Juul will pay $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 largest multi-state settlement the company has reached to date, the attorneys general said during a press conference. The deal will impose strict limits on Juul’s sales and marketing abilities, and will force Juul to secure its products behind retail store counters and verify the age of purchasers, the officials added.
The states that reached the settlement with Juul are New York, California, Massachusetts, New Mexico, Illinois and Colorado.
“There is no doubt that Juul played a central role in the vaping epidemic today,” New York Attorney General Letitia James said. “Juul is paying for widespread harm caused and will undergo severe restrictions on its marketing and sales practices.”
California will receive $175.8 million, which will be used for e-cigarette research, education and enforcement, the state’s Attorney General Rob Bonta said. New York will get $112.7 million over an eight-year period, which will support underage vaping abatement programs across the state.
Massachusetts will receive $41 million.
Juul did not immediately respond to CNBC’s request for comment.
The settlement adds to years of heavy scrutiny on Juul, the one-time Silicon Valley darling among both tobacco giants and investors.
Teen vaping skyrocketed nationwide after the company 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 company 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.
The company on Monday reached a $7.9 million settlement in a West Virginia lawsuit alleging the company marketed products to underage users. Juul also said in September it would pay nearly $440 million to settle a two-year probe by 33 states into the marketing of its e-cigarettes.
The San Francisco-based company dropped all U.S. advertising and discontinued most of its flavors in 2019.
The FDA also ordered Juul to stop selling its vaping products last June. But it placed a temporary hold on the order a month later, and it is not in effect now.
Those legal and regulatory hurdles have hurt Juul’s bottom line.
The company in November said it secured enough new funding to stave off bankruptcy. But at the time it announced plans to lay off about 400 staff and cut its operating budget by 30% to 40%.
Juul appeared to be exploring other options in January. Company executives were in early stage talks with Philip Morris, Japan Tobacco and Altria about a potential sale, investment or alliance, the Wall Street Journal reported at the time.
More than 3 million middle and high school students used tobacco products last year, according to a report released in November by the FDA and the U.S. Centers for Disease Control and Prevention.
E-cigarettes were the most common tobacco product among those young people, as more than 2.5 million students used them, the report said. It added that youth use of tobacco products in any form is unsafe.
This story is developing. Please check back for updates.
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