E-cigarette company Juul will pay $40 million to settle a lawsuit in North Carolina for allegedly marketing their products to children, state Attorney General Josh Stein (D) announced Monday.
Stein in May 2019 became the first state attorney general to sue the company for its role in the unprecedented surge in youth vaping. Juul is now facing lawsuits in at least a dozen other states.
Juul did not admit to any wrongdoing or liability as part of the settlement, but it did agree to change some aspects of how it does business in the state. Under the terms of the deal, Juul's products must be sold behind the counter at shops, and the company is not allowed to use any individual under the age of 35 in its marketing and promotional materials.
“For years, Juul targeted young people, including teens, with its highly addictive e-cigarette. It lit the spark and fanned the flames of a vaping epidemic among our children — one that you can see in any high school in North Carolina," Stein said in a statement.
In his lawsuit, Stein said Juul marketed its products to youth on social media platforms and through the use of youth-oriented sponsors and social media influencers.
He also accused Juul of using lax age verification techniques for online purchases that allowed people to avoid or circumvent age requirements
Juul will also be required to use an independent age verification system for online sales and ensure its third-party sales partners do the same. Juul further committed to sending teenage “mystery shoppers” to 1,000 stores each year to check whether they are selling to minors.
The settlement prohibits the company from using most social media influencer advertising, outdoor advertising near schools, and sponsoring sporting events and concerts.
"This win will go a long way in keeping Juul products out of kids’ hands, keeping its chemical vapor out of their lungs, and keeping its nicotine from poisoning and addicting their brains," Stein said.
The $40 million will be paid to the state over the next six years. The money will fund programs to help people quit e-cigarettes, prevent e-cigarette addiction, and research e-cigarettes.
“This settlement is consistent with our ongoing effort to reset our company and its relationship with our stakeholders, as we continue to combat underage usage and advance the opportunity for harm reduction for adult smokers," Juul spokesman Josh Raffel said in a statement. "In addition, we support the Attorney General’s desire to deploy funds to generate appropriate science to support North Carolina’s public health interventions to reduce underage use."
At the time of the lawsuit, Juul accounted for about 75 percent of the e-cigarette market, but its dominance has faded.
Tobacco giant Altria purchased a 35 percent stake in Juul at the end of 2018 for $12.8 billion but has since written down the value to about $1.6 billion.
In September of 2019, Juul replaced its CEO with an Altria executive and announced a suspension of all broadcast, print and digital product advertising in the U.S.
Juul, like other e-cigarettes, was marketed as a healthier alternative to traditional combustible cigarettes. But its fruity flavors, combined with sleek initial advertisements on social media, attracted underage teenagers and young adults who had never previously smoked.
Juul eventually stopped selling its most popular fruity flavors, but kept menthol and tobacco. At the same time, the company pledged it would not sell any other flavors under any name unless they are first authorized by the Food and Drug Administration.