On September 7th, Attorney General Leslie Rutledge of Arkansas announced a $438.5 million settlement agreement between JUUL and 34 states and territories, resolving a two-year investigation into the electronic cigarette manufacturer's marketing and sales practices. In addition to financial terms, the settlement will force JUUL to comply with a series of strict injunction terms limiting its marketing and sales practices. Arkansas will receive $13,553,391.88 over the course of five years.
Justice Department Chief Rattlitch stated, "Companies like JUUL spreading misinformation and encouraging young people to purchase e-cigarette products are the cause of this epidemic, which continues to be a prevalent problem in our schools and communities. After two years of investigation, I am holding JUUL accountable for their actions and ensuring that they will comply with the law in the future, so that Arkansans are protected from fraudulent business practices.
Until recently, JUUL was the dominant player in the electronic cigarette market. Multiple state investigations have revealed that JUUL intentionally marketed their e-cigarettes to attract young people, despite it being illegal and unhealthy for minors to use their products. The investigation found that JUUL callously marketed to underage users through events, ads featuring trendy young models, social media posts, and free samples. They promoted a technology-focused, sleek design that could easily be hidden and sold their products in flavors that were attractive to underage users. JUUL even tweaked the chemical composition of its products to reduce the harshness of the vapor on young and inexperienced users' throats, all to retain their youthful customer base.
Further investigation has revealed that JUUL's original packaging is misleading, as it does not clearly disclose the presence of nicotine and implies a lower concentration than is actually contained. Consumers are also misled into believing that consuming one JUUL pod is equivalent to smoking one pack of combustible cigarettes. The company also falsely claims that its product is a smoking cessation device, making such a statement without FDA approval.
Each state is finalizing and implementing a settlement agreement, which is expected to take approximately 3-4 weeks. A total of $438.5 million will be paid over the course of 6-10 years, with the payment amount increasing the longer the company takes to pay. If JUUL chooses to extend the payment period to ten years, the final settlement amount will reach $476.6 million. The financial and injunction terms exceed any previous agreements reached by JUUL with the states thus far.
As part of a settlement agreement, JUUL has agreed to avoid:
The Youth Marketing Educational Scholarship Program targets individuals under the age of 35 in any marketing campaign. The use of cartoons and paid product placements is permitted to sell branded goods. Landing pages can provide access to websites without age verification for fragrances not approved by the FDA. Statements about nicotine not approved by the FDA and misleading statements about nicotine content are not allowed. Sponsorships and naming rights cannot be used unless 85% of the audience is adults. Advertising is restricted in stores, online, and on public transportation and social media, except for recommendations for individuals over 35 without health claims. The agreement also includes sales and distribution restrictions, such as product display and access locations in stores, online sales restrictions, retail sales restrictions, age verification for all sales, and retail compliance inspections.
An investigation led by Connecticut, Texas, and Oregon has resulted in a joint agreement signed by Alabama, Arkansas, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maryland, Maine, Mississippi, Montana, North Dakota, Nebraska, New Hampshire, New Jersey, Nevada, Ohio, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, Wisconsin, and Wyoming.
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