By Annika Kim Constantine —
CNBC
Juul has agreed to pay $462 million to settle lawsuits brought by six states and Washington DC for promoting its addictive e-cigarettes to underage teens, five Democratic attorneys general announced Wednesday.
The agreement will place strict limits on Juul's sales and merchandising capabilities, and will require the company to secure its products behind the counters of retail stores and to verify the age of shoppers, the officials added.
The states that have reached an agreement with Juul are New York, California, Massachusetts, New Mexico, Illinois and Colorado.
“There is no question that it played a central role in the current vaping epidemic
,” New York Attorney General Letitia James said, “it is paying for the widespread damage caused and will place severe restrictions on its marketing practices.”
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California will receive $175.8 million,
which will go toward e-cigarette research, education and enforcement, Attorney General Rob Bonta said.
New York will receive $112.7 million
over eight years, which will go toward underage tobacco use reduction programs across the state.
Massachusetts will receive $41 million.
The deal adds to years of heavy scrutiny over Juul, the erstwhile Silicon Valley darling among tobacco companies and investors.
Teen vaping spiked nationwide after the company launched in 2015, prompting the Food and Drug Administration (FDA) to declare an “epidemic” of underage e-cigarette use in
just
three years later.
Parents, schools and politicians largely blamed the company for hooking a generation of young people to its high-nicotine pods.
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Since then, Juul has been rocked by lawsuits and state investigations into its allegedly deceptive products and marketing practices.
On Monday, the company reached a $7.9 million settlement in a West Virginia lawsuit alleging the company marketed products to underage users.
Juul also said in September that it would pay nearly $440 million to resolve a two-year, 33-state investigation into the marketing of its e-cigarettes.
The San Francisco-based company dropped all advertising in the United States and stopped selling most of its flavors in 2019.
The FDA also ordered Juul to stop selling its vaping products last June.
But he temporarily suspended the order a month later, and now it is no longer in effect.
These legal and regulatory hurdles have affected Juul's bottom line.
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In November, the company said it had secured enough financing to avoid bankruptcy.
But at the time it announced plans to lay off about 400 employees and cut its operating budget by 30-40%.
In January, Juul seemed to be exploring other options.
As reported by the Wall Street Journal at the time, the company's executives were in the first conversations with Philip Morris, Japan Tobacco and Altria about a possible sale, investment or alliance.
According to a report released in November by the FDA and the Centers for Disease Control and Prevention (CDC), more than 3 million middle school and high school students used tobacco products last year.
E-cigarettes were the most common tobacco product among these youth, with more than 2.5 million students using them, according to the report.
It added that youth use of tobacco products in any form is not safe.
