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Juul Labs Inc. has struck a $40 million settlement with North Carolina over a lawsuit claiming it aimed its e-cigarette products at young people, in what the state called the first such agreement to hold Juul accountable for its marketing.

North Carolina Attorney General Josh Stein and the company told a state judge of the settlement at a hearing on Monday. At a news conference afterward, Stein said Juul had agreed to fundamentally change its business practices, restricting what products it sells, how and where it sells them, and who is able to buy them, and abandoning all marketing strategies and content that appeal to young people.

The consent order, enforceable in North Carolina court, prohibits advertisements near schools and most social media advertising and bars Juul from making claims that compare the impact on health of using its products with that of combustible cigarettes, among other stipulations, according to the attorney generals office. The $40 million will go to programs for teens struggling with e-cigarette addiction and to prevent other young people from starting the habit, Stein said.

Today, because of Juul, thousands of kids in North Carolina are addicted to nicotine, putting their long-term health at risk, Stein said.

Juul said in a statement that the settlement is consistent with our ongoing effort to reset our company and its relationship with our stakeholders, as we continue to combat underage usage and advance the opportunity for harm reduction for adult smokers. The company said it would work with Stein and with other manufacturers on the development of potential industry-wide marketing practices based on science and evidence and said it had previously halted all mass market product advertising.

Indeed, some of the settlements requirements are in line with actions Juul had already announced, such as shuttering its social media accounts. As it is, e-cigarette makers are barred from introducing new products without permission from the U.S. Food and Drug Administration.

Juuls popularity had ballooned in recent years, with the company coming to dominate the e-cigarette market. That success landed it in the cross-hairs of federal regulators and state attorneys general who worried about Juuls impact on teenagers. North Carolina became the first state to sue Juul for allegedly advertising to minors, in May of 2019. The companys practices helped create an epidemic among them, downplaying health risks and understating the strength of nicotine in its products, according the states complaint.

California and New York followed with similar suits that November. Juuls legal woes expanded in February of last year with the announcement of a 39-state probe of its teen marketing.

Just talk to any high school principal in North Carolina and you will hear what a devastating problem this is, Stein said.

With assistance by Breanna T Bradham, and Erik Larson

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Juul Makes $40 Million Pact With North Carolina on Marketing - Bloomberg