It was like a flashback to 1994. In early February, The House Energy and Commerce oversight and investigations subcommittee grilled the CEOs of Juul Labs, Reynolds American and NJOY, as well as the presidents of Logic Technology Development and Fontem US. It was reminiscent of when, in 1994, the CEOs from seven major tobacco companies testified before Congress about the marketing tactics for tobacco products. The tension in the rooms was also similar.
For more than two hours, lawmakers on the House Energy and Commerce Subcommittee on Oversight and Investigations asked questions ranging from marketing strategies to how to curb youth usage of these products. K.C. Crostwaite, CEO for Juul Labs, expressed his understanding of the serious need for companies to combat the uptick in youth use.
“I fully recognize that the opportunity for the millions of adult smokers who still use combustible cigarettes to have an alternative is at risk if we don’t address this issue,” K.C. Crosthwaite, Juul’s CEO, said. “We are focused on combating underage access because I know it puts it all at risk if we don’t make progress here.”
Legislators also wanted to understand the possible health effects vaping products pose to consumers and the role each company sees itself as playing in the ongoing effort to curb the nation’s uptick of youth use. Antoine Blonde, president of Fontem, said the company had a detailed youth access prevention program and maintained efforts to safeguard its products from youth.
“Fontem uses industry-standard online age-gating and age-verification mechanisms to prevent youth access to its products online,” Blonde said. “For example, for all purchases through our website, Fontem relies on industry-standard age-verification technology that compares a potential purchaser’s information against records of trusted data sources to verify the age of the purchaser.”
Blonde said Fontem recognizes that there “may be” bad actors in the marketplace who attempt to purchase bulk quantity of its products through e-commerce web sites in order to re-sell them (a practice often called strawman sales. “Fontem has always had policies in place to monitor for strawman sales and further is implementing a strict 4-Stage standard to monitor site access for any potential strawman purchases on its online platform,” Blonde explained. “This standard will track registered adult consumers’ monthly order frequency of pods from its online platform and will flag potential strawman sales.”
The companies are said to represent nearly 97 percent of the $19.3 billion U.S. e-cigarette market, according to Rep. Diana DeGette, chairwoman of the subcommittee. That data only includes convenience store sales, and many industry insiders say the figure is grossly inaccurate. Vape shop sales are not included in Nielsen data DeGette is citing.
“While consumers remain in the dark of the possible health consequences, these companies are making billions of dollars as they lure a new generation of young people into a lifetime of nicotine addiction,” DeGette, the chair of the oversight panel conducting the hearing, wrote in a press release.