Consumers are not restricted from having or using Juul’s products.

Federal health officials’ order that Juul must stop selling and distributing its e-cigarettes in the U.S. is a setback for Henrico-based Altria Group Inc., which spent $12.8 billion in 2018 on a 35% stake in the California-based company as part of its diversification strategy.

In recent years, Altria, parent company of Philip Morris USA, the nation’s top tobacco company, has emphasized alternatives to the conventional cigarettes that still produce most of its sales.

“We are disappointed with today’s decision and continue to believe that e-vapor can play an important role in harm reduction for adult smokers,” said Steve Callahan, an Altria spokesperson.

The Food and Drug Administration said Juul — widely blamed for sparking a national surge in teen vaping — must stop selling its vaping device and its tobacco- and menthol-flavored cartridges. Those already on the market must be removed. Consumers are not restricted from having or using Juul’s products, the agency said.

“Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic nicotine delivery system products currently being marketed to consumers meet our public health standards,” said Dr. Robert M. Califf, the FDA commissioner.

“The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize these make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”

Joe Murillo, chief regulatory officer at Juul Labs, said in a statement: “We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency.”

Altria’s stock fell more than 9% Wednesday to $41.60 after The Wall Street Journal reported on the pending FDA action against Juul. Altria’s stock rebounded a bit Thursday, closing at $42.51.

Tipranks.com reported that 12 analysts had a consensus view to “hold” Altria stock and that Goldman Sachs analyst Bonnie Herzog “believes that Altria can sustain with various other options.”

Altria still makes most of its money — more than 80% of its $20.8 billion in revenue in 2020 — from the sale of conventional cigarettes, and about half of all the cigarettes produced in the U.S. are manufactured at its subsidiary Philip Morris USA’s cigarette plant in South Richmond off Interstate 95.

Over the past 15 years, Altria has made a number of investments to diversify its business in tobacco and nicotine products other than cigarettes.

Juul’s products have since faced a backlash and lawsuits because of underage use, and Altria has had to take several write-downs on its investment, which was valued at just $1.7 billion as of February.

William F. “Billy” Gifford, Altria’s CEO, said in an April speech to the Richmond Association for Business Economics that the company expected to finalize development work by the end of this year on two novel nicotine products that could be submitted to federal regulators for approval soon afterward.

“We know that cigarettes are dangerous and addictive,” Gifford said. “And we know that the number one expectation that society has for us as a company is to reduce the harm associated with cigarettes.“

“So, for those adult smokers who can’t or won’t quit, it makes sense that we focus our resources on moving beyond smoking,” Gifford said.

The FDA ruling on Juul is the second recent blow to Altria’s plans to diversify its portfolio.

Altria had introduced a battery-powered “heat not burn” alternative smoking device called iQOS into the U.S. market under an agreement with its overseas former subsidiary Philip Morris International.

However, the U.S. International Trade Commission ruled late last year that Altria and Philip Morris International must halt imports and sales of the iQOS device because it infringes two patents held by their top competitor, Winston-Salem, N.C.-based R.J. Reynolds Tobacco Co.

The trade commission’s ruling also covers the replaceable tobacco HeatSticks that consumers can buy at retail stores and that are inserted into the iQOS device.

Thursday’s action is part of a sweeping effort by the FDA to bring scientific scrutiny to the multibillion-dollar vaping industry after years of regulatory delays.

To stay on the market, companies must show that their e-cigarettes benefit public health. In practice, that means proving adult smokers who use them are likely to quit or reduce their smoking while teens are unlikely to get hooked on them.

Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, said in a statement that Thursday’s announcement “represents the most significant action the FDA has taken to reverse the youth e-cigarette epidemic.”

The statement said: “Juul, more than any other product or company, has been responsible for creating and fueling the youth e-cigarette epidemic.”

Information from The Associated Press was used in this report.

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Consumers are not restricted from having or using Juul’s products.

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