WEBVTT - Inside the Backlash Against Juul 0:00:00.080 --> 0:00:03.560 Despite all the evidence of why I should, despite all 0:00:03.600 --> 0:00:07.080 the you know, family history, etcetera, etcetera. I knew I 0:00:07.240 --> 0:00:10.039 was never going to quit smoking, like that was pretty 0:00:10.119 --> 0:00:13.400 much it. And then this mirrorgal comes along and I 0:00:13.560 --> 0:00:18.639 quit smoking. Jennifer Bergman Coleman is not talking about a 0:00:18.680 --> 0:00:22.440 pill or a patch or smoking cessation plan. She's talking 0:00:22.480 --> 0:00:27.240 about vaping, or specifically jeweling. Jeweling is a high tech 0:00:27.280 --> 0:00:31.280 way to inhale nicotine without burning tobacco like a regular cigarette. 0:00:31.680 --> 0:00:34.159 And this is how Jewel says its product is supposed 0:00:34.200 --> 0:00:37.800 to work getting addicted smokers like Jennifer to finally quit. 0:00:38.360 --> 0:00:41.200 But along the way, Jewel got a lot bigger than that, 0:00:41.680 --> 0:00:45.600 taking off not just with smokers but with teenagers. It 0:00:45.680 --> 0:00:50.919 became a social media sensation. YEA, what's going on, everybody? 0:00:51.080 --> 0:00:53.320 It's downy Smokes coming back at you guys with another 0:00:53.400 --> 0:00:56.800 video today. So in this video today, what we got 0:00:57.400 --> 0:01:00.279 is how to make your experience with the Jewel right. 0:01:01.200 --> 0:01:03.840 Many of these videos looked like they were made by 0:01:03.880 --> 0:01:07.480 someone underaged, so people have started to worry teens were 0:01:07.480 --> 0:01:11.160 getting addicted to nicotine, many of whom had never smoked before. 0:01:11.560 --> 0:01:15.679 It is a an adolescent public health crisis happening before 0:01:15.760 --> 0:01:20.080 our eyes in real time, and no one is doing 0:01:20.200 --> 0:01:25.360 anything fast enough to stop it. Parents like Meredith Berkman, 0:01:25.560 --> 0:01:28.920 but also doctors and regulators have begun drawing up the 0:01:28.920 --> 0:01:32.959 battle lines. They believe something has to be done now 0:01:33.280 --> 0:01:35.560 to get Jewel out of the hands of their children, 0:01:36.040 --> 0:01:45.240 and the blowback is about to be fierce. Hi, I'm 0:01:45.240 --> 0:01:50.120 peg Akari and I'm olivia' Zeleski, and this week on Decrypted, 0:01:50.240 --> 0:01:53.600 as part of our special season, we're exploring the unintended 0:01:53.640 --> 0:01:57.680 consequences of technology, and we're talking about Jewel. The company 0:01:57.760 --> 0:02:02.000 says it only ever wanted to help else quit smoking. Instead, 0:02:02.520 --> 0:02:06.400 it's set off a teen sensation over vaping, but regulators 0:02:06.440 --> 0:02:10.400 and parents like Meredith aren't buying it. Investigators want to 0:02:10.440 --> 0:02:13.760 know was the company marketing to teens on purpose, and 0:02:13.840 --> 0:02:16.600 critics are calling for vaping products to be pulled from 0:02:16.600 --> 0:02:19.400 the market to stop them from falling into the hands 0:02:19.440 --> 0:02:23.560 of underage users. That has customers like Jennifer up in 0:02:23.680 --> 0:02:26.880 arms because they say that by helping them quit smoking, 0:02:27.280 --> 0:02:41.880 Jewel has essentially saved their lives. Stay with us. Jewel 0:02:41.960 --> 0:02:45.200 has been around for some time. The idea first originated 0:02:45.240 --> 0:02:48.840 in two thousand and five, Adam Bowen and James Monzi's 0:02:49.120 --> 0:02:53.000 to Stanford graduate students. Were both addicted smokers, and they 0:02:53.120 --> 0:02:56.079 used to swap business ideas on smoke breaks between classes. 0:02:56.800 --> 0:02:59.760 One day they landed on an idea to disrupt big tobacco, 0:03:00.240 --> 0:03:02.440 and eventually they came up with what we see to day, 0:03:02.880 --> 0:03:06.040 a penlike device with a pod or cottridge filled with 0:03:06.080 --> 0:03:10.120 a tobacco infused liquid. Users suck on the pen, which 0:03:10.160 --> 0:03:13.360 causes the pod to heat, delivering a powerful blast of 0:03:13.440 --> 0:03:16.760 nicotine into the lungs and then straight to the inhalance brain. 0:03:17.400 --> 0:03:20.840 Pods first came in flavors like cool mint and crembroulet. 