Despite all the evidence of why I should, despite all the you know, family history, etcetera, etcetera. I knew I was never going to quit smoking, like that was pretty much it. And then this mirrorgal comes along and I quit smoking. Jennifer Bergman Coleman is not talking about a pill or a patch or smoking cessation plan. She's talking about vaping, or specifically jeweling. Jeweling is a high tech way to inhale nicotine without burning tobacco like a regular cigarette.
And this is how Jewel says its product is supposed to work getting addicted smokers like Jennifer to finally quit. But along the way, Jewel got a lot bigger than that, taking off not just with smokers but with teenagers. It became a social media sensation. YEA, what's going on, everybody? It's downy Smokes coming back at you guys with another video today. So in this video today, what we got is how to make your experience with the Jewel right.
Many of these videos looked like they were made by someone underaged, so people have started to worry teens were getting addicted to nicotine, many of whom had never smoked before. It is a an adolescent public health crisis happening before our eyes in real time, and no one is doing anything fast enough to stop it. Parents like Meredith Berkman, but also doctors and regulators have begun drawing up the
battle lines. They believe something has to be done now to get Jewel out of the hands of their children, and the blowback is about to be fierce. Hi, I'm peg Akari and I'm olivia' Zeleski, and this week on Decrypted, as part of our special season, we're exploring the unintended consequences of technology, and we're talking about Jewel. The company says it only ever wanted to help else quit smoking. Instead, it's set off a teen sensation over vaping, but regulators
and parents like Meredith aren't buying it. Investigators want to know was the company marketing to teens on purpose, and critics are calling for vaping products to be pulled from the market to stop them from falling into the hands of underage users. That has customers like Jennifer up in arms because they say that by helping them quit smoking, Jewel has essentially saved their lives. Stay with us. Jewel
has been around for some time. The idea first originated in two thousand and five, Adam Bowen and James Monzi's to Stanford graduate students. Were both addicted smokers, and they used to swap business ideas on smoke breaks between classes. One day they landed on an idea to disrupt big tobacco, and eventually they came up with what we see to day, a penlike device with a pod or cottridge filled with
a tobacco infused liquid. Users suck on the pen, which causes the pod to heat, delivering a powerful blast of nicotine into the lungs and then straight to the inhalance brain. Pods first came in flavors like cool mint and crembroulet. Adam and James name their product Jewel because it conjured up the image of a rare gemstone. A jewel is also a unit of energy. In June of twenty fifteen, Adam and James launched their product to the masses with
a now infamous marketing campaign. It was full of bright colors and models looking like college students. Many were wearing letterman jackets and crop tops and high ponytails, and the campaign appeared mainly on Instagram. But still the company says Jewel was always meant for adults and more specifically addicted cigarette smokers, and that's how Jennifer began using it. Jennifer, Hi, you've never been here before, right, Okay, this is Bloomberg. Welcome.
I first met Jennifer this summer after I had connected with the American Bathing Association. On a sunny Saturday morning, Jennifer came over to Bloomberg San Francisco office on the piers and we sat and chatted about her struggles with nicotine addiction, which started at an early age. The time I smoked my first cigarette, I was probably ten years old. I became a daily smoker probably somewhere between fifteen and sixteen.
