The Vermont Attorney General’s Office has joined 33 other states in reaching a $438.5 million agreement in principle with JUUL Labs, resolving a two-year bipartisan investigation into the e-cigarette manufacturer’s marketing and sales practices. Under the terms of the agreement in principle, the State of Vermont will receive approximately $8 million over a period of six to ten years. In addition to the financial terms, the settlement would force JUUL to comply with strict injunctive terms severely limiting their marketing and sales practices, including refraining from marketing to youth.
“JUUL led the charge in reversing decades of progress in fighting nicotine addiction,” said Attorney General Susanne Young. “JUUL targeted young people, including children, in their advertising and product design. As a result, a generation of youth are newly addicted to nicotine – a crisis that is evident in schools across Vermont. This settlement is an important step in fighting this public health crisis, but there is still work to be done. Vermont is a leader in enforcing its consumer protection and tobacco laws, and we will continue to hold companies accountable for fueling the youth vaping crisis.”
JUUL was, until recently, the dominant player in the vaping market. The multistate investigation revealed that JUUL 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 youth to use. The investigation found that JUUL relentlessly marketed to underage users with launch parties, advertisements using young and trendy-looking models, social media posts, and free samples. It 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 the young and inexperienced users. To preserve its young customer base, JUUL relied on age verification techniques that it knew were ineffective.
The investigation further revealed that JUUL’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 actually did. Consumers were 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 3-4 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 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 has reached with states to date.
As part of the settlement, JUUL has agreed to refrain from:
- Youth marketing
- Funding education programs
- Depicting persons under age 35 in any marketing
- Use of cartoons and paid product placement
- Sale of brand name merchandise
- Sale of flavors not approved by FDA
- Allowing access to websites without age verification on landing page
- Representations about nicotine not approved by FDA
- Misleading representations about nicotine content
- Sponsorships/naming rights
- Advertising in outlets unless 85 percent audience is adult
- Advertising on billboards and public transportation
- Social media advertising (other than testimonials by individuals over the age of 35, with no health claims) and use of paid influencers
- Direct-to-consumer ads unless age-verified
- Free samples
The agreement with JUUL 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. Under Vermont’s Delivery Sales Ban law, it is illegal to sell electronic cigarettes and related ‘vaping’ products over the internet to individual Vermont consumers. Since December 2020, the Attorney General’s Office has reached settlements with twenty-three online sellers of electronic cigarettes, totaling $833,750 in civil penalties.
Vermont is joined in the agreement in principle by the attorneys general of 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, Texas, Utah, Virginia, Wisconsin, and Wyoming.
Contact: Lauren Jandl, Chief of Staff, 802-828-3171