0:03:21.400 --> 0:03:25.000 Adam and James name their product Jewel because it conjured 0:03:25.040 --> 0:03:27.919 up the image of a rare gemstone. A jewel is 0:03:27.960 --> 0:03:31.480 also a unit of energy. In June of twenty fifteen, 0:03:31.680 --> 0:03:34.680 Adam and James launched their product to the masses with 0:03:34.720 --> 0:03:38.160 a now infamous marketing campaign. It was full of bright 0:03:38.200 --> 0:03:42.040 colors and models looking like college students. Many were wearing 0:03:42.160 --> 0:03:45.440 letterman jackets and crop tops and high ponytails, and the 0:03:45.520 --> 0:03:49.320 campaign appeared mainly on Instagram. But still the company says 0:03:49.440 --> 0:03:53.400 Jewel was always meant for adults and more specifically addicted 0:03:53.440 --> 0:03:59.040 cigarette smokers, and that's how Jennifer began using it. Jennifer, Hi, 0:04:00.080 --> 0:04:03.960 you've never been here before, right, Okay, this is Bloomberg. Welcome. 0:04:04.760 --> 0:04:07.320 I first met Jennifer this summer after I had connected 0:04:07.320 --> 0:04:10.840 with the American Bathing Association. On a sunny Saturday morning, 0:04:10.880 --> 0:04:13.680 Jennifer came over to Bloomberg San Francisco office on the 0:04:13.720 --> 0:04:16.680 piers and we sat and chatted about her struggles with 0:04:16.760 --> 0:04:21.000 nicotine addiction, which started at an early age. The time 0:04:21.040 --> 0:04:26.200 I smoked my first cigarette, I was probably ten years old. 0:04:26.520 --> 0:04:31.200 I became a daily smoker probably somewhere between fifteen and sixteen. 0:04:32.160 --> 0:04:35.440 I probably was close to a pack a day, maybe 0:04:35.440 --> 0:04:37.080 a half a pack of pack a day when I 0:04:37.120 --> 0:04:40.279 was in high school. Jennifer is actually a nurse, and 0:04:40.360 --> 0:04:43.599 she's a mother of two teenagers herself, and she wasn't 0:04:43.640 --> 0:04:46.640 the only one in her family who smoked. Jennifer's father 0:04:46.760 --> 0:04:49.400 is a chain smoker, and his smoking has caused him 0:04:49.440 --> 0:04:52.760 to have both his legs amputated. That had a profound 0:04:52.760 --> 0:04:56.520 effect on Jennifer, but she really couldn't quit. People think, oh, 0:04:56.560 --> 0:04:58.480 it's just so easy to quit. It's such a dirty 0:04:58.520 --> 0:05:02.080 habit just quit know, and it's not that simple. I 0:05:02.160 --> 0:05:05.400 tried everything. I tried the patches, I tried the gum. 0:05:05.440 --> 0:05:08.000 I tried the patches together with the gum. I tried 0:05:08.040 --> 0:05:11.760 the medications. I tried chewing on toothpigs and hard candy, 0:05:11.880 --> 0:05:15.720 you know, all the things they tell you to do. Eventually, 0:05:15.800 --> 0:05:19.200 she tried vaping. At some point, I just kind of felt, well, 0:05:19.640 --> 0:05:22.159 I should maybe give this a try. A single jewel 0:05:22.200 --> 0:05:25.160 pod contains as much nicotine as a pack of twenty 0:05:25.240 --> 0:05:30.400 regular cigarettes. This is probably the closest thing that you 0:05:30.440 --> 0:05:33.960 would get to drawing on a cigarette where you inhale 0:05:34.000 --> 0:05:37.159 it into your mouth than into your lungs. Jennifer says 0:05:37.240 --> 0:05:40.440 this gives her a nicotine fixed without smelling like cigarettes 0:05:40.440 --> 0:05:44.240 and experiencing that social stigma of smoking. She also believes 0:05:44.240 --> 0:05:46.280 it's a lot better for her. One day, I just 0:05:46.360 --> 0:05:48.279 kind of knew I was done. I had a couple 0:05:48.320 --> 0:05:51.720 of cigarettes left and I threw them away. I was like, Okay, 0:05:51.760 --> 0:05:57.159 I'm done. It took about a year or so for 0:05:57.240 --> 0:06:00.320 sales of Jewels vaping devices to pick up. The company 0:06:00.400 --> 0:06:02.320 showed me a chart of its sales, and there's a 0:06:02.360 --> 0:06:05.720 point in about late when the bars on the chart 0:06:05.800 --> 0:06:09.880 just begin to rise a lot. By January seen Jewel 0:06:09.960 --> 0:06:14.039 says sales were up six hundred and twenty and it 0:06:14.120 --> 0:06:16.560 was emerging as one of the most significant players in 0:06:16.600 --> 0:06:20.440 the East cigarette market, and the product was going pretty viral. 