22nd Century CEO & Chairman Larry Firestone Provides Corporate Update Letter to Stockholders

Rhea-AI Summary

22nd Century Group (NASDAQ: XXII) CEO Larry Firestone issued a corporate update highlighting the company's strategic transformation and growth plans. The company has streamlined operations by focusing solely on tobacco, reducing cash burn, and cutting ~$18M in debt. Their flagship product VLN®, the only FDA-authorized cigarette with 95% less nicotine, is positioned to address a significant market opportunity where nearly 29 million adult smokers seek alternatives.

The company's contract manufacturing (CMO) business serves as their operational backbone, providing manufacturing and supply chain services to secondary tobacco brands. Starting Q2 2025, they plan to launch rebranded VLN® products (Gold, Red, and Green Menthol) across 5,000+ stores, targeting expansion into the 272,000 stores nationwide. The company is also partnering with CMO customers to launch partner-branded VLN® products, aiming to establish the Very Low Nicotine Content (VLNC) category in the $85 billion tobacco industry.

Positive

• FDA-authorized VLN® cigarettes with 95% less nicotine gives competitive advantage
• Reduced ~$18M in debt improving balance sheet
• Streamlined operations and reduced cash burn
• Secured long-term CMO contracts providing stable revenue stream
• Planned expansion from 5,000+ to 272,000 stores nationwide
• Strategic partnerships for partner-branded VLN® products

Negative

• Current CMO business operates on low margins
• current retail presence (5,000+ stores)
• Profitability not expected until 2025
• Competing in $85B industry dominated by Big Tobacco

Insights

Financial Analyst

22nd Century's corporate update reveals significant strategic shifts that indicate a potential turning point for the company. The $18M debt reduction and operational streamlining demonstrate meaningful financial discipline, though specific metrics on remaining debt obligations aren't provided.

The company's pivot to an exclusive tobacco focus represents a crucial strategic refinement. By divesting non-core hemp, hops, and cannabis operations, 22nd Century is concentrating resources on their FDA-authorized VLN® cigarettes—their clear competitive advantage in the $85 billion tobacco market.

The contract manufacturing business serves as a strategic foundation, providing essential revenue stability while the higher-margin VLN® products scale. This two-pronged approach potentially creates a sustainable business model: CMO operations covering overhead costs while proprietary products drive profit growth.

Their Q2 2025 VLN® relaunch across three variants (Gold, Red, and Menthol) gives investors a concrete catalyst to monitor. Current distribution in 5,000+ stores provides some market validation, though expansion plans toward the broader 272,000-store universe lack specific timelines or partnership details.

The parallel drawn to low-alcohol spirits suggests a potentially viable market opportunity, but without quantifiable metrics on current VLN® product performance or specific growth projections, investors have visibility into realistic market penetration expectations.

While the CEO projects 2025 as the start of a "profitable growth phase," the letter lacks concrete financial targets or specific profitability milestones, leaving the timeline for positive earnings somewhat ambiguous.

Corporate Update Letter Highlights Plans to Begin Profitable Growth Phase in 2025 on Expansion of Rebranded VLN^® Cigarette Products

MOCKSVILLE, N.C., April 08, 2025 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (Nasdaq: XXII), a tobacco products company that is leading the fight against nicotine by offering smokers a choice about their nicotine consumption, today issued the following letter to stockholders from Larry Firestone, the Chief Executive Officer of 22^nd Century Group, Inc.:

A Letter to Our Shareholders From Larry Firestone, CEO & Chairman – 22nd Century Group

It’s been 16 months since I stepped into the role of Chairman and CEO, and I’ve never been more energized by the mission we’re driving forward together.

Before diving into this update, I want to take a moment to express my genuine appreciation to every member of our team whose vital roles help 22^nd Century Group change the future of nicotine consumption. Thank you!! You are the reason we’re making real progress—and the reason that we will be successful.

I’ll walk you through a few industry shifts that are working in our favor and what’s still ahead of us to achieve greatness.

Our Industry – Tobacco 

Big Tobacco for decades has dominated the industry, with a market size that is over $85 billion strong and a single mission to keep people dependent on nicotine.

At 22nd Century, we’re flipping that script. The majority of adult smokers say they want to quit, but fewer than 10% actually can. That’s where VLN^® steps in. We’re not trying to reinvent the wheel—we’re redefining it. VLN^® is the only FDA-authorized cigarette that puts control back in the smoker’s hands with 95% less nicotine.

There’s one big question we keep asking: What if smokers could take control of their nicotine consumption and still enjoy a cigarette?

Nicotine dependence still drives billions in healthcare costs and keeps nearly 29 million adult smokers in a cycle they want out of. Nearly half that number, 15 million try to quit every year with less than 1 in 10 succeeding.

This is why VLN^® matters. We’re not asking smokers to quit—we’re giving them the option to manage their consumption without compromise. VLN^® lets smokers keep the ritual, the sensation, the satisfaction—on their own terms. Real choice. Real control.

And with the FDA proposing new lower nicotine limits, VLN^® already meets this standard. No scrambling needed. While others are stuck in the approval queue, we’re in the market and ready to go. 

A great example of a changing landscape is the zero- and low-proof spirits trend. A few years ago, it was niche. Now, it’s a multi-billion-dollar movement. Same deal here: even if just a fraction of adult smokers switch to VLN^® for whatever reason—habit, health, or just to cut back—the VLNC (Very Low Nicotine Content) category could be worth billions. And we’re the only player leading that charge.

