E-cigarette giant pushes into Canada amid U.S. concerns over underage sales

California-based Juul says insists it’s merely ‘disrupting an archaic industry’

Juul Labs Inc. has decided the time is right to make a move into Canada, doing so as the electronic cigarette company’s popularity and concerns about its appeal to teenagers has it facing scrutiny in the United States.

San Francisco-based Juul is expected to announce its launch in Canada on Thursday, with the startup saying it aims to provide the five million or so smokers here with a healthier alternative to their usual cigarette: the Juul.

“It’s effectively our backyard,” noted James Monsees, who cofounded Juul along with fellow Stanford University alum Adam Bowen, and now serves as the company’s chief product officer.

The company’s decision follows passage of legislation in Canada earlier this year that was intended to regulate the vaping industry.

According to the federal government, the law provides a new legal framework in order to protect young people, yet allow adults to vape as an alternative to smoking.

Monsees says that the law also effectively opened the door for Juul’s entry into Canada.

The company claims more than one million smokers have already switched over to Juul’s “closedpod vaping system with temperature regulation designed to provide consistent nicotine delivery.” The slender device is recharged using a USB port — in addition to bearing a resemblance to a thumb drive — and its pods are said to contain around the same levels of nicotine as a pack of cigarettes.

According to the company, the Juul device will start being made available in September via convenience stores, vape shops and an e-commerce site.

Flavours such as mint and “Virginia Tobacco” will be offered as part of the available starter packs, which include the device and USB docking station, the company says.

The migration north comes at a crucial juncture for Juul. The company has already become the leader in the U.S. when it comes to e-cigarettes — recent data suggests its market share stands at more than 70 per cent — but it has also found itself facing controversy of late.

Massachusetts Attorney General Maura Healey announced in July an investigation into Juul and online retailers of its products “over concerns about the marketing and sale of electronic smoking devices and products to minors.”

In April, the U.S. Food and Drug Administration said it had conducted an “undercover nationwide blitz to crack down on the sale of e-cigarettes — specifically Juul products — to minors at both brick-and-mortar and online retailers.”

Juul, however, maintains that its product is intended for adult smokers. In response to Healey, the company’s chief communications officer said in a statement that “we too, are committed to preventing underage use of Juul.”

“Like many Silicon Valley technology startups, our growth is not the result of marketing but rather a superior product disrupting an archaic industry,” the statement said, adding that Juul had pledged US$30 million over three years for research, education and community engagement.

In the name of preventing its product from reaching youth, Juul also noted that its e-commerce shop uses age verification technology and that it deploys secret shoppers to evaluate retailers.

Juul’s foray into Canada is not its first foreign expansion — it recently launched in the United Kingdom and has a presence in Israel (although it has run into opposition there).

The popularity of the product has caught the eye of investors. After being introduced in 2015, and then spun out of another vaping company in 2017, Bloomberg reported in June that Juul was conducting a Us$1.2-billion round of financing that would value it at US$15 billion.

The size of that war chest could jolt Big Tobacco. A note earlier this month from Morgan Stanley, after a meeting with representatives of Juul, said the confab “reinforced our view that the tobacco industry is facing a growing threat from a well-capitalized and ambitious competitor.”