0:06:20.880 --> 0:06:23.960 Jeweling had become a verb. It was a sensation on 0:06:24.000 --> 0:06:27.280 social media. Everyone at my school jewels and it. If 0:06:27.279 --> 0:06:28.640 you don't know what a jewel is, it's like this 0:06:28.680 --> 0:06:31.920 little black vape thing. Describe it's basically just vaping and 0:06:31.920 --> 0:06:35.200 you get super bussed off of it. How to juwel? 0:06:35.600 --> 0:06:38.400 How do you jewel in school? How to jewel for 0:06:38.400 --> 0:06:40.400 the first time? All right, let's check it out. Jewel 0:06:40.480 --> 0:06:44.280 sash damn? How the are your cloud so big? How 0:06:44.320 --> 0:06:47.120 are you going so milky? More? More more tips with 0:06:47.120 --> 0:06:49.920 the jewel? Like, actually, I kind of want to take another. 0:06:50.120 --> 0:06:51.960 This is pretty good. This is I haven't hit this amazing. 0:06:52.520 --> 0:06:54.960 These are just a few of the hundreds of videos 0:06:55.080 --> 0:06:58.360 online of teens and young twentysomethings talking about how much 0:06:58.360 --> 0:07:01.640 they love Jewel and this was the problem. Jewell says 0:07:01.720 --> 0:07:04.760 it designed its products for people like Jennifer, who used 0:07:04.800 --> 0:07:07.839 it to kick her cigarette habit, but its explosion in 0:07:07.920 --> 0:07:12.400 sales wasn't just coming from smoker's looking to quit. Last year, 0:07:12.600 --> 0:07:15.040 thirty six percent of high school students said they had 0:07:15.080 --> 0:07:18.560 tried vaping, according to a report from the University of Michigan. 0:07:19.520 --> 0:07:22.880 Reports from the Centers for Disease Control and Prevention say 0:07:22.920 --> 0:07:26.480 that electronic cigarettes are the most commonly used tobacco product 0:07:26.520 --> 0:07:29.560 among high school students. That's a pretty scary prospect for 0:07:29.600 --> 0:07:34.040 a lot of parents with teenage kids. Many parents now 0:07:34.200 --> 0:07:40.720 find themselves completely consumed with, unfortunately, what is arguably the 0:07:40.760 --> 0:07:47.239 most pressing American public health issues, certainly for kids. That's 0:07:47.320 --> 0:07:50.800 Meredith Berkman. She's a mom in New York City. Meredith 0:07:50.840 --> 0:07:54.000 has four children. Her older kids are already in their teens. 0:07:54.600 --> 0:07:57.360 Meredith says she doesn't think her own kids vape, but 0:07:57.480 --> 0:07:59.880 over the last year, she and two other moms she 0:08:00.040 --> 0:08:03.680 know started hearing a lot more about it. Individually. We 0:08:03.720 --> 0:08:06.640 had all heard a little bit of bits and pieces 0:08:06.720 --> 0:08:11.560 about East cigarettes, vaping. Maybe we'd heard about jeweling, but 0:08:11.600 --> 0:08:13.600 we really didn't know much about it. We knew it 0:08:13.680 --> 0:08:17.160 was something we should learn about, but it really wasn't 0:08:17.200 --> 0:08:21.480 on um on our radar. Meredith and her concerned friends 0:08:21.520 --> 0:08:24.360 started doing a bit of research. They started reading articles 0:08:24.400 --> 0:08:27.480 online and then they moved to reading academic studies, and 0:08:27.520 --> 0:08:30.320 Meredith said, the next thing she knew they were contacting 0:08:30.360 --> 0:08:34.400 experts because what they were discovering was really alarming. We 0:08:34.480 --> 0:08:37.319 all three came to the realization that it was something 0:08:37.480 --> 0:08:43.240 so important that we had better, um join, you know, 0:08:43.320 --> 0:08:47.520 a parents education and advocacy group out there, so we 0:08:47.559 --> 0:08:51.280 could educate ourselves and potentially educate others who knew even 0:08:51.360 --> 0:08:54.360 less than we did. And then there was this moment 0:08:55.040 --> 0:08:58.960 of realization that there was not such a group that existed. 