22nd Century Group is pioneering very low nicotine (VLN) cigarettes with the aim to give millions of smokers the choice to take control of their nicotine consumption. The Group’s flagship product, VLN cigarette, contains 95% less nicotine than traditional cigarettes and offers an authentic and familiar alternative in the form of a combustible cigarette. We met with Larry Firestone, CEO & Chairman of 22nd Century Group to hear more about 22nd Century Group and the very low nicotine cigarettes.
Tobacco Insider: Thank you very much for the opportunity to discuss 22nd Century Group and the very low nicotine cigarettes, Larry. Let’s start with the most basic question: what exactly does 22nd Century Group do and how would you describe your core mission to someone unfamiliar with the business?
Larry Firestone: Thank you. It’s a pleasure to be here today. Our core mission is to lead the Tobacco Harm Reduction movement by offering a product set allowing smoking consumers to take control of their smoking addiction with our low nicotine VLN cigarette products made from our proprietary low nicotine tobacco. Our core business supports that movement by offering very low nicotine cigarettes under our 22nd Century brand, VLN, and through our partner brands of Smoker Friendly and Pinnacle. We also manufacture other tobacco lines under those brands, including our naturals cigarette product category which has been gaining popularity lately.
Tobacco Insider: You operate at the intersection of biotechnology, tobacco, and public health. Could you walk us through your key products and business verticals – and how they align with your long-term mission?
Larry Firestone: Our key product is the only FDA authorized low nicotine cigarette. We previously only sold that product as our own VLN cigarette. However, we have recently begun to expand our blueprint with strategic partners that already have massive reach in the tobacco marketplace. We have done this by licensing our patented low nicotine IP to manufacture low nicotine versions of popular cigarette brands like Smoker Friendly and Pinnacle. We have realized the best way to support our tobacco harm reduction mission is to get low nicotine products on the market through numerous brands, rather than just our own. This way we can utilize the brand recognition already in the market, plus utilize the sales and marketing channels of companies with well-developed cigarette brands. We will continue to push this business model forward under different brands in the future. Keep in mind, these low nicotine cigarettes are the only combustible cigarettes that comply with the FDA’s proposed low nicotine rule. We are also exploring a new licensing model whereby another tobacco company will be able to manufacture and distribute their own low nicotine cigarettes using our technology and FDA approvals.
Beyond the low nicotine cigarette offerings, we have seen a strong trend towards a more natural style cigarette that consists of only tobacco and water. There are very few options for consumers in that category, so we have now begun to manufacture natural style cigarettes for our partner brands Smoker Friendly and Pinnacle. This style of cigarette provides a more desirable option for consumers seeking just a plain, run of the earth tobacco only cigarette, with no flavorings or additives.
We are shifting our strategy away from the contract manufacturing operations to focus on our branded business. Now that VLN is shipping, the positive gross margins from VLN will set our financials on the correct course.
Tobacco Insider: VLN cigarettes are the first and only combustible cigarettes with FDA MRTP authorization. What exactly are VLN cigarettes, why should consumers choose them over other nicotine products?
Larry Firestone: Our VLN cigarettes contain our proprietary low nicotine tobaccos that when blended, produce a high-quality cigarette with 95% less nicotine. It is common knowledge and well represented that somewhere between 60% and 70% of smokers would like to either quit or take control of their smoking habit caused by nicotine addiction. Our VLN cigarettes offer smokers the same comfortable smoking experience they enjoy but with a greatly reduced nicotine content and other ancillary benefits as well. The flavor profile is similar to some of the major brands and the VLN cigarette allows the smoker to take control of their habit by taking control of their nicotine intake. Consumers are being drawn to the tobacco harm reduction movement as part of a shift in lifestyle choices, and our product offers them the best way to go down that path with something they know and find comfort in.
Tobacco Insider: We assume VLN is not just a formulation but a result of plant genetic engineering. Can you explain the proprietary science behind your low-nicotine tobacco and how it is protected (e.g., patents, supply chain control)?
