Juul Labs, which is battling for its existence in the United States, informally agreed on Tuesday to pay $438,500,000 to resolve a probe by nearly thirty states into the company’s marketing and sales tactics, which they claim sparked the nation’s adolescent vaping epidemic.
The firm said that it did not admit any wrongdoing in the settlement, but that it was attempting to “resolve concerns from the past” while it awaited the Food and Drug Administration’s judgement on whether it would be allowed to continue selling its goods. In an attempt to repair its tainted image and increase its dwindling market value, Juul has been repositioning itself as a provider of vaping devices that may assist people in quitting smoking conventional cigarettes.
The proposed deal forbids the corporation from marketing to minors, supporting instruction in schools, and misrepresenting the nicotine content of its products. A few years ago, when the vaping epidemic was at its pinnacle, Juul had already ceased various marketing strategies and pulled several of its teen-friendly flavoured pods in response to public outcry from politicians, parents, and health professionals.
According to the findings of the multistate inquiry, the corporation attracted to young people by employing young models, utilising social media to woo teens, and distributing free samples. In addition, the investigation discovered that the company’s age verification method for its goods was “permeable” and that 45 percent of its Twitter followers were between the ages of 13 and 17.
Virginia’s attorney general, Jason Miyares, said in a statement that the company’s earlier approach of marketing tastes like mango and crème brûlée appealed to youngsters, as did the device’s sleek, concealable appearance. According to Mr. Miyares’s declaration, one condition of the settlement prohibited the corporation from representing anybody under 35 in its marketing graphics.
Juul said on Tuesday that the payment was “consistent with our current business policies, which we began implementing following our companywide reset in the autumn of 2019.”
This arrangement does not end all of the company’s legal conflicts. In spite of the fact that Juul has already negotiated settlements in litigation filed by the attorneys general of North Carolina, Washington, Louisiana, and Arizona, nine identical cases remain. Important cases brought by New York and California are pending. Approximately 3,600 claims brought by individuals, school districts, and municipal governments have been merged in a California court case that is currently ongoing.
Juul continues to sell tobacco- and menthol-flavored pods and vaping devices while the FDA reviews its application for permanent sales.
In court, Juul was granted a brief reprieve. Since then, it has contended that it assisted two million adult smokers in quitting conventional cigarettes, and it has objected to the agency’s findings about the chemicals in its products. The F.D.A. later reversed its refusal, declaring that it will conduct an extra evaluation of the application’s “scientific concerns.”
The settlement payments, which will be distributed over a period of six to ten years, will be used differently by each state. A spokesperson for the Connecticut attorney general’s office said that the state’s portion (almost $16 million) will be allocated to vaping and nicotine cessation and addiction treatment. Virginia anticipated it would get $16.6 million, while Texas estimated it would receive over $43 million.
The co-founder of Parents Against Vaping E-Cigarettes, Meredith Berkman, was pleased to hear about the settlement. In 2018, she joined the organisation when Juul sent a representative to her son’s ninth-grade high school to speak at an assembly. In a 2019 congressional hearing, Ms. Berkman detailed a discussion in which her son conveyed that the salesperson had represented the device as “completely safe.”
Since then, she said that the organisation has heard from hundreds of families who claimed that their adolescents had grown dependent on Juul and other nicotine and marijuana gadgets.
E-cigarette usage among adolescents seems to have declined in recent years, despite the coronavirus pandemic’s impact on the primary measure of youth tobacco use, a school-based survey performed by the Centers for Disease Control and Prevention. In March, this poll revealed that roughly 8%, or over 2 million students, had used e-cigarettes during the previous 30 days.
While Juul was formerly the most popular vape among teenagers, the poll revealed that candy- and fruit-flavored Puff Bar vapes were preferred, with Juul ranking fourth among students. According to IRI, a marketing research firm, the brand acquired more adult consumers by competing closely with Vuse vapes for the position of market leader, with roughly 30 percent of recent sales.
Altria, which acquired a 35 percent stake in Juul for $12.8 billion in December 2018, stated in a recent investor filing that the company’s share is now valued at approximately $450 million — nearly the same amount that Juul has agreed to pay to settle investigations by nearly two dozen states and Puerto Rico.
Juul lost a substantial amount of market share and value when it bowed to public pressure and ceased selling the flavours that were most popular among teenagers, despite having previously attracted significant attention for its popularity among adolescents.