0:08:59.160 --> 0:09:02.760 In March, Mary that started Parents Against Vaping East Cigarettes 0:09:03.000 --> 0:09:05.960 or paved with those two other moms to advocate against 0:09:06.040 --> 0:09:09.720 Yule and other East cigarette companies. PAVE has a website 0:09:09.720 --> 0:09:12.720 that educates parents and organizes events at schools to give 0:09:12.760 --> 0:09:16.640 parents and members of the media information on vaping. Meredith 0:09:16.640 --> 0:09:18.840 says her biggest fear is that vaping is going to 0:09:18.880 --> 0:09:22.000 have negative health consequences further down the line, and that 0:09:22.120 --> 0:09:25.040 the technology is so new that its impact hasn't been 0:09:25.040 --> 0:09:27.839 fully understood yet. People have said to us, well, this 0:09:27.920 --> 0:09:30.040 is not the opioid crisis, and no one is going 0:09:30.080 --> 0:09:32.800 to die. And this is not mothers against drunk driving, 0:09:32.880 --> 0:09:36.120 and you know, God forbid, right, But the reality is 0:09:36.400 --> 0:09:40.600 we don't know. I'm not a public health expert, but 0:09:40.720 --> 0:09:43.880 I am a mom of four kids, and I know 0:09:44.920 --> 0:09:50.360 an important issue that affects my children and other women's children, 0:09:50.440 --> 0:09:54.560 other people's children when I see one, and so you know, 0:09:54.640 --> 0:10:01.400 we're sort of accidental public health care advocates. So it's 0:10:01.400 --> 0:10:04.360 true these products are very new, but there's a chorus 0:10:04.360 --> 0:10:08.319 of experts who say jeweling poses clear health risks to teenagers. 0:10:08.720 --> 0:10:12.160 And that's because every Jewel pod contains so much nicotine. 0:10:12.640 --> 0:10:16.720 There's plenty of evidence showing that nicotine is very harmful 0:10:16.760 --> 0:10:21.760 to the developing brain. That's Dr Bonnie Halpern Felscher, developmental 0:10:21.800 --> 0:10:25.000 psychologist and professor at Stanford in the Division of Adolescent 0:10:25.040 --> 0:10:30.280 Medicine and Pediatrics. Bonnie studies how environmental factors influence adolescent 0:10:30.320 --> 0:10:34.840 decision making around nicotine products. The developing brain basically continues 0:10:34.960 --> 0:10:38.600 until somebody is in their mid twenties. So you take 0:10:38.640 --> 0:10:43.040 somebody a sixteen, they have a brain that's still malleable, 0:10:43.160 --> 0:10:47.240 it's still plastic, so to speed, it's still developing. Bonnie 0:10:47.280 --> 0:10:50.080 explained to me that two important things are happening in 0:10:50.120 --> 0:10:54.280 the teenage brain. First, there's a process called pruning going on, 0:10:54.880 --> 0:10:57.600 Bonnie says. That's the brain shedding away parts it doesn't 0:10:57.640 --> 0:11:02.120 need anymore. And the second process called milonization. That's a 0:11:02.160 --> 0:11:04.760 process in which a sheath is created over a neuron 0:11:04.840 --> 0:11:08.480 to make it work or fire better. Bonnie says that 0:11:08.520 --> 0:11:12.960 because these processes happen during adolescence, teens have an easier 0:11:13.000 --> 0:11:16.960 time becoming deeply addicted to nicotine. It hijacks the pleasure 0:11:16.960 --> 0:11:20.040 of rewards of the brain, and the body says I 0:11:20.200 --> 0:11:22.720 like this, and I'm going to change, and your brain 0:11:22.960 --> 0:11:26.760 actually changes to accommodate and to take in that nicotine. 0:11:27.360 --> 0:11:31.079 And because it's addictive, there are consequences for people whose 0:11:31.120 --> 0:11:34.400 brains are exposed to too much nicotine. Specifically, it creates 0:11:34.440 --> 0:11:38.160 withdrawal symptoms and the feeling of needing more and more 0:11:38.240 --> 0:11:41.920 nicotine For teenagers who would never smoke as in the 0:11:41.960 --> 0:11:45.200 first place. Jewel has been accused of pulling in young 0:11:45.320 --> 0:11:48.920 users with its high nicotine content and effectively turning them 0:11:48.920 --> 0:11:52.360 into customers for life people. Young people who are using 0:11:52.440 --> 0:11:57.240 Jewel today never planned on smoking a cigarette. So this 0:11:57.559 --> 0:12:01.319 so called harm reduction, that's not the question with young people. 0:12:01.480 --> 0:12:05.760 Young people, it's fresh air versus vapes. On top of this, 0:12:06.040 --> 0:12:08.640 East cigarettes are still so new to the market that 0:12:08.760 --> 0:12:11.600 we don't yet know what other health risks could come 0:12:11.679 --> 0:12:13.960 up down the line. So a lot of parents like 0:12:14.080 --> 0:12:18.560 Meredith have focused their attention on restricting access, including cracking 0:12:18.600 --> 0:12:23.480 down on Jewels flavored pods. Jewel currently sells eight flavors. 