Attorney General Paxton agrees to $438.5M settlement following multistate investigation of e-cigarette company JUUL

Texas Attorney General Ken Paxton speaks outside the U.S. Supreme Court on November 01, 2021 in Washington, DC. (Drew Angerer, 2021 Getty Images)

Attorney General Paxton has secured 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. The investigation, initially launched in 2020 by Attorney General Paxton, was led by his office, along with the Attorneys General of Connecticut and Oregon.

Of the $438.5 million, Texas will receive $42.8 million. The settlement will also force JUUL to comply with a series of strict injunctive terms severely limiting their marketing and sales practices.

“When I launched this investigation over two years ago, my goal was to make sure JUUL was held liable for any wrongdoing done in the past and ensure that they change direction to fully comply with the law going forward. This settlement helps accomplish both of those priorities,” said Attorney General Paxton. “My commitment to protecting consumers from deceptive business practices is unwavering, and any company that misleads Texans, especially our youth, will be held accountable for their actions.”

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The multistate investigation revealed that JUUL became a dominant player in the vaping industry by willfully engaging in an advertising campaign that appealed to youth, even though its e-cigarettes are both illegal for them to purchase and unhealthy for youth to use. The investigation found that JUUL relentlessly marketed to underage users with launch parties, advertisements using young models, social media posts, and free samples. With a technology-focused, sleek design that could easily be concealed, JUUL sold its products 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 underage customer base, JUUL relied on age verification techniques that it knew were ineffective.

The investigation further revealed that JUUL’s early packaging was misleading because it did not clearly disclose that the product contained nicotine and, further, implied that its products contained a lower concentration of nicotine. Consumers were similarly misled into believing that consuming one JUUL e-liquid pod was the equivalent of smoking one pack of combustible cigarettes, and that the product was a smoking cessation device despite the absence of FDA approval to make such claims.

The states are in the process of finalizing and executing the settlement documents. 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.

The agreement also includes strong marketing, sales and distribution restrictions, including restrictions on marketing to persons under age 35, limits on in-store displays and access, online sales limits, retail sales limits, age verification requirements on all sales, and a retail compliance check protocol.

The following states and territories are joining Texas in the settlement: 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, Utah, Virginia, Vermont, Wisconsin, and Wyoming.