This year, e-cigarette manufacturers, caught in a regulatory storm, invested millions during the first two quarters to sway government decisions, as reported by the Center for Responsive Politics. Once celebrated as the safer option and the next step in smoking, these devices are now under examination by multiple federal agencies in the U.S. because of the significant nicotine consumption they enable and their growing appeal to teenagers.
The Wall Street Journal has recently disclosed that federal prosecutors are investigating e-cigarette producer Juul Labs Inc. Shortly thereafter, the company revealed that CEO Kevin Burns will be succeeded by K.C. Crosthwaite, an executive from Altria Group Inc. (MO). The statement further noted that it would cease all advertising across broadcast, print, and digital platforms in the U.S. Additionally, it will avoid lobbying the Trump administration regarding its proposed guidelines to prohibit flavored e-cigarettes in the market. The company committed to thoroughly support and adhere to the final policy when effective.
“We must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate. That includes inviting an open dialogue, listening to others and being responsive to their concerns,” stated Crosthwaite. This shows a significant shift in strategy for a company that spent nearly $2 million in the first half of this year to exert influence policy.
Leaders in Lobbying
This year, Altria, the maker of Marlboro, and Juul—dominating about 70% of the e-cigarette market—invested more in lobbying than the entire tobacco industry combined, according to official data shows. Altria has always been the largest spender in the industry; however, since Juul separated from Pax Labs in 2017, its impact in Washington has significantly increased.
In the first half of 2019, Juul invested $1.95 million, up from $1.64 million in 2018 and $120,000 in 2017. The company concentrated its efforts on the U.S. House of Representatives, the U.S. Senate, the Executive Office of the President, the White House, the Office of Management and Budget, and the Food and Drug Administration. This year, the organization employed 21 lobbyists, with 17 of them having prior government experience, as reported by the Center for Responsive Politics. Additionally, Martha Coakley, the former Attorney General of Massachusetts, joined the government affairs team in April.
Businesses often raise their lobbying spending when the federal government is focused on specific issues that impact them.
According to Nielsen data reported by CNBC, NJOY Electronic Cigarettes holds an 11.6% market share in the U.S. dollar market. In the first two quarters of this year, the company spent $215,000, compared to a total expenditure of $55,000 last year, 2018. The Vapor Technology Association, self-identified as a champion for manufacturers, wholesalers, suppliers, vape shop owners, and small business proprietors within the vapor technology sector, has witnessed its lobbying budget soar from $30,000 in 2015 to $240,000 in both 2017 and 2018, and reaching $197,500 to date in 2019.
Among this year’s top five spenders, three manufacture their own e-cigarettes, while Altria holds a 35% stake in Juul. Philip Morris International Inc. (PM) is dedicated to creating a smoke-free future and plans to introduce its IQOS smoking device in the U.S. in partnership with Altria. British American Tobacco (BTI) advocates for its subsidiary, Reynolds American, which sells the Vuse e-cigarette.