I probably was close to a pack a day, maybe a half a pack of pack a day when I was in high school. Jennifer is actually a nurse, and she's a mother of two teenagers herself, and she wasn't the only one in her family who smoked. Jennifer's father is a chain smoker, and his smoking has caused him to have both his legs amputated. That had a profound effect on Jennifer, but she really couldn't quit. People think, oh, it's just so easy to quit. It's such a dirty
habit just quit know, and it's not that simple. I tried everything. I tried the patches, I tried the gum. I tried the patches together with the gum. I tried the medications. I tried chewing on toothpigs and hard candy, you know, all the things they tell you to do. Eventually, she tried vaping. At some point, I just kind of felt, well, I should maybe give this a try. A single jewel pod contains as much nicotine as a pack of twenty
regular cigarettes. This is probably the closest thing that you would get to drawing on a cigarette where you inhale it into your mouth than into your lungs. Jennifer says this gives her a nicotine fixed without smelling like cigarettes and experiencing that social stigma of smoking. She also believes it's a lot better for her. One day, I just kind of knew I was done. I had a couple of cigarettes left and I threw them away. I was like, Okay, I'm done. It took about a year or so for
sales of Jewels vaping devices to pick up. The company showed me a chart of its sales, and there's a point in about late when the bars on the chart just begin to rise a lot. By January seen Jewel says sales were up six hundred and twenty and it was emerging as one of the most significant players in the East cigarette market, and the product was going pretty viral. Jeweling had become a verb. It was a sensation on
social media. Everyone at my school jewels and it. If you don't know what a jewel is, it's like this little black vape thing. Describe it's basically just vaping and you get super bussed off of it. How to juwel? How do you jewel in school? How to jewel for the first time? All right, let's check it out. Jewel sash damn? How the are your cloud so big? How are you going so milky? More? More more tips with the jewel? Like, actually, I kind of want to take another.
This is pretty good. This is I haven't hit this amazing. These are just a few of the hundreds of videos online of teens and young twentysomethings talking about how much they love Jewel and this was the problem. Jewell says it designed its products for people like Jennifer, who used it to kick her cigarette habit, but its explosion in
sales wasn't just coming from smoker's looking to quit. Last year, thirty six percent of high school students said they had tried vaping, according to a report from the University of Michigan. Reports from the Centers for Disease Control and Prevention say that electronic cigarettes are the most commonly used tobacco product among high school students. That's a pretty scary prospect for
a lot of parents with teenage kids. Many parents now find themselves completely consumed with, unfortunately, what is arguably the most pressing American public health issues, certainly for kids. That's Meredith Berkman. She's a mom in New York City. Meredith has four children. Her older kids are already in their teens. Meredith says she doesn't think her own kids vape, but over the last year, she and two other moms she
know started hearing a lot more about it. Individually. We had all heard a little bit of bits and pieces about East cigarettes, vaping. Maybe we'd heard about jeweling, but we really didn't know much about it. We knew it was something we should learn about, but it really wasn't on um on our radar. Meredith and her concerned friends
started doing a bit of research. They started reading articles online and then they moved to reading academic studies, and Meredith said, the next thing she knew they were contacting experts because what they were discovering was really alarming. We all three came to the realization that it was something so important that we had better, um join, you know, a parents education and advocacy group out there, so we could educate ourselves and potentially educate others who knew even
less than we did. And then there was this moment of realization that there was not such a group that existed. In March, Mary that started Parents Against Vaping East Cigarettes or paved with those two other moms to advocate against Yule and other East cigarette companies. PAVE has a website that educates parents and organizes events at schools to give
parents and members of the media information on vaping. Meredith says her biggest fear is that vaping is going to have negative health consequences further down the line, and that the technology is so new that its impact hasn't been fully understood yet. People have said to us, well, this is not the opioid crisis, and no one is going to die. And this is not mothers against drunk driving, and you know, God forbid, right, But the reality is
we don't know. I'm not a public health expert, but I am a mom of four kids, and I know an important issue that affects my children and other women's children, other people's children when I see one, and so you know, we're sort of accidental public health care advocates. So it's true these products are very new, but there's a chorus of experts who say jeweling poses clear health risks to teenagers. And that's because every Jewel pod contains so much nicotine.
