Juul to Pay $438.5 Million in Multistate Settlement

Agreement follows 2-year investigation into e-cigarette company’s marketing and sales practices
Juul electronic vape products
Photograph: Shutterstock

HARTFORT, Conn. — Juul Labs will pay $438.5 million to 34 states and territories to settle a two-year investigation into its marketing and sales practices.

Under the agreement, the San Francisco-based e-cigarette company must also refrain from youth marketing, advertising on billboards, giving free samples of product and more, according to an announcement by Connecticut Attorney General William Tong. Further restrictions include where the product may be displayed and accessed in stores, retail sales limits and a retail compliance check protocol.

Tong, who led the probe and negotiations along with his counterparts in Texas and Oregon, announced the settlement Tuesday. Connecticut will receive a minimum of $16.2 million through the settlement, which is intended to be used for cessation, prevention and mitigation, he said.

“Connecticut led 34 states and territories in reaching this landmark $438.5 million agreement with Juul that will end youth marketing and send millions of dollars to programs nationwide to drive down tobacco use,” Tong said. “Juul’s cynically calculated advertising campaigns created a new generation of nicotine addicts. They relentlessly marketed vaping products to underage youth, manipulated their chemical composition to be palatable to inexperienced users, employed an inadequate age verification process and misled consumers about the nicotine content and addictiveness of its products. The full public health ramifications of this misconduct are yet unknown.”

Juul said in a statement on its website the settlement is a significant part of its ongoing commitment to “resolve issues from the past.”

“The terms of the agreement are aligned with our current business practices which we started to implement after our company-wide reset in the Fall of 2019. With today’s announcement, we have settled with 37 states and Puerto Rico, and appreciate efforts by attorneys general to deploy resources to combat underage use,” the statement read, in part.

The Investigation

Connecticut announced in July 2019 an initial investigation into health claims made by Juul. In March 2020, it announced the multistate investigation into Juul, focusing on the e-cigarette maker’s marketing and sales practices that allegedly targeted young people.

The investigation revealed that Juul became the dominant player in the vaping market by willfully engaging in an advertising campaign that appealed to youth, even though its e-cigarettes were illegal for youth to purchase and unhealthy for them to use, Tong said.

“The investigation found that Juul relentlessly marketed to underage users with launch parties, advertisements using young and trendy-looking models, social media posts and free samples. It marketed a technology-focused, sleek design that could be easily concealed and sold its product in flavors known to be attractive to underage users,” Tong said in the settlement announcement. “Juul also manipulated the chemical composition of its product to make the vapor less harsh on the throats of the young and inexperienced users. To preserve its young customer base, Juul relied on age verification techniques that it knew were ineffective.”

The investigation also revealed Juul’s original packaging was misleading in that it did not clearly disclose that it contained nicotine, and it implied it contained a lower concentration of nicotine than it did, Tong said.

“Corporations have a responsibility to understand the power of marketing and to be truthful in their advertising, especially when public health and safety are at risk,” said Connecticut Department of Consumer Protection Commissioner Michelle Seagull. “This settlement will prevent future marketing of these vape products to young people and other irresponsible advertising tactics that lead a new generation to nicotine addiction.”

The states are in the process of finalizing and executing the settlement documents, which could take up to a month. The $438.5 million will be paid out over six to 10 years, and the amount may increase if Juul extends the payment period.

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 have signed on to the agreement.

As part of the settlement, Juul also agreed to refrain from a slew of activities such as paid product placement, use of cartoons, direct-to-consumer ads unless age-verified and sale of flavors not approved by the U.S. Food and Drug Administration (FDA).

Juul’s Pending PMTA

The FDA continues to review Juul’s premarket tobacco product application (PMTA) after it rescinded a marketing denial order (MDO), pending further review.

Juul’s PMTA is for its Virginia tobacco-flavored pods at nicotine concentrations of 5% and 3% and menthol-flavored pods at nicotine concentrations of 5% and 3%.

“We remain focused on the future as we work to fulfill our mission to transition adult smokers away from cigarettes—the No. 1 cause of preventable death—while-combating underage use,” Juul said in its statement responding to the multistate settlement. “We recently submitted an administrative appeal, based on science and evidence, to FDA, demonstrating that its [MDO] of our products was substantively and procedurally flawed and should be rescinded. We believe that once the FDA does a complete review of all of the science and evidence presented, as required by law, and without political interference, we should receive marketing authorization.

"As we go through the FDA’s administrative appeals process, we continue to offer our products to adult smokers throughout the U.S.”

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