Arkansas will receive $13.5 million over five years as part of a $438.5 million agreement in principle between Juul Labs and 34 states and territories, Attorney General Leslie Rutledge said Wednesday.

The agreement in principle resolves a two-year bipartisan investigation into the e-cigarette manufacturer's marketing and sales practices, the Republican attorney general announced.

In addition to the financial terms, the settlement would force Juul to comply with a series of strict injunctive terms severely limiting its marketing and sales practices, Rutledge said.

"It is the fault of companies like Juul who spread misinformation and incentivized youth to buy vaping products that created this epidemic that continues to be a prevalent problem in our schools and neighborhoods," Rutledge said in a news release.

"After a two-year investigation, I am holding Juul accountable for their actions with the assurance that they will comply with the law in the future because Arkansans deserve to be protected from deceptive business practices," she said.

Asked how the state will use the $13.5 million over five years, Rutledge spokeswoman Amanda Priest said terms of the Juul settlement allocation are still being finalized and will be determined at a later date.

Rutledge's announcement Wednesday came a day after Connecticut Attorney General William Tong announced the deal on behalf of the states, plus Puerto Rico. They joined in 2020 to investigate Juul's early promotions and claims about the benefits of its technology as a smoking alternative.

The settlement, which includes numerous restrictions on how Juul can market its products, resolves one of the biggest legal threats facing the beleaguered company, which still faces nine separate lawsuits from other states.

Additionally, Juul faces hundreds of personal lawsuits brought on behalf of teenagers and others who say they became addicted to the company's vaping products. The states' investigation found that Juul marketed its e-cigarettes to underage teens with launch parties, product giveaways and ads, and social media posts using youthful models, according to a statement.

According to Rutledge's office, the states are in the process of finalizing and executing the settlement documents, a process that takes approximately three or four weeks.

The $438.5 million would be paid out over a period of six to 10 years, with the amounts paid increasing the longer the company takes to make the payments, according to the attorney general's office. If Juul chooses to extend the payment period up to 10 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 younger than 35 in any marketing, use of cartoons, paid product placement, sale of brand name merchandise, sale of flavors not approved by FDA, allowing access to websites without age verification on landing pages and representations about nicotine not approved by the FDA, according to the Arkansas attorney general's office.

Rutledge's office said Juul also has agreed to refrain from misleading representations about nicotine content; sponsorships/naming rights; advertising in outlets unless 85 percent of the audience is adult; advertising on billboards; public transportation advertising, social media advertising other than testimonials by individuals over the age of 35, with no health claims; use of paid influence; direct-to-consumer ads unless age-verified and free samples.

The agreement 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, according to the Arkansas attorney general's office.

Most of the limits imposed by the settlement won't immediately affect Juul, which halted use of parties, giveaways and other promotions after coming under scrutiny several years ago.

Teen use of e-cigarettes skyrocketed in the years following Juul's 2015 launch, leading the U.S. Food and Drug Administration to declare an "epidemic" of underage vaping among young people. Health experts said the unprecedented increase risked hooking a generation of young people on nicotine.

But since 2019 Juul has mostly been in retreat, dropping all U.S. advertising and pulling its fruit and candy flavors from store shelves.

The biggest blow came earlier this summer when the FDA moved to ban all Juul e-cigarettes from the market. Juul challenged that ruling in court, and the FDA has since reopened its scientific review into the company's technology.

The FDA review is part of a sweeping effort by regulators to bring scrutiny to the multibillion-dollar vaping industry after years of delays. The agency has authorized a handful of e-cigarettes from Juul's competitors for adult smokers looking for a less harmful alternative to cigarettes.

While Juul's early marketing focused on young, urban professionals, the company has since shifted to pitching its product as an alternative nicotine source for older smokers.

"We remain focused on our future as we fulfill our mission to transition adult smokers away from cigarettes -- the number one cause of preventable death -- while combating underage use," the company said in a statement.

The states' investigation was led by Connecticut, Texas and Oregon.

Attorneys general in 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, Vermont, Wisconsin, Wyoming have signed on to the agreement.

An official for the American Heart Association in Arkansas on Wednesday praised the agreement.

"Juul has a been the leader in the e-cigarette industry that has falsely marketed e-cigarettes as a safe alternative to cigarettes and as a tool to help adult smokers quit," said David Oberembt, the association's government relations director in Arkansas.

He said tobacco companies have been targeting youth and addicting a new generation to tobacco and nicotine, reversing the decades-long progress that has been made in reducing youth tobacco use.

It's a positive step that tobacco companies are starting to be held liable for marketing to children and that some basic restrictions are being put into place, but there is still a lot more that needs to be done to curb the youth e-cigarette epidemic," Oberembt said in a written statement.

Information for this article was contributed by The Associated Press.

Print Headline: Arkansas to get $13.5M as part of $438.5M Juul settlement

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