Juul spends big on its S.F. ballot measure
Juul is outspending all other San Francisco ballot initiative backers combined to try to pass a measure that would preserve its right to keep selling ecigarettes in the city.
Juul’s ballot measure is an attempt to do an end run around city officials who passed legislation in June suspending the sale of ecigarettes until they are reviewed by the Food and Drug Administration. Ecigarette companies face a May deadline to apply for the FDA review, but the industry sued the federal government to try to delay the evaluation.
Many public health experts and politicians have blamed Juul, the largest ecigarette maker in the U.S., for the youth vaping epidemic. But Juul says its products are meant for adults trying to switch from traditional cigarettes to less harmful ecigarettes.
The San Francisco vaping company spent $4.3 million since May to promote the measure it
wrote, Proposition C, which would overturn the city’s ecigarette ban and instead restrict the sale of the products. By comparison, backers of three other measures have spent a combined $103,000. Backers of the other two measures on the Nov. 5 ballot have spent nothing so far. That means Juul accounts for nearly 98% of money spent on the campaigns.
Juul has made the financial contributions through the Coalition for Reasonable Vaping Regulation, a committee created to back the measure. Most of the money, about $3 million, has gone to the political strategy firm Whitehurst Mosher, according to city records.
A breakdown of the spending categories shows that about $2 million has gone to television ads, $473,000 to campaign consultants, $333,000 to polling and research and $166,000 to signaturegathering.
Juul’s aggressive spending is perhaps not surprising, since the company’s ballot measure is the only one sponsored by a corporation. The others — which include an affordable housing measure and a tax on Uber and Lyft to ease traffic congestion — are backed by city officials.
“It’s an extraordinary amount of money,” said political consultant Jim Ross. “They’ll probably end up spending another $9 (million) to $11 million on top of what they’ve spent already. So it could end up being the most expensive campaign in San Francisco history.”
The most spent on a San Francisco ballot measure in recent years is $11.7 million, which tobacco company R.J. Reynolds shelled out last year to oppose San Francisco’s ban on flavored tobacco products. But voters approved the ban anyway.
Nate Allbee, a spokesman for the Coalition for Reasonable Vaping Regulation, said he does not know how much more the coalition will spend before the election.
“We’ll spend what we need to get our messaging out there,” he said.
The coalition, which is entirely financed by Juul, is dramatically outspending its opponent, a coalition of public health groups and concerned parents called SF Kids vs. Big Tobacco, which has raised $137,500.
Allbee said this is in part because the opposing campaign is newer — it was formed in July, whereas the Juulbacked coalition was created in May —and that he expects the other side to spend “quite a bit against us.”
Matt Dorsey, a spokesman for SF Kids vs. Big Tobacco, said Juul is taking a page out of the Big Tobacco playbook. A tobacco giant now holds a 35% stake in Juul after Altria, the parent company of Philip Morris, invested $12.8 billion in it last year.
“We have no illusions that we’ll be outspent, but we’re going to do everything we can to fight this,” Dorsey said. “In the end, we have faith that San Francisco voters won’t be fooled . ... This is a tobacco company, this is a company that brought us the vaping addiction that now says, ‘Trust us to fix the teen vaping addiction epidemic.’ ”
Juul’s ballot measure would require online retailers that sell ecigarettes to San Franciscans to apply for a permit; require brickandmortar stores to use new ageverification technology to ensure customers are at least 21, the legal age to buy tobacco in California; and cap the number of ecigarettes a customer can buy to two devices and five packs (20 pods total) of nicotine cartridges in one transaction in stores, and two devices and 60 milliliters (86 pods) per month online.
“We are strongly supporting these efforts because enacting the strongest regulations in the country will work to combat underage use and an illconceived and unpopular ban will simply fuel a black market for vapor products and the increased use of deadly cigarettes,” Juul spokesman Ted Kwong said in a written statement. “We can aggressively tackle the largest causes of youth access — lax or ineffective ID verification and legalage customers reselling products to underage peers — which recognizing the nearly 100,000 adult smokers in San Francisco deserve access to alternatives” to conventional cigarettes.
Juul has maintained that its ballot measure would not overturn San Francisco’s ban on flavored tobacco and therefore not allow fruit and dessertflavored nicotine pods to be sold in the city again. The company’s chief administrative officer submitted an affidavit this month saying the flavor ban would remain in place if Juul’s ballot measure passes.
But critics say the measure was written in a way that does overturn the flavor ban. A committee in the Department of Elections that summarizes language for the voter guide found that the measure may overturn the flavor ban.
It is common for companies and industry groups to spend millions opposing local measures they believe will hurt their business. San Francisco has been home to many of these fights:
In 2008, PG&E spent $10 million to beat back Proposition H, which would have helped lay the groundwork for San Francisco to run its own public power system; voters rejected the measure.
In 2014, the beverage industry spent $8 million to oppose Proposition E, a tax on sugary drinks; it was voted down.
In 2015, Airbnb spent $8.5 million to defeat Proposition F, which would have drastically limited shortterm vacation rentals; voters killed it.
It is less typical for a company or industry to back a measure, as Juul is doing. The tobacco industry, though, has attempted a similar tactic in California: In 1994, Philip Morris sponsored Proposition 188, a statewide initiative that would have trumped local laws banning smoking in most indoor public spaces. Voters rejected it, despite tobacco companies raising nearly $19 million to promote the initiative, according to a 1997 paper published in the American Journal of Public Health. Public health groups opposing the initiative raised about $1.2 million.
Jon Golinger, a campaign strategist and adjunct professor of election law at Golden Gate University School of Law, said he expects the spending disparity to reach at least 10to1, in favor of Juul.
“That should raise a red flag in the mind of voters of what’s really going on here,” said Golinger, who helped draft Proposition F, which would require greater disclosure on political spending. “If someone is going to spend that much, it usually means there’s an agenda. In this case, it’s not hidden . ... This is a bigmoney attempt to subvert what they don’t like, and get the voters to do it for them.”