There's plenty of evidence showing that nicotine is very harmful to the developing brain. That's Dr Bonnie Halpern Felscher, developmental psychologist and professor at Stanford in the Division of Adolescent Medicine and Pediatrics. Bonnie studies how environmental factors influence adolescent decision making around nicotine products. The developing brain basically continues until somebody is in their mid twenties. So you take somebody a sixteen, they have a brain that's still malleable,
it's still plastic, so to speed, it's still developing. Bonnie explained to me that two important things are happening in the teenage brain. First, there's a process called pruning going on, Bonnie says. That's the brain shedding away parts it doesn't need anymore. And the second process called milonization. That's a process in which a sheath is created over a neuron to make it work or fire better. Bonnie says that because these processes happen during adolescence, teens have an easier
time becoming deeply addicted to nicotine. It hijacks the pleasure of rewards of the brain, and the body says I like this, and I'm going to change, and your brain actually changes to accommodate and to take in that nicotine. And because it's addictive, there are consequences for people whose brains are exposed to too much nicotine. Specifically, it creates withdrawal symptoms and the feeling of needing more and more nicotine For teenagers who would never smoke as in the
first place. Jewel has been accused of pulling in young users with its high nicotine content and effectively turning them into customers for life people. Young people who are using Jewel today never planned on smoking a cigarette. So this so called harm reduction, that's not the question with young people. Young people, it's fresh air versus vapes. On top of this, East cigarettes are still so new to the market that we don't yet know what other health risks could come
up down the line. So a lot of parents like Meredith have focused their attention on restricting access, including cracking down on Jewels flavored pods. Jewel currently sells eight flavors. Two of these, Virginia Tobacco and Classic Tobacco, taste almost like cigarettes. The other six mango, cucumber, menthal mint, fruit and cream. And Meredith feels it's just no coincidence at all that some of jewels flavors taste almost like candy.
And we also know from emerging research that kids who begin jeweling are three point eight almost four times more likely to begin smoking conventional cigarettes than non jeweling kids. If this were really just solely and UM a smoking cessation device, why would you want flavors? Why would you want to UM hook people to the flavors. So that's how I would answer that we are not interested in banning the Jewel for adults, but what we're interested in
doing is closing the loophole. Many of the health advocates and doctors I've spoken to feel the same way. If the flavors of the pods were it so sweet and tasty, maybe teenagers wouldn't find vaping is appealing. The debate over flavors cuts to the heart of the controversy surrounding jewel. One camp says a medical device shouldn't need to market itself as delicious, just effective. The other side says addicts
need the flavors to quit. Like Jennifer, she said the flavors made it easy to start using the product when every other smoking cessation device just felt like a chore. Upwards of somewhere between eighty five and eight of people said that the flavors the availability of flavors where the key element in getting them to quit smoking, and the availability of those are a very important part of how people quit. So that's the case for flavoring. Because it
worked for Jennifer, she became an activist. She worked with the American Vaping Association to advocate against regulation and she's not alone. When we met Jennifer, she said she had joined about fifty vaping groups on Facebook alan and she's found a large community on other social networks like Instagram.
She's part of a pro vaping movement. Meanwhile, Meredith and scores of other parents across the country had set up their own advocacy groups, and four sets of parents were lining up to sue the company, arguing that its flavors were hooking their kids. But as this battle was playing out, a larger threat to Jewel was forming. It was coming from cities, states, and the federal government itself. America's largest e cigarette makers under fire this morning. One state now
investigating whether Jewel markets to teenagers. After a series of lawsuits accusing the company of trying to hook teens, State Attorney General Mora Healy's office has launched an investigation into a Jewel e cigarette maker. The Attorney General held a news conference. The first investigations came from state regulators in Massachusetts. They were asking questions about the sale of Jewels flavors, as well as the company's early marketing campaigns. Mississippi's Attorney General,
Jim Hood, is also asking questions. Then, over the summer, in the company's hometown of San Francisco, voters resoundingly supported a ban on flavored tobacco products. All of This was happening right after Jewel hit one of the biggest milestones there is for a startup. It raised one point to billion dollars from tech investors to fund the next stage of the company's growth, and according to those negotiations, Jewell
was said to be worth fifteen billion dollars. It was June and I had just started covering Jewel, and this funding round was shocking. It's just so much money, And to put those numbers in perspective, it meant investors thought Jewel was as valuable as Lift, the ride hailing company, or twice as much as Slack, the mobile messaging platform. Yet this company's products had only been on the market
for three years. In June, Jewel said it had captured sixty eight percent of the U S East cigarette business. This is especially impressive if you consider that East cigarettes are generally thought to be the future of the regular cigarette market, which brought in about a hundred and five billion in the US last year. Through the summit, Silicon Valley was buzzing with talk about Jewel. The company seemed poised for a continued growth set despite the probe and
Massachusetts and lawsuits from parents. Most people I was talking to expressed confidence that the company would move past these hurdles, and the culture and Silicon Valley has in the past been very encouraging of companies that push the limits of existing regulation, like that's the approach companies like Uba took, and for a time that was considered to be a smart strategy. Then in September, the real bombshell hit. The freaking Drug Administration says it is preparing to launch a
campaign to discourage teens from using East cigarettes. The f d A is also investigating the marketing strategies and impact of several vaping products, including the most popular e cigarette, Jewel. Federal regulators, the American Food and Drug Administration's Commissioner, Scott Gottlieb, Sensual and four other e cigarette companies a scathing letter. He gave the cigarette companies sixty days to submit quote robust plans for how they'll stop teens from using their products.
