“Altria has decades of experience in regulatory, government affairs, compliance, product development, and brand management that we expect to leverage, particularly as new markets for cannabis open around the world,” Cronos Group CEO Mike Gorenstein told the Cannabis Bussiness Times at the time of the deal.
In fact, as the price of flower continues to fall, with cannabis itself being seen more as a commodity as the plant becomes legal across the globe, companies are looking for products with higher margins to justify their large market caps.
— JUUL (@JUULvapor) December 18, 2018
With Friday’s announcement, Cronos’ plans, and those of the industry at-large could be out in jeopardy.
Worse still, for the cannabis industry, the FDA’s position appears to be more than just a scare tactic. As recent research shows, adolescents who smoke e-cigarettes are more likely to smoke marijuana, and although cannabis has been proven to be relatively safe for adults, its effects on youth are still under review.
"Some of the access is not as limited as maybe we need it to be," said Janet Audrain-McGovern in an interview with the Philadelphia Inquirer, co-author of one such study and a psychology professor at the University of Pennsylvania. "That may give adolescents the notion that it's acceptable."
JUUL attempts to comply with the FDA
For its part, JUUL continues to condemn the use of e-cigarettes by minors. In a statement to The Hill the popular vaping company said they are doing everything they can to keep e-cigarettes out of the hands of youth.
“Underage use of JUUL and any other vaping products is completely unacceptable to us and is directly opposed to our mission of eliminating cigarettes by offering existing adult smokers a true alternative to combustible cigarettes," said Ted Kwong, a Juul Labs spokesman, according to The Hill.
Still, the FDA maintains its position that if vaping rates don’t decline throughout 2019, they will need to take drastic measures.