Larry Firestone: Reduced nicotine content tobacco is the result of years of cutting-edge research and development. 22nd Century Group ensures the protection of our low nicotine tobacco with our extensive patent portfolio surrounding several proprietary genetic combinations that reduce nicotine content by 90% to 98% using precise, non-GMO exclusively licensed gene-editing technology that leaves no foreign DNA. Our hand-selected farmers, our very own expert agronomist, proprietary handling, and in-house testing ensure unmatched purity, consistency, and genetic integrity in every leaf. Beyond genetics, 22nd Century Group has first-mover advantage as it took years conducting research alongside independent researchers to demonstrate that very low nicotine content cigarettes are appropriate for the protection of public health, a key factor the FDA considers when deciding whether to authorize the sale of new tobacco products. After compiling all necessary evidence and application materials, it took an additional three years to secure FDA authorization to market VLN cigarettes.
Tobacco Insider: What makes your VLN technology truly unique and defensible?
Larry Firestone: Developing our proprietary reduced nicotine content tobacco was not a matter of finding a simple DNA “off” switch in plants under laboratory conditions. It is the result of dozens of cumulative innovations made over decades by our scientists specializing in molecular biology, bioinformatics, chemistry, and agronomy. We have also accumulated a vast body of know-how throughout in collaboration with selected farmers to develop and employ proprietary cultivation and handling methods to preserve the quality of our tobacco crops with each improved generation. The result today is a family of reduced nicotine tobacco varieties that can be grown, harvested, cured, and used just like conventional tobacco, minus the nicotine.
Our intellectual property is defensible because the genetic fingerprint of our tobacco is distinct and verifiable. It is surprisingly fast and easy to detect the presence of any of our patented gene sequences in any sample of tobacco. We maintain internal testing capabilities not only to confirm nicotine content and genetic integrity of our own tobacco, but also to ensure that our IP rights are respected.
Tobacco Insider: Your VLN blend can also be used with regular cigarettes – to produce super low tar-nicotine variants. Trade secrets regarding blending are the core intellectual property in the traditional tobacco industry. How do you see 22nd Century penetrating into this domain? As a leaf supplier to traditional cigarette production?
Larry Firestone: I think there could be two ways. Assuming cigarette manufacturers want to develop new propositions with lower nicotine content, one way is that we can produce tobacco for the large manufacturers and they can blend it themselves in their “secret garden.” Currently, we have three different strains: a Burley, a flue-cured and an Oriental. We are working on developing more strains. We have contracts with farmers that grow tobacco for us. We buy the tobacco leaves and cure, process and warehouse them. Currently, we produce our own cigarettes and partner brands, Smoker Friendly and Pinnacle, in this way. We have a factory in North Carolina with an annual production capacity of 45 million cartoons (note: 450 million packs = 9 billion sticks). It is not a prototype shop or anything like a craft shop; we have production equipment, production lines. We can sell processed tobacco or finished product to the large manufacturers.
The other way is that we can license large manufacturers our technology, so that they can go to their own fields and have VLN tobacco grown themselves. We would simply be on a royalty basis for them. To penetrate the market on a wider basis, I think, the licensing is going to be the most effective way. It would certainly be the fastest way, but probably the most effective way too.
Tobacco Insider: What real-world data do you have to validate consumer interest? What is the market potential for VLN cigarettes in the United States—and what makes you confident that adoption will scale meaningfully in a high tar-nicotine market?
Larry Firestone: We have several data points of real-world data. During the initial launch in 2022 in Illinois, over a 26-week period we tracked the depletions, and we achieved between 1 and 3.5 cartons/week for the various stores. Additionally in a scientific study that was conducted in 2024, we had 450 subjects put VLN cigarettes to the test and 40% of the subjects altered their smoking behavior’s dramatically over just 12 weeks.
There are 28.8 million smokers in the United States and there are several factors that we consider as we build our brands and our presence. First, the published reports suggest that 70% of smokers would like to quit if they could. That would be 20.2 million smokers. Nicotine intake from standard cigarettes that causes their addiction is their enemy in this endeavor. We believe there is a population of smokers in this group who are seriously looking to take control of their nicotine addiction and therefore their smoking habit. Second, the recent FDA low nicotine mandate for all combustible cigarettes calls attention to the need for this very product in the market. In fact, the FDA references our VLN product as part of the mandate which leads to the feasibility of executing on their mandate. We are widening the set of brands and SKUs that represent the combustible low nicotine presence in the United States.
