Reference no: EM132326991

James Monsees and Adam Bowen, co-creators of Juul Labs have come under criticism for potentially marketing to teenagers the e-cigarette device. Monsees did not show much concern because he believed the small percentage of underage consumers were making a lot of noise that was distracting Juul from one of the greatest advances in public health. Believed to be safer than cigarettes, Juul devices have shown to be safer than traditional cigarettes containing fewer toxins. The e-cigarette has captured 70% of the market share for e-cigarettes. A Juul that transforms a pod of nicotine-laced liquid into inhalable fumes sells for $34.99 with a pack of pods costing about $15.99. The company's revenue is expected to grow to $1 billion in 2018 making the value of the company worth approximately $16.3 billion.

A major attraction of the Juul device is the variety of flavors available to smokers. Flavors include mango, fruit, crème and cucumber, all attractive to adolescents.

The Food and Drug Administration (FDA) is scrutinizing the company's advertising to assess whether Juul has intentionally targeted teenagers. In 2009, President Obama signed the Family Smoking Prevention and Tobacco Control Act granting the FDA the authority to regulate the marketing and sales of tobacco products to reduce adolescent tobacco use. Although the FDA has authority over cigarettes, cigarette tobacco and smokeless tobacco, it does not have jurisdiction over e-cigarettes, cigars, and snus. However, the FDA proposed e-cigarettes, little cigars and other products be labeled as 'tobacco products,' which provides regulatory jurisdiction to the FDA under the Tobacco Control Act. Executives at Juul have taken a position that the company did not intentionally target teenagers. Despite its statement, management at Juul admitted to knowing about the popularity of the e-cigarettes among youth. In fact, since the release of the flash-drive shaped device in 2015, teenagers have been seen vaping Juuls. Since coming under scrutiny, Juul has changed it advertising to move away from using young models in their 20's to models over 35 years of age. This effort was to better align its advertising to the company mission to appeal to adult smokers. In 2018, Juul Labs made another change to its advertisements that led to depicting real people who had switch from cigarettes to Juul. Juul Labs has an official Marketing & Social Media Code that states, "We adhere to strict guidelines to ensure that our marketing is directed toward existing adult smokers." On October 1, 2018, the FDA made a surprise inspection of the headquarters of Juul Labs confiscating documents that furthered its efforts against marketing tobacco products to children. CEO, Kevin Burns released a message stating the goal of Juul Labs is to improve the lives of the world's one billion adult smokers and to eliminate cigarettes. He further added that underage use of e-cigarettes is an unintended problem that goes against the company's mission and is bad for the health of the public. Juul Labs claimed to have a common goal with the FDA in wanting to prevent youth from using e-cigarettes.  Meanwhile, the debates rages on. The FDA has proposed restricting sales of most flavored products and products that resemble juice boxes or candy and for stores that verify a customer's age and possibly require a separate, age-restricted area for e-cigarettes. In March 2019, Hawaii announced it would follow San Francisco's lead proposing a ban on flavored e-cigarette liquids such as Maui Mango, Cookie Monsta and clove and to place restrictions on tobacco and e-cigarettes to those older than 21. Students testified before Hawaii lawmakers pleading for action as they claimed vaping in school bathrooms was adversely affecting the health of students. Hawaii's health agency voiced concern over the negative affects nicotine can have on adolescent growth of the brain circuits that control attention and learning.

Questions:

• Differentiate between ethical and legal behavior.
• Identify and discuss the legal issue(s) associated with Juul Labs.
• Identify and discuss the ethical issue(s) associated with Juul Labs
• Explain what measures Juul Labs can take to ensure the company operates as an ethical organization in the future.
• Explain how society has or is attempting to influence business through government activity.