Vaping firm agrees $462m settlement over marketing to children

The $12 billion deal will see Altria take a 35% stake in Juul.

Vaping firm agrees $462m settlement over marketing to children

California, New York, and other states have announced a $462 (EUR419) million settlement with Juul Labs. This resolves lawsuits alleging that the company aggressively promoted its ecigarettes to youth and fuelled the vaping epidemic in the country.

This agreement ends many of the legal issues that have plagued Juul. Settlements were reached with 47 state and territory governments, as well as with 5,000 individuals and local government. Juul is currently in the middle a Minnesota trial, a case that was unusual in that a settlement could not be reached. The company's attempts to reach settlements over the lawsuits has cost it almost $3 billion, which is a huge sum for a firm still trying to get regulatory approval to continue selling its products.

California, Colorado and the District of Columbia were all part of the latest settlement. Massachusetts, New Mexico, Illinois, California, and New York were also included. The settlement follows other lawsuits that accused the company of failing to warn users about the addictive nature of e-cigarettes with high nicotine levels.

In its lawsuit, California alleged that Juul had not disclosed in its advertising for several months that its devices contained Nicotine. The lawsuit detailed Juul's early marketing campaigns, including the distribution of free samples at popular events in 2015, such as Nocturnal wonderland in San Bernardino, and a "Movies All Night Slumber Party" in Los Angeles. In the New York lawsuit, it was noted that the company used social media hashtags such as #LightsCameraVapor.

The attorneys general of these states carried out investigations and found that Juul executives knew that their marketing initially lured teenagers into purchasing its sleek vaping pen, but they did not do much to correct the issue as the vaping rates among adolescents exploded.

Austin Finan, a spokesman for Juul said that, citing federal statistics, underage use of the company's products has declined by 95 percent since a reset of all Juul devices in the fall 2019. Finan, a spokesman for Juul, said that the settlement represents a near-total resolution to the company's historic legal challenges, and provides certainty for its future.

Finan stated that the terms of the settlement, as with previous agreements, provided financial resources for further combating underage use, developing cessation programmes, and reflecting our current business practices.

Letitia James said that Juul was a major factor in the vaping epidemic in America.

Juul has denied directly marketing to minors on numerous occasions. In settlements with other parties, Juul has never admitted any wrongdoing. The payments made to plaintiffs in these agreements are intended to be used to develop and implement programs to help combat underage smoking. Juul framed these deals as part its efforts to'resolve past issues'.

Juul's sales soared in 2019, when federal data revealed that 27,5% of high school students had used e-cigarettes. More than half of them named Juul as their preferred brand. Juul began to change its marketing strategy as the pressure mounted on the company. It marketed itself as a company that helps adults transition from traditional cigarettes.

Public health experts are concerned that despite the fact that vaping among teens has declined from its peak of 2019, about 2.5 million teenagers continue to use e-cigarettes in rates much higher than adults.

According to the Centers for Disease Control and Prevention, e-cigarettes are used by 4,5 per cent of all adults. In 2022, a survey usually given to middle and high school students found that about 9 percent of them had used e-cigarettes within the past 30 days. Approximately 14 percent of high school students responded to the survey. This is about half of the rate of the 2019 survey.

The recent decline in vaping has been seen as a success by some, but data shows that nearly half of high school students reported using e-cigarettes, and they do so 20-30 days a month.

Juul settled thousands of lawsuits brought by plaintiffs and individuals last year.

The company settled lawsuits filed by over 5,000 individuals and school districts, as well as local governments, for $1.7 billion in December. In September, more than 30 states settled lawsuits with the company for $438.5 millions.

Juul has settled claims with West Virginia in the amount of $7.9 Million this month.

The Minnesota trial began a few week ago. Keith Ellison, state attorney general opened proceedings by accusing the firm of hooking teenagers on e cigarettes'so that they can make money'.

Ellison stated that 'they lured, deceived and addicted a new generation of children after Minnesotans reduced youth smoking rates to the lowest levels in a generation'.

The latest settlement also requires Juul not to market to youths. Juul must also stop marketing to youths and refrain from offering 'free' or 'nominally-priced' products.

Juul continues to struggle with its business. In 2018, Juul dominated the vaping market with revenue of almost $1 billion. Juul is losing market share to Vuse - its main competitor owned by British American Tobacco. Juul doesn't disclose its revenue, but BAT reported that its vapor category, including its popular Vuse product Alto, in the United States had around $1 billion in revenue last year. This is up by more than 60% from the previous year.

Altria, the tobacco giant, had placed its future smokeless on Juul. In 2018, Altria paid $13 billion to acquire a 35% stake in Juul. Juul was then blamed for teenage nicotine addiction and became the defendant of thousands of lawsuits and investigations. Altria valued this stake at $250m by the end of 2018. Earlier this year it exchanged its stake for Juul's heated tobacco intellectual property.

Throughout the last year, there was speculation that Juul would have to file for bankruptcy. The Wall Street Journal reported in late November that two of Juul's directors and its earliest investors provided cash and that the company would lay off 400 employees.

Juul continues to wait for the Food and Drug Administration (FDA) to decide if it will allow sales of its products on a permanent basis. The FDA is currently reviewing numerous applications for e-cigarettes. (Juul products are now on the shelves because FDA does not enforce its premarket clearance requirement.)

In June, the FDA denied Juul's request for permission to sell its products. The FDA said that Juul's data was 'insufficient' and 'conflicting'. The FDA decided to review the'scientific questions' raised in the application. This article was originally published in

The New York Times