The state of North Carolina said Monday that Juul Labs Inc. will pay $40 million and reform its business practices to resolve a lawsuit that accused the e-cigarette company of hooking young people with its sleek product.
State Attorney General Josh Stein, a Democrat, said the agreement is the first of its kind in the nation and will fund programs that help teens quit vaping.
“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,” Mr. Stein said. “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.”
Under the settlement, the company cannot issue marketing that appeals to anyone under age 21 or make claims comparing the health effects of its products versus combustible cigarettes, Mr. Stein said.
A “secret shopper” program will hold retailers accountable if they fail to follow age-verification procedures.
Vaping among middle school and high school students is a big concern for politicians of all stripes. They have targeted Juul, in particular, for its popular flavored pods and devices that resemble a USB port.
Critics say it is too easy for young people to conceal the devices from teachers and parents.
The company says its devices are designed to help adult smokers quit, and children should never use them. It also points to efforts it took in 2019 to pull most of its flavored product from the market before regulators demanded it.
Juul struck a collaborative tone Monday in a statement about the settlement.
“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,” the company said. “We seek to continue to earn trust through action. Over the past two years, for example, we ceased the distribution of our non-tobacco, non-menthol flavored products in advance of FDA guidance and halted all mass-market product advertising. This settlement is another step in that direction.”
The Food and Drug Administration, under a court order, required e-cigarette and tobacco companies to submit applications by September 2020 to keep their vaping products on shelves.
Regulators must decide by Sept. 9 whether the products are targeted at kids and if they bolster public health by helping adults to quit smoking.
Sen. Richard J. Durbin of Illinois and other congressional Democrats told acting FDA Commissioner Janet Woodcock to take a hard line, dubbing it “the Super Bowl for the FDA’s tobacco effort.”
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