Juul Labs agreed to pay North Carolina $ 40 million and change its business practices in the state.
Regulatory and health authorities have blamed the company for the rise in popularity of e-cigarettes among teens in recent years. In 2019, federal data found that more than one in four high school students had used an e-cigarette in the past 30 days, compared to 11.7 percent just two years earlier. In 2020, that number dropped to 19.6 percent of high school students due to tighter government controls and the coronavirus pandemic.
“North Carolina is now the first state in the nation to hold Juul accountable for its pivotal role in creating a youth vaping epidemic,” North Carolina Attorney General Josh Stein said in a news conference that marked the deal on Monday.
North Carolina began its investigation in 2018 and announced the lawsuit the following year. In May, the judge ruled that Juul destroyed documents, published thousands of pages of irrelevant information, and ignored relevant court orders. The company faced millions in fines for this decision, but the agreement announced Monday will clarify that list.
Under the agreement, Juul may not, among other things, target minors in its advertising, use people under the age of 35 in its marketing materials, or pay influencers to promote its products. The agreement also limits the number of devices and capsules that North Carolina consumers can purchase each month and each year. The $ 40 million will be used to support teens addicted to e-cigarettes, fund prevention programs, and help pay the costs of litigation.
“This agreement is in line with our ongoing efforts to reshape our company and its relationship with our shareholders as we continue to combat the use of minors and promote harm reduction opportunities for adult smokers,” a Juul spokesperson said in a statement opposite to CNBC. .
The company also said it looks forward to working with Stein and other manufacturers to develop potential industry-wide marketing practices and support the use of the money to reduce the use of minors.
At least nine other states have followed North Carolina’s lead with their own lawsuits, and a 39-state coalition is investigating Juul.
But these are not the only legal cases with Juul at the center. Tobacco giant Altria is opposing the Federal Trade Commission for its 2018 investment in the startup. The agency argues that the Marlboro maker engaged in anti-competitive practices when the two companies tried to reach an agreement. Since the initial investment of $ 12.8 billion in Juul, Altria has written off its value three times, reducing its value by $ 11.2 billion.