Juul raises $325 million despite growing health concerns

Investors have plunked another $325 million into controversial e-cigarette maker Juul Labs as the company seeks to expand its global reach, according to a regulatory filing on Monday.

Although the investors are undisclosed, the funding is a show of confidence in the growth prospects for Juul, roughly a third of which is owned by Marlboro maker Altria Group. The injection of capital comes at a time the vaping company faces increasing government scrutiny and business restrictions—that includes in its hometown of San Francisco, which in June became the first U.S. city to ban the sale and distribution of e-cigarettes, pending approval from the U.S. Food and Drug Administration. 

Consumer and health advocates accuse Juul of targeting teens, attracting them to e-cigarettes through a sleek tech product that comes in flavors including fruit, crème, mango and cucumber. Their claims are bolstered by a recent Stanford University study that found that Juul’s social media marketing strategies are youth-oriented.

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In another headwind for the company, the Centers for Disease Control and Prevention, is investigating 94 possible cases of severe lung illness associated with vaping across 14 states.

Teen blames vaping for collapse of his lung

For its part, Juul contends that restricting its sales and distribution, as in San Francisco, will drive smokers who switched to vaping to return to cigarettes. 

Juul claims the San Francisco ordinance will lead former adult smokers who successfully switched to vapor products back to deadly cigarettes.” It will also “create a thriving black market instead of addressing the actual causes of underage access and use,” the company told CBS MoneyWatch in June, when San Francisco’s board of supervisors ratified the sales ban.  

Lawmakers accuse Juul of using Big Tobacco tactics to market to teens

In July, a U.S. federal court ordered e-cigarette companies to submit applications to the FDA within 10 months in order to remain on the market.

Juul, which launched its products in 2015, had revenue of about $2 billion last year and and an estimated 72% share of the e-cigarette market. The Altria stake, purchased last year, valued the entire startup at more than $35 billion, Bloomberg reports. 

With scrutiny of its product increasing in North America, Juul has focused more recently on growing overseas, launching sales in South Korea, the Philippines and Indonesia. 

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