And this was a big reversal because only last year the FDA decided that the cigarette companies didn't have to submit products for review until then. In early October, the FDA said it collected more than a thousand pages of documents from Jewels offices in an unannounced on site inspection. The company, for its part, says that teen us has never been allowed and that bad actors are the ones
who are responsible for selling jewel to kids. There's a lot of of unauthorized illegal reselling on other marketplaces with no age verification. That's Ashley gold Jewels chief administrative officer and the executive who has been at the forefront of defending jewel publicly. What she's saying here is a critical part of jewels defense. Teens really shouldn't be able to
get ahold of this product in the first place. Ashley said, teens are buying jewels and jewel pods from law breaking vape shops and these online resellers think eBay, Ali Baba, Amazon and even Walmart dot com. We have a technological solution where we scraped the Internet every day and send automated stustans and assist letters to these online market places. The people who are posting are trying to make it
not look like they're selling our product. So sometimes we see they'll add you know, any at the end, or there they'll add a dollar sign, or they'll try to make it so that whatever systems these online marketplaces put in place to say you can't post Jewel product that they somehow get around it. And here's what happens. When someone buys product directly from Jewel's website, the company checks the buyer's age by matching the credit card details to
public records. You also have to take a picture of yourself holding your government I D which must also match the government databases. But the company is going to have to do more than that to satisfy the f d A and angry parents. I asked Ashley about whether Jewel has a plan and what it looks like. She said the company is exploring a technological solution to the problem. The idea is that each East cigarette would be linked
to a smartphone. People using Jewel would have to prove through an app on their smartphone that they're of age to use the product, and this would make it harder for an underage person to use Jewel illegally. If you are an underage user and somebody of age purchased the product for you and gave it to you, then maybe
thirty days later the device stops working. In order to reactivate it, you have to go through our online age verification process through an app, so that in order to reactivate the device, you have to prove to us that you're of age to use it. I think that that technology could be revolutionary, Olivia. It basically sounds like Jewel is putting a tracking device into its product. Yeah, but maybe that's a good thing to stop teens from using.
When Ashley Gold described the technology to me, I thought, well, if Jewel is really serious about cutting back on team use, this maybe could work. The question is whether the US government will allow them to do it. Jewel said the product requires pre approval from the FDA, and the agency might be unwilling to let them launch a whole new product in the US. Yeah. I get the sense they're not quite sure if Jewel had bad intentions or not, and whether it deliberately tried to appeal to a younger
audience through its ad campaigns and those sweet flavors. But we understand that those ads reflect the colors and a lifestyle sort of image that is really not consistent with our messaging and it's not something, frankly, that we would launch today. Um, but that doesn't mean that the company had bad intentions. So, Olivia, because this is the unintended consequences season of decrypted. I think we have to stop and usk is this situation that Jewels in with all
its appeal to teenagers, is it truly unintended? You know, it's hard to say, but what we do know is that when the company was created, James and Adam, the founders, were pretty young themselves, and I think they were sort of in this campus college community where they weren't really interacting with many teenagers. Um, they were sort of thinking about themselves and designing a product that was just right
for them. You know, the backlash has been growing really through the summit, but the rise in sales has been going on for you know, maybe eighteen months at this point, and Jewel hasn't done things that it could have done perhaps to address teen sales earlier, Like they haven't made it harder for people to buy huge volumes of that product at once. Yeah. I found that really interesting too.
