Juul Secures Financing Deal in the Midst of Massive Layoffs

Juul brand vape cartridges are pictured for sale at a shop in Atlanta, Georgia, on Sept. 26, 2019.

Juul Labs revealed that it has secured financing from early investors, amid plans to lay off almost a third of its staff in a bid to avoid bankruptcy. Nevertheless, the company has yet to release any details regarding the investment.

“Today, Juul Labs has identified a path forward, enabled by an investment of capital from some of our earliest investors,” a Juul spokesperson told CNBC. “This investment will allow Juul Labs to maintain business operations, continue advancing its administrative appeal of the FDA’s marketing denial order, and support product innovation and science generation.”

According to the company, in order to continue operations a “reorganization” of its global staff will be necessary. Ultimately, it plans to lay off approximately 400 employees and reduce its operating budget anywhere from 30% to 40%.

Five years ago, Juul rose to the top of the U.S. market vaping market amid its popular flavors like mango, mint, and brulee. However, the success was backed by underage use among teenagers, which in some circumstances became addicted to Juul’s high-nicotine pods. Due to government backlash, the company has discontinued all U.S. advertising and dropped most of its flavors.

However, the biggest setback occurred in June when the Food and Drug Administration rejected Juul’s application for its products to remain on the market as smoking alternatives for adults. The FDA disclosed that Juul had not properly addressed important questions regarding the possibility of chemicals leeching from its device, which turns flavored nicotine solution into an aerosol.