Juul to San Francisco: 'We're staying'
Biz & Tech
Catherine Ho
June 6, 2019 Updated: June 20, 2019 1:15 p.m.
1of2Kevin Burns, Juul CEO, speaks during a Chronicle editorial board meeting on Thursday, June 6, 2019 in San Francisco, Calif.Lea Suzuki / The ChronicleShow MoreShow Less
As San Francisco officials prepare to consider a bill that would suspend the sale of e-cigarettes in the city, the CEO of Juul Labs — the controversial, homegrown company that sells the majority of e-cigarettes in the U.S. — said he's committed to keeping the business and its fast-growing workforce in San Francisco.
"Yes, we're staying," Juul CEO Kevin Burns said Thursday in a wide-ranging interview with The Chronicle's editorial board. "San Francisco is our home. We want to be in San Francisco. We have 1,200 employees in San Francisco, a huge talent base in San Francisco. We want to be a resident, and I'm hopeful we'll find a way to be a resident."
Juul's headquarters are in the Dogpatch neighborhood on Pier 70, which is owned by the city. But the growing company — which has taken heat from city supervisors, one of whom said recently that he didn't want Juul in the city — is believed to be negotiating to purchase another building.
Burns has met with the bill's author, City Attorney Dennis Herrera, and members of the Board of Supervisors to discuss ways to prevent minors from buying Juul's popular vaping devices and nicotine pods.
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"We haven't done a good job engaging our communities in San Francisco," Burns said. "We're trying to do a better job engaging our communities where we have large employee presences. ... We are also concerned about youth usage. It's not something we want from a moral basis."
Burns said he does not vape himself, and that he would discourage a young person who doesn't already smoke cigarettes from picking up a Juul. Burns, who joined Juul in late 2017, struck a conciliatory tone, saying the company didn't initially recognize the magnitude of the youth vaping problem, but when it saw federal health data indicating a rapid rise in teen vaping, it took action to try to quell the trend.
In November, the company halted shipments of its flavored pods — like the popular mango and creme — to retail stores, and shut down its social media accounts. But it did little to quiet the outcry from state attorneys general and public health officials, who continue to criticize Juul for having presented its products in ways appealing to teens and young adults. Juul has long said its products are meant for adult cigarette smokers, not youths.
Burns said Juul has offered to pay to install electronic scanning systems in all 800 San Francisco retail stores that sell e-cigarettes that would use age verification technology to block sales to customers under 21 and limit each customer to two vaping devices and five packs of pods (up to 20 pods total) in a single transaction. The system is being tested in 150 stores nationwide, including 12 in San Francisco, and Burns offered to provide the $3 million to $5 million it would cost to install it in all San Francisco stores.
"I'll pay for it and put it in San Francisco," Burns said. "We've discussed it with the Board of Supervisors and the city attorney. The response was constructive."
Herrera's bill is scheduled to be considered by the Public Safety and Neighborhood Safety Committee on Friday. If approved by the Board of Supervisors, it would prohibit the sale of e-cigarettes in San Francisco until the Food and Drug Administration completes a review to ensure the products' safety. E-cigarette companies face a 2021 deadline to submit applications to the federal agency.
Matt David, a Juul spokesman, said it is taking the company time to conduct the necessary clinical and behavioral health research before it can submit the application. The process is costing about $100 million, he said.
Juul wants to place an initiative on the November ballot that would essentially override Herrera's legislation, if it is passed, by ensuring that e-cigarettes could continue to be sold in San Francisco. The ballot measure is being framed as an attempt to further restrict tobacco sales to minors, but most of those restrictions are already in place under state law.
Tobacco industry critics say Juul has used deceptive language, trying to frame the initiative as the last word in tobacco regulation in San Francisco by including the words "Comprehensive regulation of vapor products ... the provisions of this initiative may only be amended by a vote of the people."
Juul said the ballot measure, if passed, would prevent the Board of Supervisors from enacting an e-cigarette ban in the future — but it would not negate tobacco laws the city has already enacted, such as a ban on flavored tobacco that voters passed last year. It also would not prevent the city from passing additional tobacco regulations, such as putting tobacco products in a lockbox in stores, as long as those regulations do not amount to a ban.
David said Juul is on pace to get the signatures it needs to qualify the measure for the ballot.
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"Ultimately our preference is to work with the city to figure out a solution, working together, but if we have to go the ballot initiative route, we'll work with our coalition and pursue that option," he said.
Burns acknowledged that Juul shoulders some of the responsibility for youth vaping, but said it was never the company's intent for its products, which contain the addictive substance nicotine, to become so popular among teens.
"We are, of course, partly responsible (for youth vaping). We have 80% of the marketplace, how can we not be responsible for this?" Burns said. "I don't think it's intent, but we are responsible and we've got to take action on it."
He also addressed widespread criticism that followed Juul's acceptance of a $12.8 billion investment from Altria, the parent company of Philip Morris, saying it has hurt Juul's attempts to work with researchers and others.
"Absolutely, it's hurt our ability to form partnerships with some third parties ... we knew there'd be some trade-offs associated with that," Burns said.
Catherine Ho is a San Francisco Chronicle staff writer. Email: cho@sfchronicle.com Twitter: @Cat_Ho
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Catherine Ho covers health care at The San Francisco Chronicle. Before joining the paper in 2017, she worked at The Washington Post, the Los Angeles Times and the Daily Journal, writing about business, politics, lobbying and legal affairs. She's a Bay Area native and alum of UC Berkeley and the Daily Californian.