JUUL: Why It Doesn’t Pay to Invest in Addiction

JUUL: Why It Doesn’t Pay to Invest in Addiction

On June 23rd, the Food and Drug Administration (FDA) announced a ban on all sales of JUUL e-cigarettes in the United States. JUUL is an e-cigarette company that roared onto the scene in 2017, manufacturing electronic cigarette devices and nicotine cartridges. These devices use heat to atomize liquid containing nicotine and other chemicals which the user then inhales. This is commonly referred to as “vaping.”

In 2018, cigarette manufacturer Altria bought a 35% stake in JUUL for $12.8 billion with high hopes for growth. Marketing campaigns for JUUL specifically targeted adolescents and federal surveys in 2019 found that 1 in 4 high schoolers had used an e-cigarette in the last 30 days. The explosion of youth vaping and lung diseases specifically tied to vaping have increased the scrutiny of these products and led to bans of flavorings and other restrictions.

At Beacon Wealth Consultants, our goal is to avoid investing in cigarette, tobacco, or e-cigarette companies for both moral and financial reasons. From a moral perspective, we know that nicotine is an addictive substance with long-term negative health consequences. E-cigarettes may pose even scarier health concerns as users inhale nicotine along with as many as 80 other chemicals and metals. Since these are new products, we do not yet know the long-term health implications, and the fact that they are marketed to youth is unconscionable. Simply put, we seek to avoid investing in companies that prey on human addictions.

We also seek to avoid investing in companies like these because there is material financial risk. After significant regulatory problems, Altria’s $12.8 billion investment in JUUL, was valued in March 2022 at $1.6 billion – a loss of 87.5%! Altria stock (MO) dropped 9% on June 23rd when the FDA ban was announced. It remains to be seen what will be left of the initial investment if the company cannot legally sell its products in the U.S. Regulators know the dangers posed by these products and are keen to control the growth of the industry and the distribution of the products. From a financial standpoint alone, this seems like a hard pass!

You should be proud of the companies in your portfolio. When you invest with Beacon Wealth Consultants, we seek to invest your money in companies that do not prey on human addiction. We believe that people are made in the image of God, so profiting from activities that purposely harm others is unbiblical. We also believe that these are not prudent investments from a financial standpoint given the risks and volatility associated with these types of companies.

Do you know what’s in your portfolio? If you don’t, today is the day to find out! Tobacco companies are common holdings in many mutual funds and ETFs. Request a free portfolio screening and discover whether you are profiting from human addiction.