American e-cigarette firm Juul Labs has secured financing to stay afloat but confirmed job cuts, it said in a statement Thursday, while dealing with a dispute on whether its products can remain on market.
The vaping giant has challenged a June action by the US Food and Drug Administration ordering all products it made to be off the market in the United States, after finding that it failed to address certain safety concerns.
The FDA order has been put on hold after an appeal by Juul, which argues that its products are safe for adult smokers.
“Today, Juul Labs has identified a path forward, enabled by an investment of capital from some of our earliest investors,” a Juul spokesperson told AFP in a statement.
This investment will help Juul Labs to maintain business operations and “continue advancing its administrative appeal of the FDA’s marketing denial order,” among other needs, the firm added.
But it is undertaking a reorganization “including the difficult but necessary step of separating from many valued colleagues,” the spokesperson said, without providing further details.
Juul told staff on Thursday that it has halted bankruptcy preparations with the new injection of funds, The Wall Street Journal reported.
It is also undertaking a cost-cutting program, and plans to lay off around 400 employees while cutting its operating budget by up to 40 percent, according to the report.
The company’s wide range of flavored vapes, which have included mango and creme brulee, helped it become a byword for e-cigarettes in the US.
But it has also been blamed for a surge in youth vaping over its marketing of fruit and candy flavored e-cigarettes, which it stopped selling in 2019.
Proponents of vaping say that it is less harmful than traditional tobacco, though the science is not clear.
Those who disagree, however, counter that the flavors are appealing to young people, arguing that companies which sell them are knowingly or otherwise getting a new generation hooked on nicotine.
By the end of 2018, Juul had more than 70 percent of the US market for e-cigarettes.
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