Juul Labs Inc. plans to cut roughly 500 jobs by the end of the year, according to people familiar with the matter, reversing the embattled e-cigarette maker’s rapid staff growth as the company braces for a proposed ban on flavors that make up more than 80% of its U.S. sales.
The number of positions to be eliminated could range from 10% to 15% of the workforce but isn’t final, the people said.
The cuts are part of a broader reorganization aimed at mending the company’s damaged relationship with regulators. Besides the job cuts, Juul will trim its marketing budget, among other expenses, and invest in new ways to reduce underage vaping.
The e-cigarette market is undergoing “a necessary reset,” the company’s new chief executive, K.C. Crosthwaite, said in a statement Monday. Juul’s focus, he said, is on “earning a license to operate in the U.S. and around the world.”
Juul’s co-founders, James Monsees and Adam Bowen, who previously held the titles of chief product officer and chief technology officer, respectively, will join a new office called the founder’s office, where they will advise Mr. Crosthwaite on a variety of subjects, one of the people familiar with the matter said. Several senior executives are leaving, including finance chief Tim Danaher and marketing chief Craig Brommers.
Juul this year has added an average of 300 employees a month, and its staff has swelled to a little over 4,000 employees. It enacted a hiring freeze in September shortly before Mr. Crosthwaite took over.
Mr. Crosthwaite left the tobacco giant Altria Group Inc. to take the helm of the startup last month. Among his top priorities are investing in scientific research for submission to the Food and Drug Administration and other regulators and exploring new technologies including a Bluetooth-connected device that could help curb underage use of its products, the company said.
Blamed for a rise in teenage vaping, Juul is the subject of several federal investigations, including a criminal probe by prosecutors. By May, the company must submit for FDA review any products it wants to remain on the U.S. market beyond that point.
When Mr. Crosthwaite was named to the top job, Juul suspended broadcast, print and digital ads for its U.S. products. Juul also said it wouldn’t lobby against the FDA’s plan to curb teenage vaping by ordering all e-cigarettes off the market except those formulated to taste like tobacco. His first big hire was Joe Murillo, who headed regulatory affairs for Altria.
The company previously tried to win over Washington by flooding the White House with lobbyists and other advocates. But that strategy backfired because it appeared that the startup was bypassing the FDA.
Juul’s sales have fallen since the Centers for Disease Control and Prevention in September warned the public to stop using all vaping products, including e-cigarettes, as it investigated an outbreak of vaping-related lung illnesses. The agency has since narrowed that warning, advising people not to vape THC, the psychoactive ingredient in cannabis. Juul’s products haven’t been linked to the vaping-related lung illnesses.
Mr. Crosthwaite’s predecessor, Kevin Burns, pushed aggressively to expand overseas as the company came under pressure in the U.S. The company now will take “a more methodical approach,” one of the people familiar with the matter said.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
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