Tobacco Insider: Your approach is very different than the other tobacco companies. Others want to keep nicotine and flavors, and are ready remove anything else – including the tobacco itself. You keep the tobacco and use ritual, remove nicotine. However, for a smoker, moving from Marlboro Red to a VLN product is a very big jump. It feels like there should be some laddering down to take the consumer sequentially down to a level to let nicotine go. How do you read this gap?
Larry Firestone: Years ago, certainly before I joined the company, we had an initiative with a research cigarette called Spectrum and what was developed was nicotine walk down: 40%, 60%, 80% nicotine reduction. And, then down to 95% less nicotine. What we learnt in the research of that approach was that people would tend to just go back and dabble in their usual cigarette brand. So, it was never effective as a walk down mechanism. In fact, the 2024 scientific research study demonstrated that consumers do the balancing between their usual brand and VLN cigarettes. They want to mix it to work themselves down and achieve the nicotine in-take reduction. They can alternate back and forth until they get fully over to VLN cigarettes. From a nicotine content perspective, one cigarette from the standard brand equals one pack of VLN cigarettes.
70% of the smokers want to quit or reduce their cigarette consumption. That is 20.2 million smokers. So, if there is an appetite in the market for reducing the nicotine content, then I think we have got probably the best solution out there.
Tobacco Insider: You are proposing a method of quitting, which is not known to many consumers. And, consumer education is very difficult, especially under the restrictions of tobacco marketing. How will you overcome the consumer education challenge?
Larry Firestone: It is going to be done in several ways. The science community is definitely helping us and they continue to develop these studies about VLN cigarettes. We have our retail marketing team which engages with the early retail adopters, Smoker Friendly and Murphy USA which carries the Pinnacle brand, and have our marketing materials placed in the retail environment – counter mats, floor mats, door mats, take away cards. We are also training the retail staff so that they can speak about the VLN. 22nd Century has been around for 27 years and the VLN chatter has been going on for a long time. So, there’s knowledge out there and we have consumers who ask where they can buy the product. There is a quarter century long inherent knowledge that is built up. Now it is our job to move the product to the market.
If I were a large cigarette manufacturer, I would consider having VLN products in my portfolio through a license from 22nd Century. Instead of having 30 facings of Marlboro Red in a store, I would have 25 facings of Marlboro Red and 5 facings of Marlboro VLN. I think the licensing model, powered by VLN technology – like “Intel Inside” – is the pathway for a wider adoption. It would be the “Diet Coke” version of their product. However, this path is still in the very early stage of emergence.
I am also going to bring in the U.S. FDA which has been working the low nicotine strategy since 2017. We recently went through the commentary period and there are two camps. There is the U.S. FDA, medical community, and us, and then, there are the large tobacco manufacturers. With a license agreement, we can all be in the same camp. Instead of trying to turn the industry off, we want to see the proliferation of products along the VLN line. Large tobacco companies can bring a large spectrum of products to the market – from full strength to low and very low nicotine products. That is a message I am going to underline in our next earnings call. I think this is a very important perspective because we can help large manufacturers broaden their spectrum as they compete for the hard dollars earned.
Tobacco Insider: Are there any other major commercial initiatives or national retail partnerships in the pipeline that could significantly accelerate rollout?
Larry Firestone: We are at the forefront of our launch in the United States as we have secured distribution with two retailers that span over 2,000 stores that will be carrying VLN products. We are in discussions with other major retailers and some that have reach beyond the US borders. Our definition of success at this point is to make sure we achieve sell-through and repeat sales from the current distribution that will begin broad selling in Q4. The United States has approximately 273,000 retailers that sell tobacco products. We have a long road for retail adoption.
We are in discussions with several national retailers. The discussions are at different stages and in some cases the retailers are waiting for state approvals of VLN products in certain states before they carry VLN products in their lineup. The national retailers are attracted to the higher margins on these products, plus they are able to align with the changing consumer trends.
Tobacco Insider: Let us talk a bit of the pricing. How are VLN cigarettes positioned in terms of pricing at the retail? More importantly, some manufacturers make $5 net revenue for every pack sold in the U.S. (premium cigarettes) while the others make $1 (deep discount cigarettes). So, there is a very wide range in the market in terms of net revenue per pack. Where do you see VLN cigarettes falling in this spectrum in the long run?
