Nevada to see nearly $14.5M from multistate settlement with e-cigarette maker JUUL Labs

Nevada Attorney General Aaron D. Ford on Tuesday announced a $438.5 million agreement in principle between JUUL Labs and 34 states and territories resolving a two-year bipartisan investigation into the e-cigarette manufacturer’s marketing and sales practices.

Nevada served on the executive committee of the multistate investigation, and as part of the settlement, will receive $14,473,168.72.

In addition to the financial terms, the settlement would force JUUL Labs to comply with a series of strict injunctive terms severely limiting their marketing and sales practices.

“For years, JUUL Labs knowingly marketed its product to underage users, directly working to expose minors to nicotine use and abuse,” said AG Ford. “This settlement will help Nevada’s youth by curbing these harmful marketing tactics and holding the company accountable for its breach of public trust.”

JUUL Labs was, until recently, the dominant player in the vaping market. The multistate investigation revealed that JUUL Labs rose to this position by willfully engaging in an advertising campaign that appealed to youth, even though its e-cigarettes are both illegal for them to purchase and are unhealthy for their use.

The investigation found that JUUL Labs relentlessly marketed to underage users with launch parties, advertisements using young and trendy-looking models, social media posts and free samples.

In addition, JUUL Labs marketed a technology-focused, sleek design that could be easily concealed and sold its product in flavors known to be attractive to underage users. JUUL also manipulated the chemical composition of its product to make the vapor less harsh on the throats of young and inexperienced users. To preserve its young customer base, JUUL Labs relied on age verification techniques that it knew were ineffective.

The investigation further revealed that the company’s original packaging was misleading in that it 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 three to four 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 Labs chooses to extend the payment period up to ten years, the final settlement would reach $476.6 million. Both the financial and injunctive terms exceed any prior agreement JUUL Labs has reached with states to date.

As part of the settlement, JUUL has agreed to refrain from:

— Marketing their product to youth
— Depicting people under age 35 in any marketing
— The use of cartoons in their marketing materials
— The sale of brand name merchandise
— The sale of flavors not approved by FDA
— Making representations about nicotine not approved by FDA
— Allowing access to websites without age verification on landing page
— Making misleading representations about nicotine content
— Advertising on billboard and public transportation
— Using paid “influencers,” product placement and sponsorships/naming rights
— Using direct-to-consumer ads unless there is a form of age verification
— providing free samples

In addition, JUUL Labs will restrict its advertising to outlets with an audience made up of 85% adults; will limit advertising on social media to testimonials by people over the age of 35, with no health claims; and have committed to funding education programs.

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.

Nevada joins Alabama, Arkansas, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maryland, Maine, Mississippi, Montana, North Dakota, Nebraska, New Hampshire, New Jersey, Ohio, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, Wisconsin and Wyoming in signing on to the agreement.