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A pedestrian walks in front of an advertisement for JUUL at the door of a tobacco shop in New York.
Scott Mlyn | CNBC
Altria shareholders congratulated general manager Howard Willard on his $ 12.8 billion bet on giant e-cigarette Juul at the company's annual shareholder meeting on Thursday.
Analysts and investors worried that Altria has paid too much for its 35% stake in the company and its influence on its operations, particularly with the giant's control of the e-cigarette.
Willard defended on Thursday the terms of the deal, saying the e-cigarette market would not grow much until Juul joined it. Altria's MarkTen products have not gained much popularity, prompting Altria to stop selling them in the fall before signing the deal with Juul.
"I am very excited about the opportunity to make this investment and I think it will pay dividends down the road," he told analysts.
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Juul is facing a public and regulatory scrutiny of critics who claim that society has fueled an "epidemic" of vaping. A number of lawsuits accuse Juul of having intentionally hooked teens to nicotine. The Food and Drug Administration is investigating the company's business practices. On Wednesday, the North Carolina Attorney General sued Juul.
"JUUL has targeted youth as clients, and as a result, vaping has become an epidemic among miners," North Carolina Attorney General Josh Stein said in a statement. "JUUL's business practices are not just reckless, they are illegal, and I intend to stop them – we can not allow another generation of young people to become addicted to nicotine."
Willard, responding to a shareholder question about how Altria would make himself less vulnerable to Juul's legal risks, said that Altria was aware of ongoing legal proceedings when he had invested in Juul . He said that Altria was committed to reducing the use of e-cigarettes among young people, including raising the minimum age of buying tobacco to 21 years old.
On Wednesday, a judge ruled that the Food and Drug Administration should begin examining applications for electronic cigarettes. Former FDA commissioner, Scott Gottlieb, has postponed the deadline to 2022 in 2017, although the FDA announced earlier this year that it would postpone this to 2021.
Willard said that Altria would study the decision and hoped that the judicial process would continue over the next few months, if not years, with appeals.
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