Last year, e-cigarette giant JUUL signed a lease for 20,000 square feet of space at 1000 F Street NW, a LEED Silver-certified office space in Washington, D.C. This week, the company announced it would expand its presence in the nation’s capital, in an effort to relocate its headquarters from San Francisco and better position itself to lobby federal regulators.
Currently, JUUL’s main offices are in a city-owned building at Pier 70, near San Francisco’s Dogpatch neighborhood. The company also owns a downtown tower at 123 Mission Street, which it acquired for nearly $400 million last year. It had been hoping to sell to Newark-based PGIM, but the deal fell through just last week. Meanwhile, JUUL is expected to close more than 12 offices throughout the Bay Area as it plans to lay off roughly 900 of its 3,000 employees. What’s more, the vaping company has also announced its intention to pull out of the South Korean market, and is reconsidering its presence in Austria, Belgium, Portugal, France and Spain.
Although it’s now shrinking its operations and planning its exit from Silicon Valley, the company still holds 60% of the e-cigarette market. At one point, it was even hiring 300 people a month. The startup had raised billions by promising investors it would help smokers quit by offering an alternative. Its sleek, flash drive-like e-cigarette design — coupled with its enticing set of flavorings — rendered JUULpods a popular choice among smokers.
However, the company ran into trouble when it also attracted a massive younger following. While JUUL denied allegations of marketing its vaping pens to teens, the public backlash has led to a 38% decline in the brand’s U.S. retail-store sales, according to Cowen Analyst Vivien Azer. Furthermore, the FDA has required JUUL and other e-cigarette companies to apply for authorization by September 9. If granted, this would allow them to continue selling their product. Applicants must produce evidence that any harm resulting from the use of e-cigarettes is outweighed by the public health benefits, such as helping heavy smokers gradually reduce their dependence on nicotine.
Eager to regain the trust of both the public and regulators, JUUL revealed it was working on a new version of its vaporizer as part of its FDA application. The new design would need to be unlocked by users, who would have to prove that they were at least 21 years old. In the meantime, the e-cigarette firm hopes its move to DC will increase its influence on lawmakers in charge of issuing guidelines regarding the safety of their products.