Tobacco stocks are surging after the FDA threatens to pull flavored e-cigarettes

electronic cigarettesPeople use electronic vaporizers with cannabidiol (CBD)-rich hemp oil while attending the International Cannabis Association Convention in New York, October 12, 2014.REUTERS/Eduardo Munoz

  • Tobacco stocks are surging after the Food and Drug Administration threatened the industry to combat the widespread flavored electronic cigarette use among young people.
  • The FDA found top-selling brands were popular among minors.
  • The FDA set a 60-day deadline for five major tobacco manufacturers to provide a plan for mitigating youth sales, or the agency will pull them out of the market.
  • Watch Altria and British American Tobacco trade in real time here.

Tobacco stocks are surging after the Food and Drug Administration threatened Wednesday to pull flavored electronic cigarettes like Juul off the market if the industry fails to combat the epidemic of youth e-cigarette use.

Following the news, shares of Altria, which owns the MarkTen brand, surged more than 7%, and British American Tobacco, which owns Vuse and Logic brands, jumped more than 6%.

"We see clear signs that youth use of electronic cigarettes has reached an epidemic proportion, and we must adjust certain aspects of our comprehensive strategy to stem this clear and present danger," FDA Commissioner Scott Gottlieb said in a press release.

The FDA discovered that top-selling brands like JUUL, Vuse, MarkTen XL, blu e-cigs, and Logic were popular among minors. To address the trend, the agency set a 60-day deadline for the five major tobacco manufacturers to provide a plan describing how they will address the widespread youth access and use of their products. Otherwise, the FDA could require the tobacco makers to stop selling the flavored products that appealed to children.

To gain clearance to return to the market, the companies would have to show evidence that the benefits for adults who use e-cigarettes to stop smoking outweigh the risks associated with youth vaping, Bloomberg reported, citing Gottlieb's words that he is "disappointed in the actions the companies have taken" to try to address the problem.

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