Could Juul be on its way to opening vaping shops?

E-cig maker under FDA scrutiny

By Michael Nedelman and Clare Sebastian, CNN
Scott Olson/Getty Images

(CNN) - Leading e-cigarette company Juul Labs is looking into setting up its own retail stores, a source familiar with the matter told CNN.

The plans, which have not been finalized, could bring some of the company's retail sales in-house amid increasing pressure from the US Food and Drug Administration, elected officials and health groups concerning the surge of vaping among youth.

According to the source, a small team has been hired and is focusing on launching initial locations in Houston and Dallas. The stores would only be accessible to those 21 and over, and they would check customers' IDs at the door. Only mint, menthol and tobacco flavors would be sold. The company sells other flavors -- mango, cucumber, fruit and creme -- through its online portal, which asks customers to verify ages.

The company is also considering doing so internationally in South Korea.

The source said the company isn't planning a large retail footprint at this stage, describing the effort as a way to learn more about verifying users' ages, limiting bulk purchases and understanding how these locations could impact smokers' tendencies to switch to vaping -- often described by the industry as a less harmful alternative. The company may also allow users to recycle pods and replace defective products at these locations.

Juul declined to comment for this story.

The FDA revealed in November that vaping had increased nearly 80% among high schoolers and 50% among middle schoolers since the year before. Public health experts say that Juul has largely propelled the rise, holding about 75% of the e-cigarette market in the United States. Experts worry that e-cigarettes could put kids' developing brains at risk, get them hooked on nicotine early in life and be a gateway to smoking and other drugs.

Juul has maintained that its products are not for kids and are intended to convert adult former smokers. In previous statements, the company has said it's taken significant actions to prevent its products from getting into kids' hands.

Juul products are already sold in a number of retail locations, including some gas stations and vape shops.

In November, the company vowed to halt most retail sales of flavor products while restricting flavor sales to adults 21 and older on its secure website. The company also shut down much of its social media activities in the US.

In addition, Juul is the focus of lawsuits like one in North Carolina, whose attorney general claims the company marketed its products to children and misled the public about risks associated with those products. The lawsuit, announced in May, is the first by a state over the company's alleged marketing toward teens.

Last year, tobacco giant Altria took a 35% stake in Juul in a deal worth $12.8 billion. Altria will also be distributing Philip Morris International's "heat-not-burn" tobacco device, called IQOS, under an exclusive agreement. The device is the focus of a retail pilot: Following the FDA's decision last month to allow sales of the device, an IQOS store and other retail touchpoints are planned in Atlanta in the coming months, according to an Altria statement issued last month.

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