0:12:23.640 --> 0:12:27.920 Two of these, Virginia Tobacco and Classic Tobacco, taste almost 0:12:27.920 --> 0:12:33.400 like cigarettes. The other six mango, cucumber, menthal mint, fruit 0:12:33.520 --> 0:12:37.040 and cream. And Meredith feels it's just no coincidence at 0:12:37.080 --> 0:12:40.559 all that some of jewels flavors taste almost like candy. 0:12:40.720 --> 0:12:45.160 And we also know from emerging research that kids who 0:12:45.280 --> 0:12:50.000 begin jeweling are three point eight almost four times more 0:12:50.040 --> 0:12:55.320 likely to begin smoking conventional cigarettes than non jeweling kids. 0:12:58.160 --> 0:13:01.000 If this were really just solely and UM a smoking 0:13:01.000 --> 0:13:04.920 cessation device, why would you want flavors? Why would you 0:13:04.960 --> 0:13:09.320 want to UM hook people to the flavors. So that's 0:13:09.320 --> 0:13:11.560 how I would answer that we are not interested in 0:13:11.720 --> 0:13:16.000 banning the Jewel for adults, but what we're interested in 0:13:16.080 --> 0:13:20.040 doing is closing the loophole. Many of the health advocates 0:13:20.040 --> 0:13:23.000 and doctors I've spoken to feel the same way. If 0:13:23.040 --> 0:13:26.240 the flavors of the pods were it so sweet and tasty, 0:13:26.320 --> 0:13:30.120 maybe teenagers wouldn't find vaping is appealing. The debate over 0:13:30.200 --> 0:13:33.360 flavors cuts to the heart of the controversy surrounding jewel. 0:13:33.840 --> 0:13:37.200 One camp says a medical device shouldn't need to market 0:13:37.240 --> 0:13:41.440 itself as delicious, just effective. The other side says addicts 0:13:41.480 --> 0:13:44.920 need the flavors to quit. Like Jennifer, she said the 0:13:44.920 --> 0:13:47.439 flavors made it easy to start using the product when 0:13:47.440 --> 0:13:50.240 every other smoking cessation device just felt like a chore. 0:13:51.240 --> 0:13:55.120 Upwards of somewhere between eighty five and eight of people 0:13:55.160 --> 0:13:58.959 said that the flavors the availability of flavors where the 0:13:59.200 --> 0:14:02.120 key element in getting them to quit smoking, and the 0:14:02.160 --> 0:14:06.000 availability of those are a very important part of how 0:14:06.120 --> 0:14:10.400 people quit. So that's the case for flavoring. Because it 0:14:10.440 --> 0:14:13.760 worked for Jennifer, she became an activist. She worked with 0:14:13.800 --> 0:14:18.240 the American Vaping Association to advocate against regulation and she's 0:14:18.280 --> 0:14:21.040 not alone. When we met Jennifer, she said she had 0:14:21.120 --> 0:14:25.040 joined about fifty vaping groups on Facebook alan and she's 0:14:25.080 --> 0:14:28.840 found a large community on other social networks like Instagram. 0:14:28.880 --> 0:14:33.680 She's part of a pro vaping movement. Meanwhile, Meredith and 0:14:33.800 --> 0:14:36.720 scores of other parents across the country had set up 0:14:36.720 --> 0:14:39.800 their own advocacy groups, and four sets of parents were 0:14:39.880 --> 0:14:43.040 lining up to sue the company, arguing that its flavors 0:14:43.040 --> 0:14:46.720 were hooking their kids. But as this battle was playing out, 0:14:46.880 --> 0:14:50.040 a larger threat to Jewel was forming. It was coming 0:14:50.040 --> 0:15:01.920 from cities, states, and the federal government itself. America's largest 0:15:01.920 --> 0:15:04.440 e cigarette makers under fire this morning. One state now 0:15:04.480 --> 0:15:08.160 investigating whether Jewel markets to teenagers. After a series of 0:15:08.240 --> 0:15:10.640 lawsuits accusing the company of trying to hook teens, State 0:15:10.640 --> 0:15:14.760 Attorney General Mora Healy's office has launched an investigation into 0:15:14.800 --> 0:15:18.080 a Jewel e cigarette maker. The Attorney General held a 0:15:18.080 --> 0:15:23.000 news conference. The first investigations came from state regulators in Massachusetts. 