Juul Stops Funding Measure to Overturn San Francisco's Anti-Vaping Law

A campaign to defeat an industry-backed e-cigarette measure on San Francisco's ballot will push on despite an announcement by Juul Labs Inc. that it will stop financially supporting the proposal.

The San Francisco company, the nation's largest maker of e-cigarettes, announced late Monday that it will end its support for Proposition C after a review of company policies resulting from a leadership shakeup last week.

The e-cigarette industry, and Juul in particular, face mounting scrutiny from federal and local governments over youth vaping and as the 14th U.S. death linked to vaping was reported in Nebraska.

In San Francisco, Juul has donated nearly $19 million to the Yes on C campaign and was the only financial backer of the measure.

Matt Dorsey, spokesman for the No on C campaign, said so much money has been spent in support of the proposition that opponents have no choice but to continue educating voters on a measure that will appear on San Francisco's Nov. 5 ballot.

"There's a lot of voter confusion out there, uncertainty about what a yes vote means and what a no vote means," Dorsey said Tuesday.

Hundreds of people have suffered lung ailments tied to vaping, although no major e-cigarette company has been linked to them and many patients said they vaped products that included THC, the psychoactive chemical in cannabis.

The e-cigarette industry is also awaiting details of a Trump administration proposal for a sweeping ban on e-cigarette flavors particularly appealing to teens. If such a ban included mint-flavored e-cigarettes, which currently account for 75% of Juul products, it would be devastating to the company, said Garrett Nelson, a senior equity research analyst at CFRA Research.

Proposition C would overturn a San Francisco ordinance approved by supervisors in June, and set to start in January, to stop all sales of e-cigarettes and vape products in the city until the U.S. Food and Drug Administration reviewed and approved their use.

The measure would allow general sales to adults but restrict sales to young people.

Nelson, the analyst, said Juul's decision to abandon the campaign isn't surprising given the steady stream of news of deaths and illnesses related to vaping. "And it's probably a realization they would not win the ballot measure," Nelson said.

The No on C campaign has raised nearly $5 million in contributions, more than $4 million of that from Michael Bloomberg, the former New York City mayor and anti-tobacco advocate.

San Francisco has seen its share of high-profile, big-money campaigns.

Last year, R.J. Reynolds spent nearly $12 million to fight a ban on flavored tobacco products and lost. In 2016, opponents of a tax on sugar-sweetened beverages spent at least $26 million to defeat measures in San Francisco, Oakland and Albany and lost.

In 2015, Airbnb spent $9 million to successfully kill a measure that would have limited short-term vacation rentals.

Juul's newly appointed chief executive, K.C. Crosthwaite said in a statement Monday that the company is committed to engage "productively with all stakeholders, including regulators, policymakers and our customers."

The No on C campaign says the Yes on C campaign has about $7 million it needs to return to Juul. The Yes on C campaign said Tuesday it will do so after sorting out expenses.

Juul has said it doesn't market to youth and its products are meant to be an alternative to smoking. However, the company's advertising is under federal investigation, and the company recently announced it will stop advertising its e-cigarettes in the U.S.

E-cigarettes have been largely unregulated since arriving in the U.S. in 2007. The Food and Drug Administration has set next May as a deadline for manufacturers to submit their products for review.

Health experts generally consider e-cigarettes less harmful than traditional cigarettes because they don't contain all the cancer-causing byproducts of burning tobacco. But there's virtually no long-term research on the health effects of the vapor produced when e-cigarettes heat a liquid with nicotine.

This story has been updated.