Carcinogens, monopolies, influence-peddling: Juul is a microcosm with everything wrong in the world

Juul just handed out $2 billion in dividends, making 1,500 employees into overnight millionaires; the cash came from Altria-Marlboro's 35%, $12.8 billion buyout of the company -- and everything about the story stinks.

As David Dayen from The Intercept explains, the vaping industry has gutted the smoking industry -- and the smoking industry's attempts to catch up with their own offerings have failed miserably. In a world of competitive markets, this would be pretty normal: a disruptive innovation breaks up an oligarchic, concentrated market, replacing it with a diverse, competitive market.

But Juul owns nearly 75% of the e-smoking industry. Marlboro's buyout of the company -- which would have been prohibited in an era of robust anti-trust -- means that the out-innovated incumbents don't wither and die, they just buy up the upstart competitor (and that upstart competitor completely dominates its niche).

Then there's Juul's product and marketing: while the company pitches itself as an alternative to smoking, it's fortunes are mostly gained through getting children hooked on nicotine, a carcinogenic, highly addictive substance that the company flavors with "mango, fruit, cucumber, and creme."

As the Wall Street Journal notes, Marlboro's Juul buyout is a good deal for both companies: Marlboro gets to profit from a new generation of children who are hooked for life on a carcinogenic product, and Juul gets to leverage Marlboro's deep experience with lobbying governments to look the other way while it peddles addiction to children.

Limited retail sales in storefronts could hold back Juul's growth, however. Enter Altria. An amazing article in the Wall Street Journal bluntly suggests that the 35 percent stake in Juul "gives the e-cigarette maker more marketing muscle, expanded shelf space and a benefit that would have been unthinkable from a cigarette company in the past: an easier path to Washington's approval."

The deal stipulates specifically that Juul devices and pods will appear on shelves next to Marlboro cigarettes, and it states that Juul ads could go right on Marlboro packages. Altria's sales force will push Juul products, potentially opening up hundreds of thousands of retail locations. And Altria CEO Howard Willard suggested in a conference call that the company would collaborate with Juul on an FDA application required of all e-cigarette makers before 2022 to remain on the market. "We have years of experience" with navigating the FDA, Willard said.

Put another way, an established merchant of death with a deep lobbying bench is framing itself as a rescuer of an upstart nicotine addiction device, protecting it from FDA attacks. This is the next level for a monopolist - converting economic power into political power.

How Vaping Giant Juul Explains Everything That's Wrong With Our World [David Dayen/The Intercept]