0:15:23.320 --> 0:15:26.320 They were asking questions about the sale of Jewels flavors, 0:15:26.520 --> 0:15:30.960 as well as the company's early marketing campaigns. Mississippi's Attorney General, 0:15:31.040 --> 0:15:34.600 Jim Hood, is also asking questions. Then, over the summer, 0:15:34.640 --> 0:15:39.040 in the company's hometown of San Francisco, voters resoundingly supported 0:15:39.080 --> 0:15:42.960 a ban on flavored tobacco products. All of This was 0:15:43.000 --> 0:15:46.400 happening right after Jewel hit one of the biggest milestones 0:15:46.440 --> 0:15:49.200 there is for a startup. It raised one point to 0:15:49.400 --> 0:15:52.480 billion dollars from tech investors to fund the next stage 0:15:52.520 --> 0:15:56.320 of the company's growth, and according to those negotiations, Jewell 0:15:56.400 --> 0:16:02.320 was said to be worth fifteen billion dollars. It was 0:16:02.440 --> 0:16:05.520 June and I had just started covering Jewel, and this 0:16:05.600 --> 0:16:09.480 funding round was shocking. It's just so much money, And 0:16:09.520 --> 0:16:12.240 to put those numbers in perspective, it meant investors thought 0:16:12.360 --> 0:16:15.600 Jewel was as valuable as Lift, the ride hailing company, 0:16:15.920 --> 0:16:19.600 or twice as much as Slack, the mobile messaging platform. 0:16:19.720 --> 0:16:22.320 Yet this company's products had only been on the market 0:16:22.360 --> 0:16:26.320 for three years. In June, Jewel said it had captured 0:16:26.400 --> 0:16:29.160 sixty eight percent of the U S East cigarette business. 0:16:30.040 --> 0:16:33.280 This is especially impressive if you consider that East cigarettes 0:16:33.280 --> 0:16:35.880 are generally thought to be the future of the regular 0:16:35.920 --> 0:16:39.000 cigarette market, which brought in about a hundred and five 0:16:39.120 --> 0:16:45.400 billion in the US last year. Through the summit, Silicon 0:16:45.520 --> 0:16:49.000 Valley was buzzing with talk about Jewel. The company seemed 0:16:49.040 --> 0:16:52.560 poised for a continued growth set despite the probe and 0:16:52.600 --> 0:16:56.320 Massachusetts and lawsuits from parents. Most people I was talking 0:16:56.360 --> 0:17:00.479 to expressed confidence that the company would move past these hurdles, 0:17:01.320 --> 0:17:04.040 and the culture and Silicon Valley has in the past 0:17:04.080 --> 0:17:06.560 been very encouraging of companies that push the limits of 0:17:06.560 --> 0:17:10.119 existing regulation, like that's the approach companies like Uba took, 0:17:10.840 --> 0:17:12.439 and for a time that was considered to be a 0:17:12.480 --> 0:17:17.159 smart strategy. Then in September, the real bombshell hit. The 0:17:17.280 --> 0:17:20.320 freaking Drug Administration says it is preparing to launch a 0:17:20.400 --> 0:17:24.040 campaign to discourage teens from using East cigarettes. The f 0:17:24.200 --> 0:17:27.960 d A is also investigating the marketing strategies and impact 0:17:28.000 --> 0:17:31.920 of several vaping products, including the most popular e cigarette, Jewel. 0:17:32.480 --> 0:17:38.040 Federal regulators, the American Food and Drug Administration's Commissioner, Scott Gottlieb, 0:17:38.200 --> 0:17:42.119 Sensual and four other e cigarette companies a scathing letter. 0:17:42.520 --> 0:17:46.320 He gave the cigarette companies sixty days to submit quote 0:17:46.480 --> 0:17:50.359 robust plans for how they'll stop teens from using their products. 0:17:50.880 --> 0:17:53.800 And this was a big reversal because only last year 0:17:54.160 --> 0:17:57.080 the FDA decided that the cigarette companies didn't have to 0:17:57.160 --> 0:18:02.760 submit products for review until then. In early October, the 0:18:02.840 --> 0:18:05.639 FDA said it collected more than a thousand pages of 0:18:05.680 --> 0:18:10.159 documents from Jewels offices in an unannounced on site inspection. 0:18:11.080 --> 0:18:14.040 The company, for its part, says that teen us has 0:18:14.080 --> 0:18:16.680 never been allowed and that bad actors are the ones 0:18:16.720 --> 0:18:19.479 who are responsible for selling jewel to kids. There's a 0:18:19.520 --> 0:18:25.840 lot of of unauthorized illegal reselling on other marketplaces with 0:18:25.880 --> 0:18:30.920 no age verification. That's Ashley gold Jewels chief administrative officer 0:18:31.160 --> 0:18:33.439 and the executive who has been at the forefront of 0:18:33.480 --> 0:18:37.520 defending jewel publicly. What she's saying here is a critical 0:18:37.600 --> 0:18:40.520 part of jewels defense. Teens really shouldn't be able to 0:18:40.560 --> 0:18:43.680 get ahold of this product in the first place. Ashley said, 0:18:43.720 --> 0:18:46.680 teens are buying jewels and jewel pods from law breaking 0:18:46.760 --> 0:18:51.040 vape shops and these online resellers think eBay, Ali Baba, 0:18:51.080 --> 0:18:54.520 Amazon and even Walmart dot com. We have a technological 0:18:54.600 --> 0:18:56.600 solution where we scraped the Internet every day and send 0:18:56.640 --> 0:19:00.440 automated stustans and assist letters to these online market places. 