Larry Firestone: The net pricing would be right in the middle. We’re right in the middle of the $5 and $1 range. So, if you think about it, this is an interesting question because Smoker Friendly and Pinnacle core brands are in the $1 range for the generic cigarettes that we have been producing for them for years. With the introduction of VLN and natural cigarettes, we have been able to upscale their branding to play right in the middle. We could have probably started a little bit higher, maybe more towards the $5 range, but we want to give a solid opportunity for our solid technology to get traction and for people who want to evaluate switching to VLN cigarettes. Nevertheless, there’s room in their pocketbook to jump into that that part of the market.
Tobacco Insider: Setting an aspirational target both has a lot of news value and is motivating for both the internal organization and the external community. For 22nd Century, reaching 1 billion VLN sticks sales volume by 2028 could be one such aspirational target. Why have you refrained from setting such an aspirational target so far?
Larry Firestone: That’s certainly on me. I’ve worked for a long time in public companies and, especially, in companies in a turnaround environment. When I took over 22nd Century, the company was pretty in a very rough shape; now, we have got it cleaned up and we have got ourselves set to go forward. Then, what typically happens is exactly what you said: the CEO comes out and says, “We’re going to dominate the world. We’re going to crush everybody. We are going to do all those things.” I do refrain from that because, right now, we’re in the proof of concept phase. We are moving VLN brands to the market. We have got our partner brands that have already moved to the market. What I’m looking at is licensing for the development of the next phase.
I want to have a proof of concept and, then, I can take that and I can drive out into the wider market. But if I was to set an aspirational target, if you really want to put pressure on me, I think I can give an answer for you: there are about 273,000 retailers in the U.S. Every retailer selling one carton a week will make 273,000 cartons per week (TI note: that would correspond to 2.8 billion sticks or about 2% U.S. cigarette market share).
If we were to get to one carton per week per retailer of our blended brands, that’s $700 million revenue. With a very healthy gross profit, 22nd Century becomes a very profitable company. Obviously, we are looking north of that, to move more of VLN products, and then, when I add the licensing opportunity with the large cigarette manufacturers, this becomes a very meaningful public company in the in the tobacco space on two angles: firstly, on financial performance and secondly, on technology performance and our ability to recycle that gross profit and continue to develop the low nicotine leaf technology.
Tobacco Insider: The FDA’s proposed rule to mandate reduced nicotine levels in cigarettes now appears to be indefinitely delayed. How does this shift in regulatory momentum affect your business strategy, particularly around VLN’s market potential and 22nd Century’s financial projections?
Larry Firestone: The timing of the FDA’s low nicotine mandate does not affect our strategy. The tobacco harm reduction movement is fully alive now. It is clear that our VLN cigarettes address the main issue that the other attempts at harm reduction do not, which is nicotine intake and therefore addiction. It is certainly helpful that the FDA has published their mandate and referenced our VLN products within as this has called attention to the biggest issue in the tobacco industry, nicotine and carcinogens caused by smoking. In the US market, with 28.8 million smokers, and the public data states that 70% want to quit, we know that taking control of nicotine consumption is a key issue. We have the only FDA authorized product that addresses this issue. We now have 2 early adopters who have added VLN SKUs to their lineup and we expect more to follow suit.
There are really two powerful forces driving consumers away from traditional combustible cigarettes. As just mentioned, the government is one of them, and they have been trying for a while. The other, more recently developed force, is by large tobacco manufacturers, themselves. Companies like Altria, BAT and PMI will not mention the word cigarette. They are pushing their own consumers as hard as possible away from combustible cigarettes, and pulling them towards the next generation of nicotine products – vapes and heat not burn. Or at least that is the external message. But the important takeaway here is that they are pushing millions of consumers away from their combustible cigarettes and towards another option. Fortunately for us, one of those options is a low nicotine cigarette. Many traditional smokers do not want to switch to electronic smoking devices. Most of them, though, probably want to switch to something that aligns with better health decisions. Enter the VLN cigarette.
Tobacco Insider: You emphasize that R&D drives future opportunities for 22nd Century. Could you elaborate on what specific product innovations or technologies are in your pipeline? How do these R&D efforts align with your core business?