You think that it would be so easy to say, well, we're not going to sell a hundred packs to a single online distributor, or if we do sell to a vape shop, we're going to kind of keep an eye on how much product we're moving to them. I asked the company about this and I have to be honest. They didn't have a great answer, so I hope that
they're working on that. I mean, the other thing that I thought about was the situation with pods, because Jewel says it has a big issue with counterfeit pods on the market, huge issue, and you know, that's something it they told me, is that they're getting all the heat. They're getting all the backlash for selling pods that are bubble gum flavored, for example, but actually Jewel doesn't even make a bubble gum flavored pod. They said that those
are coming from counterfeit companies. You know, I spoke to a ton of parents who really were up in arms, like how can we trust this company that makes bubble gum flavored pod that's so clearly targeted to a teenager? And I told them, you know, actually Jewel doesn't make that. That's a counterfeit product. And they were really surprised to
hear that. So, you know, Jewel does have this problem where it's sort of guilty by association, and it begs the question when a company is valued over fifteen billion dollars, like how much of that is their responsibility even if they're not making the product themselves. It's still their brand, and maybe they need to do more to clamp down
on counterfeit products UM. One thing I'll tell you quickly is that UM Jewel earlier this month just filed the complaint with the US International Trade Commission saying that over fifteen UM company and mainly in China and some of the United States and France, are just blatantly developing and selling products that are counterfeits based on jewels patented technology, and they're asking the i t C to do way
more to stop the import of these products. So, as of this taping Olivia, we're still a few weeks away from the FDA's deadline for Jewel to submit those plans for stopping teens from using its product. How big a threat do you think this could this investigation could be to the company. I think it's a huge threat. I think it not only m is hurting morale internally at the company of people are afraid of what will happen.
It's stressful, but you know, it could really clamp down on their business if they get rid of flavored pods. That's UM a large revenue source for them, and you know, perhaps people will then end up going to smaller companies that have flavored pods, or they'll just buy the counterfeit ones. Yeah, and ultimately it might be tough for Jewel to convince regulators that anything short of eliminating flavors will be enough. That would be a blow for people like Jennif who
think the flavors are the key to helping her quit. Yeah. When I spoke to her, she said she believes quitting smoking has really benefited her family and that the solution to the problem of teenage use should involve doing a better job of making sure age restrictions are enforced. It's already illegal for children to smoke or vape, so the only thing you're doing by passing these laws is restricting adult access from people who want to quit. And what
about the kids? What about their parents? What about their parents who are dying unnecessarily of tobacco related illnesses? You know, then what are you going to do with those kids? Meanwhile, doctors and parents like Meredith Berkman want regulators to intervene. They just don't believe that Jewel can really be trusted to help solve a problem that it essentially created. The moment is now, if we don't act now quickly, we will have an entire generation of children addicted to nicotine.
Why are you waiting even one more day? Because every day that goes by, more and more teens are becoming addicted. And that's it for this week's Decrypted. Thanks for listening. Do you use juel or do you know a young person who does. We want to hear from you. You can email us at Decrypted at Bloomberg dot net or I'm on Twitter at Olivia Zeleski and I'm at piagad Cary. If you're a fan of the show, please take a moment to rate and review us. It really helps new
listeners find the show. This episode was produced by piagad Cary, Magnus Hendrickson, and Austin Weinstein. Our story editors were Emily Busso and a vanderm Thanks also to Bradstone, Aki Ito and Liz Smith. Francesco Levie is head of Bloomberg Podcast. We'll see you here next week. M