0:19:00.720 --> 0:19:02.960 The people who are posting are trying to make it 0:19:03.359 --> 0:19:06.240 not look like they're selling our product. So sometimes we 0:19:06.320 --> 0:19:09.440 see they'll add you know, any at the end, or 0:19:09.440 --> 0:19:11.560 there they'll add a dollar sign, or they'll try to 0:19:11.600 --> 0:19:14.720 make it so that whatever systems these online marketplaces put 0:19:14.760 --> 0:19:17.760 in place to say you can't post Jewel product that 0:19:17.800 --> 0:19:21.360 they somehow get around it. And here's what happens. When 0:19:21.400 --> 0:19:25.120 someone buys product directly from Jewel's website, the company checks 0:19:25.160 --> 0:19:27.800 the buyer's age by matching the credit card details to 0:19:27.840 --> 0:19:30.639 public records. You also have to take a picture of 0:19:30.680 --> 0:19:34.119 yourself holding your government I D which must also match 0:19:34.240 --> 0:19:37.199 the government databases. But the company is going to have 0:19:37.280 --> 0:19:39.240 to do more than that to satisfy the f d 0:19:39.359 --> 0:19:43.280 A and angry parents. I asked Ashley about whether Jewel 0:19:43.359 --> 0:19:46.240 has a plan and what it looks like. She said 0:19:46.240 --> 0:19:50.080 the company is exploring a technological solution to the problem. 0:19:50.200 --> 0:19:52.960 The idea is that each East cigarette would be linked 0:19:52.960 --> 0:19:56.200 to a smartphone. People using Jewel would have to prove 0:19:56.320 --> 0:19:58.920 through an app on their smartphone that they're of age 0:19:58.960 --> 0:20:01.560 to use the product, and this would make it harder 0:20:01.600 --> 0:20:05.119 for an underage person to use Jewel illegally. If you 0:20:05.320 --> 0:20:09.159 are an underage user and somebody of age purchased the 0:20:09.200 --> 0:20:12.560 product for you and gave it to you, then maybe 0:20:12.600 --> 0:20:15.879 thirty days later the device stops working. In order to 0:20:15.960 --> 0:20:19.400 reactivate it, you have to go through our online age 0:20:19.480 --> 0:20:24.399 verification process through an app, so that in order to 0:20:24.920 --> 0:20:27.520 reactivate the device, you have to prove to us that 0:20:27.560 --> 0:20:30.520 you're of age to use it. I think that that 0:20:30.640 --> 0:20:36.240 technology could be revolutionary, Olivia. It basically sounds like Jewel 0:20:36.320 --> 0:20:39.119 is putting a tracking device into its product. Yeah, but 0:20:39.280 --> 0:20:41.919 maybe that's a good thing to stop teens from using. 0:20:42.320 --> 0:20:45.520 When Ashley Gold described the technology to me, I thought, well, 0:20:45.640 --> 0:20:48.760 if Jewel is really serious about cutting back on team use, 0:20:48.920 --> 0:20:52.280 this maybe could work. The question is whether the US 0:20:52.359 --> 0:20:54.760 government will allow them to do it. Jewel said the 0:20:54.760 --> 0:20:58.120 product requires pre approval from the FDA, and the agency 0:20:58.200 --> 0:21:00.200 might be unwilling to let them launch a whole new 0:21:00.200 --> 0:21:02.920 product in the US. Yeah. I get the sense they're 0:21:02.960 --> 0:21:05.800 not quite sure if Jewel had bad intentions or not, 0:21:06.000 --> 0:21:08.520 and whether it deliberately tried to appeal to a younger 0:21:08.560 --> 0:21:11.720 audience through its ad campaigns and those sweet flavors. But 0:21:11.880 --> 0:21:18.560 we understand that those ads reflect the colors and a 0:21:18.600 --> 0:21:23.760 lifestyle sort of image that is really not consistent with 0:21:24.000 --> 0:21:28.080 our messaging and it's not something, frankly, that we would 0:21:28.320 --> 0:21:32.160 launch today. Um, but that doesn't mean that the company 0:21:32.200 --> 0:21:39.760 had bad intentions. So, Olivia, because this is the unintended 0:21:39.880 --> 0:21:42.960 consequences season of decrypted. I