Electronic cigarette giant Juul Labs has agreed to pay $40M to North Carolina in a landmark legal settlement. The lawsuit was filed by Attorney General Josh Stein on behalf of the state in 2019. The suit alleged that the company marketed its products to teenagers and children, NC state attorneys said on Monday, June 29. Juul has also agreed to make a change in its business practices.

Juul will revamp its marketing strategies completely to avoid selling the products to people of an impressionable age. The company is henceforth also banned from using people under the age of 35 or hiring influencers to market their products. Juul is also prohibited from advertising near schools and will not be allowed to use certain flavors in their products, the ones that are popular among young people. 

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Who owns Juul Labs?

Juul Labs' product Juul is highly popular among young consumers. The interesting packaging which makes the flat e-cigarette look like a USB key was one of the factors that helped in the surge of its popularity. The prefilled nicotine portion is also known as the "juul pod" and is available in popular flavors including golden tobacco, glacier mint and mango nectar. The company was founded by entrepreneurs Adam Bowen and James Monsees in 2007 and was known as PAX Labs back then. The name Juul Labs was adopted in 2017 and contrary to popular belief, this wasn't an independent company spun off from PAX Labs, just the name had changed. 

KC Crosthwaite, tobacco giant Altria’s Chief Growth Officer is the CEO of Juul Labs since September 2019. Altria's previous Head of Regulatory Affairs, Joe Murillo, was also appointed as Juul Labs Chief Regulatory Officer a few weeks after Crosthwaite's appointment. The $40M settlement money will go toward rehabilitating youth affected by e-cigarettes. Juul Labs is required to complete the payment over the next six years. 

The order issued on June 28 states, "Under this consent order, Juul cannot sell mint. It cannot sell mango, it cannot sell crème brulee, or any other flavor." They will not be able to do so without authorization from the US Food and Drug Administration, Stein said in a news briefing after a court hearing. "Juul must abandon all marketing strategies and content that appeals to young people. Juul will be prohibited from influencer advertising, outdoor advertising near schools, sponsoring sporting events and concerts, and most importantly, most social media advertising.

"Juul cannot use anyone under the age of 35 years in their advertising. Juul cannot make any claims that its e-cigarettes are safer or better for your health than combustible cigarettes," Stein added. A spokesperson for Juul Labs in a statement said they were in support to reduce underage nicotine use. "We look forward to working with Attorney General Stein and other manufacturers on the development of potential industrywide marketing practices based on science and evidence. In addition, we support the Attorney General's desire to deploy funds to generate appropriate science to support North Carolina's public health interventions to reduce underage use," the spokesperson said.