E-cigarette manufacturer Juul Labs reached an agreement in principle with 34 states and territories, ending a two-year probe into the company's advertising practices.
The deal was announced Tuesday by Texas Attorney General Ken Paxton, who led the investigation with the attorneys general from Connecticut and Oregon. Fox Business reached out to Juul for comment on the settlement, but they did not immediately respond.
"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," Paxton said in a statement. "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."
As part of the agreement, Juul will pay $438.5 million over the course of six to ten years. If the payments are spread toward the higher end of that range, the amount will increase, so if payment is done over ten years, they would amount to $476.6 million, Paxton's office announced.
Texas is set to collect $42.6 million of the $438.5 million total.
Paxton's office said their investigation into Juul found that the company "became a dominant player in the vaping industry by willfully engaging in an advertising campaign that appealed to youth." This, they said, was done by marketing to underage consumers through methods including social media, free samples and enticing flavors, despite knowing it was harmful as well as illegal for them to buy e-cigarettes.
In addition to the payment, Juul will also have to comply with Paxton's office called "a series of strict injunctive terms severely limiting their marketing and sales practices." This includes restrictions on marketing to people under the age of 35, limiting in-store displays, online and retail sales limits and required age verification for all sales.
"This settlement with 34 states and territories is a significant part of our ongoing commitment to resolve issues from the past," a Juul Labs spokesman said in a statement. "The terms of the agreement are aligned with our current business practices which we started to implement after our company-wide reset in the Fall of 2019. With today’s announcement, we have settled with 37 states and Puerto Rico, and appreciate efforts by Attorneys General to deploy resources to combat underage use."
The spokesman added that Juul continues to be "focused on the future as we work to fulfill our mission to transition adult smokers away from cigarettes ‚ the number one cause of preventable death — while combating underage use," and that they are appealing the FDA's marketing denial order.
Besides Texas, the parties to the settlement include 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.