Electronic cigarette manufacturer Juul Labs has agreed to pay nearly $440 million to settle a two-year investigation by 33 states into its marketing of high-nicotine e-cigarette products. These products have long been accused of being the main driver behind the surge in youth e-cigarette use nationwide.
Connecticut Attorney General William Tong announced the deal on Tuesday, on behalf of several states and Puerto Rico. Puerto Rico had joined forces in 2020 to investigate Juul's early promotional activities and claimed the safety and benefits of its technology as a smoking alternative.
The settlement has resolved one of the biggest legal threats facing the struggling company, however, it still faces nine separate lawsuits from other states. Additionally, Juul is also facing hundreds of individual lawsuits brought by teenagers and others who claim to have become addicted to the company's e-cigarette products.
According to a statement, a national investigation has found that Juul marketed its e-cigarettes to underage minors through parties, product giveaways, advertisements, and social media posts featuring young models.
Through this settlement, we have acquired hundreds of millions of dollars to aid in reducing nicotine use, and have compelled Juul to accept a series of strict prohibitory clauses aimed at ending their adolescent marketing tactics and combating underage sales," said Juul spokesperson Tong in a press release.
A sum of $438.5 million will be paid within a period of 6 to 10 years. Tong stated that at least $16 million paid by the state of Connecticut will be used for prevention and education efforts. Prior to this settlement, Juul had resolved lawsuits in Arizona, Louisiana, North Carolina, and Washington.
Most of the restrictions imposed by the settlement on Tuesday will not affect Juul's practices. Juul stopped using parties, giveaways, and other promotional activities a few years ago after being scrutinized.
Since its launch in 2015, the use of e-cigarettes by teenagers has surged, leading to the US Food and Drug Administration declaring a "epidemic" of underage e-cigarette use among youths. Health experts warn that this unprecedented growth could result in a generation of young people becoming addicted to nicotine.
Since 2019, Juul has mostly been in retreat, abandoning all US advertising and removing its fruit and candy flavors from store shelves.
The biggest blow occurred earlier this summer, when the FDA began banning all Juul e-cigarettes from entering the market. Juul challenged this decision in court, prompting the FDA to resume its scientific review of the company's technology.
The FDA's review is part of a comprehensive examination of the multi-billion-dollar electronic cigarette industry by regulatory authorities, following years of regulatory delays. The agency has authorized some electronic cigarettes for adult smokers who are looking for less harmful alternatives.
Although Juul initially focused on marketing to young urban consumers, the company has since shifted towards positioning its product as an alternative source of nicotine for older smokers.
The company stated that they will continue to focus on their future as they fulfill their mission to prevent the leading cause of preventable deaths among adult smokers, while also combating underage usage.
As part of a settlement agreement, Juul has agreed to avoid a series of marketing practices. These include not using cartoon characters, paying social media influencers, depicting individuals under the age of 35, advertising on billboards and public transportation, and advertising through any channel unless 85% of the audience is adults.
The deal also includes restrictions on the placement of Juul products in stores, age verification for all sales, and limitations on online and retail sales.
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