Photo: SERGEI SUPINSKY
Photo: Getty Images
Attorney General Rosenblum announced today a $438.5 million agreement between JUUL Labs and 34 states and territories resolving a two-year bipartisan investigation into the e-cigarette manufacturer’s marketing and sales practices. In addition to the financial terms, the settlement forces JUUL to comply with a series of strict injunctive terms severely limiting their marketing and sales practices. Oregon will receive $18.8 million in the settlement but could receive up to $20.5 million if JUUL extends the payment schedule. Attorney General Rosenblum co-led the investigation with the Attorneys General of Connecticut and Texas.
"The conduct that led to this settlement was reprehensible and demonstrates pure corporate greed at its most damaging,” said Attorney General Rosenblum. "Just when we were starting to make serious progress reducing tobacco use among our young people, JUUL came along and hooked another generation. They intentionally targeted kids with slick and misleading ads to get them hooked on their nicotine products. The cost to society and the public health consequences are enormous and devastating."
Until recently JUUL was the dominant player in the vaping market. The multistate investigation revealed that JUUL willfully engaged in an advertising campaign that appealed to youth, even though its e-cigarettes are both illegal for them to purchase and unhealthy for children. The investigation found that JUUL relentlessly marketed to underage users with launch parties, advertisements using young and trendy-looking models, social media posts and free samples. It marketed a technology-focused, sleek design that could be easily concealed and sold its product in attractive flavors. JUUL also manipulated the chemical composition of its product to make the vapor less harsh on the throats of the young and inexperienced users. To preserve its young customer base, JUUL relied on age verification techniques that it knew were ineffective.
The investigation further revealed that JUUL’s original packaging was misleading and did not clearly disclose that it contained nicotine and implied that it contained a lower concentration of nicotine than it did. Consumers were also misled to believe that consuming one JUUL pod was the equivalent of smoking one pack of combustible cigarettes. The company also misrepresented that its product was a smoking cessation device without FDA approval to make such claims.
The states are in the process of finalizing and executing the settlement documents, a process that takes approximately 3-4 weeks. The $438.5 million would be paid out over a period of six to ten years, with the amounts paid increasing the longer the company takes to make the payments. If JUUL chooses to extend the payment period up to ten years, the final settlement would reach $476.6 million.
"Hopefully, this settlement will provide states with needed resources to help young people stop using e-cigarettes and will prevent future generations from being targeted with slick marketing tactics like those used to attract youth to JUUL's products," Rosenblum added.
As part of the settlement, JUUL has agreed to refrain from:
- Youth marketing
- Funding education programs
- Depicting persons under age 35 in any marketing
- Use of cartoons
- Paid product placement
- Sale of brand name merchandise
- Sale of flavors not approved by FDA
- Allowing access to websites without age verification on landing page
- Representations about nicotine not approved by FDA
- Misleading representations about nicotine content
- Sponsorships/naming rights
- Advertising in outlets unless 85 percent audience is adult
- Advertising on billboards
- Public transportation advertising
- Social media advertising (other than testimonials by individuals over the age of 35, with no health claims)
- Use of paid influencers
- Direct-to-consumer ads unless age-verified, and
- Free samples.
The agreement also includes sales and distribution restrictions, including where the product may be displayed/accessed in stores, online sales limits, retail sales limits, age verification on all sales, and a retail compliance check protocol.
In addition to this multi-state investigation with JUUL, Attorney General Rosenblum last year successfully championed the Oregon legislature to close an important loophole that allowed underage Oregonians to purchase vaping products over the internet.
The investigation was led by Connecticut, Texas, and Oregon, and joined by Alabama, Arkansas, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maryland, Maine, Mississippi, Montana, North Dakota, Nebraska, New Hampshire, New Jersey, Nevada, Ohio, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, Wisconsin, and Wyoming.
Source: Oregon Attorney General