Larry Firestone: Our VLN cigarettes have been authorized by the FDA in king size. We are developing a set of 100mm SKUs. This has a high priority. In addition, we are developing additional strains using our patent protected process for lowering the nicotine in the tobacco leaf. These additional strains once developed will give us a wider variety of blends that will help us tailor the final product to meet either the taste in the market or come close to full-strength brands that are looking to adopt a VLN set of SKUs. Widening the variety of taste over time will be critical to the tobacco harm reduction movement. These efforts align perfectly with our core business and each of these efforts will allow us to expand our product offerings and offer the highest quality product in the market.
Tobacco Insider: Finally, what is your take on flavored “cigarettes” without tobacco, such as the herbal sticks made of rooibos leaves and used with heated tobacco devices in Europe? As nicotine is infused to the tea leaves during the manufacturing process, manufacturers can precisely dose the nicotine content – which, if you think about it, could eliminate the need for a VLN strain.
Larry Firestone: Nicotine is present in the natural tobacco leaf. When you take a tea leaf, which is a very neutral substance, and add nicotine to it, you are just engineering a consumer product. The real question: is natural tobacco a better, more satisfying environment for the consumer than something that has been engineered? We have met with companies that have tea leaf solutions and we have had people smoke it.
I spent some time, in the earlier part of my career, in the coffee business. They have a flavor for everything. They can make your coffee taste like an ice cream sundae. When you go to that level of flavor dispensation, then you are driving for a specific consumer. The question is, are we going to ever go down that lane and try to chase the consumer’s flavor palette around. I think the answer is most likely not. Now that does mean that we will not develop different flavors. This is where the low nicotine tobacco, of Burly, flue-cure, Oriental, come in – this is where we can help large tobacco manufacturers in having the right inventory of low nicotine leaf so that they can match their own flavor profiles.
From everyone who has sampled our current VLN cigarette, we have had a very positive response. So, we know that we have a product that has a place in the stack of products and solutions that the Industry is trying to bring forward. I think it fits very well and it is a very natural progression. I think one of the parallels is the non-alcoholic beers and non-alcoholic spirits. Consumer choice is evolving towards that direction now; it is about giving consumers a choice. We give consumers a choice, very low nicotine cigarettes, and, I think, we fit pretty nicely in the stack of products.
Tobacco Insider: There was a plan to launch VLN cigarettes in South Korea. What is your long‑term international expansion plan and how will global expansion contribute to your results? Do you see a potential for VLN outside the U.S.?
Larry Firestone: We held back the launch of VLN cigarettes in Korea last year as we were resetting the brand and developing the partner brand strategy. Korea is the second largest smoking population in Asia on a per capita basis. We now have the best product for the market and the correct branding. Korea is off the table for 2025, but we will look into launching in Korea in 2026 when we have a defined launch plan. The global tobacco business is a $1.1 trillion dollar industry with 1.1 billion smokers. Global expansion will be a major part of our future, and this expansion must be carried out in a very strategic way. To our vision, this will involve both direct distribution and licensing partners under our partner brand strategy as the brands that carry the global markets should and will carry a product with our “VLN Inside” concept.
Reduction of nicotine dependency is a global question and the answer is, absolutely. Our unique non-GMO low nicotine tobacco can be used not only in combustible cigarettes but also in filtered cigars, heated tobacco and pouch/moist snuff applications. The international market is in many instances more appealing from a regulatory standpoint. It takes several years to receive a PMTA or an MRTP from the FDA here in the United States, but the runway in many international markets is much shorter.
Tobacco Insider: Before we move onto the closing remarks, just a quick question on Naturals. What is the role of Naturals for 22nd Century? Is it about keeping the factory working and creating some cashflow to support VLN? Is it a tactical or strategic line of business for 22nd Century?
