Juul to pay $14.5 million to settle Arizona vaping lawsuit

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NEW YORK, NY - DECEMBER 19: A sign advertising JUUL products is displayed in a store on December 19, 2019 in New York City. (Photo by Stephanie Keith/Getty Images)

PHOENIX - E-cigarette giant Juul Labs will pay Arizona $14.5 million and vowed not to market to young people in the state to settle a consumer fraud lawsuit.

The settlement announced by Attorney General Mark Brnovich on Nov. 23 is the second Juul has reached with state prosecutors. It ends litigation the Republican U.S. Senate candidate filed in January 2020 against Juul and another maker of electronic cigarettes, alleging they illegally targeted young people in their marketing.

Arizona previously obtained a $22.5 million judgment against defunct vaping product maker Eonsmoke but has not and is not likely to collect any of the money.

Juul Labs admitted no wrongdoing in settling the case and called it "another step in our ongoing effort to reset our company." The company had stopped all advertising before Brnovich sued and ended sales of all flavored products except menthol.

Juul has faced lawsuits from multiple states over marketing of its products, which it touts as a safer alternative to regular tobacco products. In June, it reached a similar deal with North Carolina’s attorney general that included a $40 million payment and promises not to market to minors and boost enforcement of retailers who sell its products. Lawsuits with a handful of other states remain.

E-cigarettes are touted as safer than tobacco cigarettes because while they deliver the addictive drug nicotine they do not give off smoke that contains carcinogens. But they are still addictive and dangerous to health, especially for teenagers whose brains are still developing.

The U.S. Food and Drug Administration approved the first e-cigarette last month, saying the R.J. Reynolds’ product has a clear benefit because it can reduce the use of regular cigarettes. Juul’s product remains under FDA review. Some adulterated vaping products have caused serious health effects.

All but $2 million of the $14.5 million Arizona settlement will be used for programs that discourage the use of vaping products, including cessation and education programs designed to prevent use and nicotine addiction by young people. Juul also agreed in the consent decree to implement a strict retailer monitoring program where it will do compliance checks of at least 25 stores per month across Arizona for two years and take action against those that illegally sell to underage smokers.

The agreement requires Juul not to advertise near schools or target anyone under 21 and to not use social media to market. It is not advertising at all.

The other $2 million will go into a state account the attorney general uses to fund consumer fraud investigations.

"Today’s settlement holds Juul accountable for its irresponsible marketing efforts that pushed Arizona minors toward nicotine and the addiction that follows," Brnovich said in a statement. "Combatting the youth vaping epidemic remains a priority for our office with both our undercover Counter Strike program and zero tolerance for vaping companies that mislead or deceive."

Juul said in its statement on the Arizona settlement that it will "continue working with federal and state stakeholders to advance a fully regulated, science-based marketplace for vapor products."

It said it will continue to support the " Tobacco 21 " anti-smoking group’s push for higher smoking age limits and back enforcement actions against illegal vaping products that "jeopardize the harm reduction potential of alternative vapor products."

The company, which is partly owned by tobacco giant Altria Group, said it is in discussions to settle lawsuits filed by other states.

Vaping among young people exploded in recent years, drawing concerns from health experts and state and federal regulators. But an FDA report released in September showed a steep drop in young people vaping as schools closed because of the coronavirus pandemic.

It was the second straight yearly drop in teen vaping and followed the 2019 enactment of a new federal law that raised the purchase age for all tobacco and vaping products from 18 to 21. Shortly afterward, the FDA banned nearly all flavors from small, cartridge-based e-cigarettes, the products blamed for the big increase in teen use.