Juul pays $462 million to settle claims by six states and Washington D.C. that the vaping company marketed its addictive e-cigarettes to underage teens, five Democratic attorneys general announced Wednesday.
The agreement is the most important multi-state settlement the corporate has reached so far, the attorneys general said during a press conference. It means Juul has now settled in suits with 45 states for more then $1 billion.
The deal will impose strict limits on Juul’s sales and marketing abilities, and can force Juul to secure its products behind retail store counters and confirm the age of purchasers, the officials added.
The states that reached the settlement with Juul are Recent York, California, Massachusetts, Recent Mexico, Illinois and Colorado.
“There isn’t a doubt that Juul played a central role within the vaping epidemic today,” Recent York Attorney General Letitia James said. “Juul is paying for widespread harm caused and can undergo severe restrictions on its marketing and sales practices.”
The settlement adds to years of heavy scrutiny on Juul, the one-time Silicon Valley darling amongst each tobacco giants and investors. A string of payouts to each governments and consumers over allegations that it marketed addictive products to teens has hampered the corporate and left it in search of options to remain afloat.
The settlement brings the corporate closer to a “total resolution of the corporate’s historical legal challenges and securing certainty for our future,” a spokesperson for Juul said. They noted that underage use of Juul products has declined by 95% because the company dropped all U.S. promoting and discontinued most of its flavors in 2019.
“Now we’re positioned to dedicate even greater concentrate on our path forward to maximise the worth and impact of our product technology and scientific foundation,” the spokesperson told CNBC.
Juul’s priority is to secure Food and Drug Administration authorization of the corporate’s Premarket Tobacco Product Applications, which it needs legally market its products within the U.S., the spokesperson said.
The FDA denied those applications last June, essentially banning Juul from selling its vaping products. However the agency placed a brief hold on that call a month later, and it just isn’t in effect now.
Under the settlement announced Wednesday, California will receive $175.8 million, which will probably be used for e-cigarette research, education and enforcement, the state’s Attorney General Rob Bonta said. Recent York will get $112.7 million over an eight-year period, which is able to support underage vaping abatement programs across the state.
Massachusetts will receive $41.7 million, a portion of which is able to fund vaping addiction services. Colorado will get nearly $32 million, Recent Mexico will receive $17 million and D.C. will get around $15 million.
James said Juul led consumers to consider that its vapes are safer than cigarettes. But one pod of Juul’s e-cigarette accommodates as much nicotine as an entire pack of cigarettes, she noted.
She said the corporate’s colourful advertisements often featured young models and flashy parties, which “downplayed the harmful effects” of its products.
“Taking a page out of huge tobacco’s playbook, Juul misled consumers concerning the health risks of their products,” she said.
James highlighted the agreement’s crackdown on Juul’s marketing practices. She noted that the corporate will probably be barred from funding or operating youth education and prevention campaigns.
The agreement will even force Juul to stop using people under 35 years old in its marketing materials that directly or not directly goal young people, James said.
Teen vaping skyrocketed nationwide after the corporate launched in 2015, leading the Food and Drug Administration to declare an “epidemic” of underage e-cigarette use just three years later. Parents, school administrators and politicians largely blamed the corporate for hooking a generation of young people on its high-nicotine pods.
Since then, Juul has been buffeted by lawsuits and state-led investigations over its products and allegedly deceptive marketing practices.
Those legal and hurdles and a possible U.S. ban have hurt Juul’s bottom line.
The corporate in November said it secured enough latest funding to stave off bankruptcy. But on the time it announced plans to put off about 400 staff and cut its operating budget by 30% to 40%.
Juul seemed to be exploring other options in January. Company executives were in early stage talks with Philip Morris, Japan Tobacco and Altria a couple of potential sale, investment or alliance, the Wall Street Journal reported on the time.
Greater than 3 million middle and highschool students used tobacco products last 12 months, in response to a report released in November by the FDA and the U.S. Centers for Disease Control and Prevention.
E-cigarettes were essentially the most common tobacco product amongst those young people, as greater than 2.5 million students used them, the report said. It added that youth use of tobacco products in any form is unsafe.