North Carolina attorney general sues co-founders of e-cigarette company Juul

North Carolina Attorney General Josh Stein said on Tuesday he was taking legal action against the co-founders of Juul Labs months after reaching a $ 40 million settlement against the e-cigarette giant over the company marketing practices.

Stein also announced an investigation into 20 companies involved in the electronic cigarette industry in North Carolina and into the “use or suspected use” of their products by underage users.

North Carolina is suing Juul co-founders, including Adam Bowen and James Monsees, for their alleged personal involvement in shaping the company’s marketing strategy to appeal to young users, Stein said at a conference on Tuesday. presses his office’s efforts to tackle the rising number of teenagers. vaping in recent years.

The lawsuit, which names Bowen and Monsees as defendants in addition to current and former board members Nicholas Pritzker, Hoyoung Huh and Riaz Valani, is separate from the lawsuit settled in June. Next, Juul agreed to pay $ 40 million to resolve an earlier lawsuit filed by Stein’s office that accused the company of illegally selling and marketing its e-cigarettes to minors.

The previous lawsuit claimed that Juul’s stylish e-cigarettes and variety of sweet flavors made minors consume nicotine, a highly addictive substance, and helped reverse a historic decline in teenage tobacco use.

As part of the settlement, Juul agreed to stop targeting minors in its marketing and was prohibited from using anyone under the age of 35 in its advertising. The company was also required to stop advertising claiming that e-cigarettes are safer alternatives to cigarettes, and was required to sell its products behind counters.

But Stein said on Tuesday that his office is now suing the company’s founders and early investors because “they were intimately involved in shaping Juul’s strategy to design, market and sell its product in a way. whose natural consequence was to sell to young people “.

At the same time, the lawsuit claims, Juul’s founders and investors sought financial gain from their control over the company by positioning it for an acquisition. When tobacco giant Altria bought a 35% stake in Juul in 2018, the deal generated hundreds of millions of dollars in profits for Bowen, Monsees and others, according to the lawsuit.

“They collectively made billions of dollars. It’s wrong for them to take that money out of the business and come away richer, when they’re at fault here, ”said Stein. “So they have to be held accountable and these funds have to come back to North Carolina, where they can go to prevent and treat troubled youth.”

The lawsuit alleges, among other things, that Bowen and Monsees developed the slim design of Juul’s e-cigarette, which resembled a USB stick, and reviewed and approved the marketing materials used in the company’s “Vaporized” advertising campaign that “Featured young models exuding freshness. “

Bowen is also accused of having engineered the chemical composition of the liquid used in e-cigarettes “to have a particularly powerful nicotine effect” and “to minimize the harshness of the vapor for new users,” according to the 98-page complaint.

The lawsuit also accuses the defendants of ignoring concerns about the popularity of electronic cigarettes with underage users, and claims that Monsees complained that a “small percentage of underage consumers [was] creating a lot of noise and distraction[on]. “

NC Electronic Cigarette Industry Survey

Stein’s office has asked 20 companies for a civil investigation, ordering them to provide a series of documents, including the companies’ “knowledge of the attractiveness” of their products to underage users.

These companies include Puff Bar, an electronic cigarette maker that overtook Juul earlier this year as the most popular brand among middle and high school students, according to the Wall Street Journal, as well as 15 retail stores across the state. (including three in Raleigh) which sell electronic cigarettes, an online seller and three distributors.

Businesses are required to provide records of all of their e-cigarette transactions during a specified time period. This includes all documents demonstrating the steps taken by employees to verify the age of buyers. The list of requested documents also includes any policies or procedures companies have in place for age verification.

“Too many players in the electronic cigarette industry operate in a reckless manner that threatens the children of North Carolina,” said Stein. “If and when my investigation reveals illegal activity, I will not hesitate to take appropriate action. “

The investigation remains ongoing, Stein added, and “no one should assume that these are the only retailers we are looking at.”

Need for national industry-wide regulation

In addition to investigating the marketing of e-cigarettes to underage users in North Carolina, Stein advocated for federal standards for the industry that would ban flavors other than tobacco, such as fruit, candy, desserts and mint or menthol.

The infusion of sweet flavors in e-cigarettes and tobacco products “masks the harshness of this tobacco” and leads many young users to believe that what they inhale does not contain nicotine, said Dr Betsey Tilson , director and head of state health. physician in the North Carolina Department of Health and Human Services.

In North Carolina, 70% of e-cigarette users must use their e-cigarettes within an hour of waking up, and 25% of users must use their e-cigarettes within five minutes of waking up, Tilson said. .

“Most of our young people in North Carolina have tried to quit or want to quit and are struggling with this high level of nicotine addiction,” she said.

In August, Stein joined a bipartisan group of state attorneys general to urge Janet Woodcock, then acting Commissioner of the Food and Drug Administration, to issue industry-wide regulations that would ban other flavors. than tobacco, would limit the amount of nicotine in electronic cigarettes and restrict marketing efforts aimed at minors.

On Tuesday, Stein said he contacted Dr Robert Califf, a former FDA commissioner and Duke University researcher who was appointed by President Joe Biden last week to re-head the agency. Stein said he urged Califf to review the recommendations from state officials and “act with greater urgency on this issue.”

“Until the FDA takes decisive action in the industry and across the country, state attorneys general will be playing a game with one company after another,” Stein said at the press conference.

This story was originally published November 16, 2021 2:50 pm.

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