Larry Firestone: It is strategic for us. In Smoker Friendly portfolio, there are 22 different SKUs and these are 4th Tier, deep discount, brands. Naturals are in the sphere of Natural American Spirit, which is a very high-priced brand. Our Naturals, cigarettes made of just tobacco & water, is at a mid-range price point. Smoker-friendly VLN sort of plays along those lines. So, strategically, the way I look at it is that we do not want to just put VLN cigarettes on the shelves and have people go for it. If we have a pairing of a natural and a VLN cigarette, then the customer can look at it with at a wider brand strategy and there is more brand presentation of that scenario on the shelf. It provides a different presence of VLN brand in the market. What I call it inside our company is “it’s kind of a motorcycle in the sidecar.” If I am inside a brand, I am a Smoker Friendly “Black Label” smoker – I want to try a VLN cigarette and go back & forth. Or, let us just say the FDA comes in tomorrow and says “we’re going to put in this low nicotine standard,” now I have got the brand that I am used to smoking even if the naturals go away. It is kind of a pairing scenario.
Tobacco Insider: You are reducing the operating losses and improving your balance sheet. You are now in a net cash positive position. How does your current cash runway look like and, most importantly, is there a risk of insolvency for 22nd Century?
Larry Firestone: Based on the shift in strategy, we have pushed our EBITDA breakeven target to the first half of 2026. We closed a $10 million capital raise in late August to pay off our debts and provide working capital. We now have zero debt. We also just settled an insurance claim from 2022 that will bring us $9.5 million in cash. This new capital should carry us into profitability. We have great support from our investors who have continued to fund 22nd Century through our transition to this point of commercial launch of our branded products, along with a balance sheet that has become very healthy in the last month. Now that we have launched, the branded portfolio carries standard gross margins, and with our low overhead model, profitability is achievable near term.
Tobacco Insider: Why should an investor bet on 22nd Century Group? What makes 22nd Century a compelling buy right now?
Larry Firestone: The investor thesis on 22nd Century is a bet on the adoption of the lane that we have created with our VLN cigarettes serving the tobacco harm reduction movement. With a high percentage of smokers reporting that they want to quit, nicotine control is the root of their addiction. Consumer trends are changing. People want to make healthier decisions. Also, the pending FDA mandate is certainly a tailwind for us as well, and we will have our VLN products in the market if and when the FDA enacts the final rule, proving that this rule can be implemented effectively with our VLN technology. This can be accomplished through our direct selling and distribution and licensing arrangements allowing others to produce VLN products under their brands via a license with 22nd Century. We see a world where the major tobacco companies will want to have a product set in their lineup containing our VLN tobacco and adopting a “VLN Inside” mentality by having a VLN cigarette or filtered cigar under their brand.
Tobacco Insider: Thank you very much, Larry, for your time and your explanations. Greatly appreciated!
Larry Firestone: Thank you for having me.
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Chief Executive Officer (CEO) & Chairman, 22nd Century Group: Lawrence (Larry) Firestone
Larry Firestone has over 40 years of enterprise, operations, and financial management experience in both public and private companies, including tenures as CEO, CFO and COO across multiple industry sectors. Larry joined 22nd Century Group as Chairman & Chief Executive Officer in November 2023. Before joining 22nd Century, Larry was the CFO of Oakland Manager, a privately-held purveyor of cannabis with both retail and wholesale market penetration, and Chairman of FirePower Technology, a privately held manufacturer of ATX power supplies for the IT and instrumentation markets. In the public company domain, Larry has served as CEO of Eastside Distilling, Inc., CEO of Qualstar Corporation, CFO of Advanced Energy Industries, and CFO of Applied Films Corporation. He has also served on numerous boards, including those of Eastside Distilling, Qualstar, CVD Equipment Corporation, Amtech Systems, Inc. and HyperSpace Communications, Inc. Larry received his Bachelor of Science in Business Administration with a concentration in Accounting from Slippery Rock University of Pennsylvania.
Company Profile: 22nd Century Group
22nd Century Group, Inc. is a leading plant biotechnology company focused on technologies that alter the level of nicotine in tobacco plants through genetic engineering, gene-editing, and modern plant breeding. The Company’s primary mission in tobacco is to greatly reduce the harm caused by smoking by bringing our reduced nicotine content tobacco cigarettes – containing 95% less nicotine than conventional cigarettes – to adult smokers in the U.S. and international markets. Headquartered in Mocksville, North Carolina (USA), 22nd Century is publicly traded on the Nasdaq under the symbol XXII.
Corporate Website: www.xxiicentury.com
