Today, Juul Labs, Inc. and its Canadian affiliate, Juul Labs Canada Ltd. filed litigation against an illicit global network of entities and individuals that illegally sourced and resold authentic JUULpods and devices in the U.S. and abroad.
One of the largest distributors of these diverted products are the purveyors of the PodVapes and PodMaster websites, entities based in Canada that acquired JUUL products from the U.K., Canada, and U.S., to ship all over the world, disregarding the laws and regulations of a variety of jurisdictions. PodVapes, for example, acquired authentic JUULpods from Canada and the U.K. in non-tobacco and non-menthol flavors, and shipped them into various states in the U.S. to be illegally resold. These activities violate U.S. federal, state, and local tobacco regulations, and undermine critical public health objectives by contributing to an emerging black market for vapor products.
Through investigations, we have confirmed that PodVapes actively sells diverted JUULpod packs into the U.S. PodVapes also shipped JUUL devices that were explicitly developed for non-U.S. markets into the U.S. in violation of FDA laws and regulations.
Diverted products are part of a growing illicit market for vapor products, including compatible and counterfeit products. Diverted products, in particular, are authentic products that are produced for lawful distribution in an intended market, but are illegally diverted into a different, non-compliant market without authorization from the manufacturer. Not only do these illicit products likely violate the laws and regulations of the jurisdictions where they are sold, but they also undermine underage-prevention measures given that they often are sold through non-traditional retail channels, such as online without age-verification and through social sourcing. Additionally, diverted products evade national, state, and local taxes, costing the government significant losses in potential revenue.
Evidence of this illicit activity first started to emerge in February 2019. While sales of diverted products were first noticed in the markets of New Zealand and Australia by websites facing those countries, the sales quickly spread to websites facing the U.K. and U.S and, most recently, Canada.
As of today, PodVapes has continued to sell and distribute diverted products, through its website and other means. With this legal filing, Juul Labs aims to disrupt these illegal operations while gathering more information about how these products are distributed across the global trade channel. We stand ready to fully support and cooperate with law enforcement, regulators, and other key stakeholders in every jurisdiction impacted by this illicit trade.
As Juul Labs continues to reset the category, it is imperative that the company acts as a responsible partner to regulators and other stakeholders around the world, wherever our products are sold. We are committed to aggressively going after bad actors in the vapor category and helping to ensure a responsible marketplace for adult smokers seeking legal alternatives to combustible cigarettes.