think we have to stop 0:21:42.960 --> 0:21:45.920 and usk is this situation that Jewels in with all 0:21:45.960 --> 0:21:49.960 its appeal to teenagers, is it truly unintended? You know, 0:21:50.000 --> 0:21:52.800 it's hard to say, but what we do know is 0:21:52.840 --> 0:21:57.240 that when the company was created, James and Adam, the founders, 0:21:57.400 --> 0:22:00.160 were pretty young themselves, and I think they were sort 0:22:00.200 --> 0:22:03.080 of in this campus college community where they weren't really 0:22:03.119 --> 0:22:06.920 interacting with many teenagers. Um, they were sort of thinking 0:22:06.920 --> 0:22:09.440 about themselves and designing a product that was just right 0:22:09.520 --> 0:22:12.600 for them. You know, the backlash has been growing really 0:22:12.640 --> 0:22:15.560 through the summit, but the rise in sales has been 0:22:15.560 --> 0:22:17.960 going on for you know, maybe eighteen months at this point, 0:22:18.000 --> 0:22:20.560 and Jewel hasn't done things that it could have done 0:22:20.560 --> 0:22:24.760 perhaps to address teen sales earlier, Like they haven't made 0:22:24.760 --> 0:22:26.920 it harder for people to buy huge volumes of that 0:22:27.040 --> 0:22:30.720 product at once. Yeah. I found that really interesting too. 0:22:30.760 --> 0:22:32.760 You think that it would be so easy to say, well, 0:22:32.800 --> 0:22:35.080 we're not going to sell a hundred packs to a 0:22:35.160 --> 0:22:40.119 single online distributor, or if we do sell to a 0:22:40.200 --> 0:22:42.280 vape shop, we're going to kind of keep an eye 0:22:42.320 --> 0:22:45.359 on how much product we're moving to them. I asked 0:22:45.359 --> 0:22:47.440 the company about this and I have to be honest. 0:22:47.480 --> 0:22:49.720 They didn't have a great answer, so I hope that 0:22:49.760 --> 0:22:52.080 they're working on that. I mean, the other thing that 0:22:52.119 --> 0:22:55.160 I thought about was the situation with pods, because Jewel 0:22:55.200 --> 0:22:57.240 says it has a big issue with counterfeit pods on 0:22:57.280 --> 0:23:00.080 the market, huge issue, and you know, that's something it 0:23:00.520 --> 0:23:03.120 they told me, is that they're getting all the heat. 0:23:03.119 --> 0:23:06.600 They're getting all the backlash for selling pods that are 0:23:06.680 --> 0:23:09.640 bubble gum flavored, for example, but actually Jewel doesn't even 0:23:09.680 --> 0:23:12.320 make a bubble gum flavored pod. They said that those 0:23:12.359 --> 0:23:15.119 are coming from counterfeit companies. You know, I spoke to 0:23:15.280 --> 0:23:18.240 a ton of parents who really were up in arms, 0:23:18.280 --> 0:23:21.080 like how can we trust this company that makes bubble 0:23:21.119 --> 0:23:24.640 gum flavored pod that's so clearly targeted to a teenager? 0:23:24.800 --> 0:23:26.800 And I told them, you know, actually Jewel doesn't make that. 0:23:26.800 --> 0:23:29.879 That's a counterfeit product. And they were really surprised to 0:23:29.920 --> 0:23:32.480 hear that. So, you know, Jewel does have this problem 0:23:32.480 --> 0:23:35.679 where it's sort of guilty by association, and it begs 0:23:36.000 --> 0:23:39.040 the question when a company is valued over fifteen billion dollars, 0:23:39.040 --> 0:23:41.959 like how much of that is their responsibility even if 0:23:41.960 --> 0:23:44.960 they're not making the product themselves. It's still their brand, 0:23:45.400 --> 0:23:47.400 and maybe they need to do more to clamp down 0:23:47.480 --> 0:23:50.359 on counterfeit products UM. One thing I'll tell you quickly 0:23:50.400 --> 0:23:53.879 is that UM Jewel earlier this month just filed the 0:23:53.880 --> 0:23:58.240 complaint with the US International Trade Commission saying that over 0:23:58.320 --> 0:24:01.840 fifteen UM company and mainly in China and some of 0:24:01.880 --> 0:24:04.600 the United States and France, are just blatantly developing and 0:24:04.640 --> 0:24:08.800 selling products that are counterfeits based on jewels patented technology, 0:24:08.840 --> 0:24:10.800 and they're asking the i t C to do way 0:24:10.800 --> 0:24:14.520 more to stop the import of these products. So, as 0:24:14.520 --> 0:24:16.640 of this taping Olivia, we're still a few weeks away 0:24:16.680 --> 0:24:19.520