2024: Reset. Refocus. Relaunch 

This past year was all about setting the foundation. Here’s what we have accomplished:

• We went all-in on tobacco. Divested out of hemp, hops, or cannabis.
• Streamlined our operations, diminished significant cash burn.
• Slashed ~$18M in debt, strengthening our balance sheet 
• Gave VLN^® a bold new look and feel with a robust go to market strategy.
• Developed retail partnerships that’ll relaunch VLN^® in thousands of stores across the U.S.
  

Vertical Integration, Strategic Expansion

Our core contract manufacturing (CMO) business is the backbone of our operations. It’s high-volume, low-margin—and absolutely essential to our success. We provide full turnkey services to secondary and tertiary tobacco brands providing manufacturing, compliance, and supply chain. They handle the brand. We handle everything else for them.

Here’s why CMO is a major strategic win:

• It gives us a vertically integrated platform for our core product—we control the manufacturing, distribution, and marketing of VLN^® and other proprietary products.
• With new long-term, properly priced contracts, CMO provides revenue that addresses all of our overhead and provides stability to our operations.
• It opens doors. We’re leveraging customer partnerships and brand equity to launch VLN^® and new partner brands—growing into new channels and stores.
  

Starting Q2 2025, we’re hitting the market with our bold new branding, featuring:

• VLN^® Gold
• VLN^® Red
• VLN^® Green (Menthol)
  

Already in 5,000+ stores—and aiming for a growing slice of the 272,000-stores nationwide.

We’re also launching partner-branded VLN^® products—a win-win. Our CMO customers get a premium, high-margin SKU and we get a fast track into new stores, new audiences, and greater awareness. Think of it like your favorite beverage offering a low-proof version: same vibe, less buzz, new category.

And that’s exactly where we’re headed: building the Very Low Nicotine Content (VLNC) category. Just like low-proof spirits carved out their space, VLN^® will stand on its own shelf—with its own story.

2025 and Beyond: Time to Grow

We’ve stabilized. We’ve streamlined. And we’ve struck the match and created the spark.

This year is about scale—and profit. VLN^® is our statement. Our CMO business is funding our freedom. We’ve got the strategy, team, and partnerships to finally take 22nd Century into self-sustaining territory.

We’re not just building a brand. We’re creating a whole new lane in the $85 Billion Dollar industry—and bringing smokers options with VLN^®.

Thanks for being part of the journey.

Larry Firestone
Chief Executive Officer

About 22nd Century Group, Inc.

22nd Century Group is the pioneering nicotine harm reduction company in the tobacco industry enabling smokers to take control of their nicotine consumption. 

We created our flagship product, the VLN^® cigarette, to give traditional cigarette smokers an authentic and familiar alternative that helps them take control of their nicotine consumption. VLN^® cigarettes have 95% less nicotine than the traditional cigarette and have been proven to greatly reduce nicotine consumption. Instead of offering new ways of delivering nicotine to addicted smokers, we offer smokers the option to take control of their nicotine consumption and make informed and more productive choices, including the choice to avoid addictive levels of nicotine altogether. 

Our wholly owned subsidiaries include a leading cigarette manufacturer that produces all VLN^® products and provides turnkey contract manufacturing for other tobacco brands both domestically and internationally. The 60,000 square foot facility in Mocksville, North Carolina has the capacity to produce more than 45 million cartons of combustible tobacco products annually with additional space for expansion. 

Our proprietary reduced nicotine tobacco blends are made possible by comprehensive and patented technologies that regulate nicotine biosynthesis activities in the tobacco plant, resulting in full flavor and high yield with 95% less nicotine. Our extensive patent portfolio has been developed to ensure we have the only low nicotine combustible cigarette in the United States and critical international markets.

VLN^® is a registered trademark of 22nd Century Limited LLC.

Learn more at xxiicentury.com, on X (formerly Twitter), on LinkedIn, and on YouTube.

Learn more about VLN^® at tryvln.com.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements, including but not limited to our full year business outlook. Forward-looking statements typically contain terms such as “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “explore,” “foresee,” “goal,” “guidance,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “preliminary,” “probable,” “project,” “promising,” “seek,” “should,” “will,” “would,” and similar expressions. Forward-looking statements include, but are not limited to, statements regarding (i) our cost reduction initiatives, (ii) our expectations regarding regulatory enforcement, including our ability to receive an exemption from new regulations, (iii) our financial and operating performance and (iv) our expectations for our business interruption insurance claim. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in “Risk Factors” in the Company’s Annual Report on Form 10-K filed on March 20, 2025. All information provided in this release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law.

Investor Relations & Media Contact
Matt Kreps
Investor Relations
22nd Century Group
mkreps@xxiicentury.com
214-597-8200

FAQ

What are the key features of 22nd Century Group's (XXII) VLN® cigarettes?

VLN® cigarettes contain 95% less nicotine than traditional cigarettes and are the only FDA-authorized reduced nicotine cigarettes in the market.

How many stores will XXII's VLN® products be available in Q2 2025?

VLN® products will be available in 5,000+ stores initially, with plans to expand across 272,000 stores nationwide.

What debt reduction has XXII achieved in their recent restructuring?

22nd Century Group has reduced approximately $18 million in debt as part of their operational streamlining efforts.

What new VLN® product variants will XXII launch in Q2 2025?

XXII will launch three variants: VLN® Gold, VLN® Red, and VLN® Green (Menthol).

How has XXII streamlined its business operations?

XXII has divested from hemp, hops, and cannabis to focus exclusively on tobacco, while reducing cash burn and strengthening their balance sheet.