Packs of Juul e-cigarettes go on sale at the Brazil Outlet store on June 22, 2022 in Los Angeles, California.
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Juul Labs said on Thursday it had secured funding from early investors, as it planned to lay off nearly a third of its staff in a bid to avoid bankruptcy.
“Today, Juul Labs has identified a path forward, made possible by a capital investment from some of our early investors,” a Juul spokesperson told CNBC. “This investment will allow Juul Labs to maintain commercial operations, continue to advance its administrative remedy against the FDA’s marketing denial order, and support product innovation and science generation.”
The company has not released any details or terms of the investment.
Juul said that for it to move forward and continue operations, a “reorganization” of its global workforce will be required. The company plans to lay off around 400 people and cut its operating budget by 30-40%.
Juul has faced financial difficulties in recent years. In 2015, he introduced his popular e-cigarette, promoting it as a safer alternative to traditional cigarettes. Since then, the company has struggled with a variety of legal challenges. Juul has settled several major cases brought by state authorities, largely related to its marketing practices, which many lawsuits allege were misleading and failed to warn of the risks of its products.
The deal came ahead of a new report from the U.S. Food and Drug Administration and the U.S. Centers for Disease Control and Prevention that found e-cigarettes — for the ninth straight year — to be the most common tobacco product used by students. middle and high schools by 2022. Globally, nearly 3.1 million students have used tobacco products this year, according to the agencies. More than 2.5 million electronic cigarettes used.
The report indicates that many factors contribute to the use of tobacco products among young people, including flavors, marketing and misperceptions of harm.
The FDA ordered Juul to stop selling its vaping products this year, then temporarily suspended its order in July. Headwinds hurt the company’s bottom line, and analysts predicted it could file for Chapter 11 bankruptcy protection as a solution.