E-cigarette maker Juul facing mounting scrutiny by state AGs

WASHINGTON (AP) — E-cigarette giant Juul Labs is facing mounting scrutiny from state law enforcement officials, with the attorneys general in Illinois and the District of Columbia investigating how the company's blockbuster vaping device became so popular with underage teens, The Associated Press has learned.

The company's rapid rise to the top of the multi-billion dollar U.S. e-cigarette market has been accompanied by accusations from parents, politicians and public health advocates that Juul fueled a vaping craze among high schoolers. In addition to the ongoing inquiries in Illinois and the district, which had not been publicly disclosed before, four other state attorneys general are probing or suing Juul.

The company also is being investigated by members of Congress and federal health regulators and faces separate lawsuits from Juul users, both teens and adults.

Juul's top executives have disputed allegations that they've marketed their products to teens, declaring that they've taken unprecedented steps to combat underage use of its e-cigarettes. The company has shut down its Facebook and Instagram pages and pulled several of its flavored products out of retail stores. Juul also backs federal legislation to raise the minimum age to purchase all tobacco products, including e-cigarettes, to 21 nationwide.

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Employee at Cloud 10, an e-cigarette store in Simi Valley, CA, demonstrates the type of smoke, with no smell, comes out of an electric cigarette. Sales are Booming at this store.

(Lynne Gilbert via Getty Images

A customer exhales vapor while smoking an electric cigarette at the Betamorph E-Cigs store in Albuquerque, New Mexico, U.S., on Saturday, Dec. 10, 2016. Sales in the U.S. vapor-device market are projected to rise by 21% annually through 2020, based on Euromonitor Passport data.

(Sergio Flores/Bloomberg via Getty Images)

An e-cigarette store in Simi Valley, CA, called Cloud 10, displays various types of electric cigarettes juice flavors for sale. Sales are Booming at this store.

(Lynne Gilbert via Getty Images)

Indonesian teenager exhaling smoke from Electric Cigarettes (e-cigarettes) as seen in Medan, North Sumatra, Indonesia on December 5, 2014 night. Electric cigarettes (e-cigarettes) are increasingly popular in Indonesia, especially among teenagers. In fact, cigarettes are actually more harmful than regular cigarettes with an increasing number of patients with poisoning after using electronic cigarettes and nicotine liquid continues to increase. The World Health Organization (WHO) notes, electronic cigarette brand has been produced in 466, 8,000 taste, spending budget of US $ 3 billion.

(Photo by Ivan Damanik/NurPhoto) 

Gdynia, Poland 29th, Dec. 2015 Polish Ministry of Health plans to ban electronic cigarettes sales to persons under the age of 18, restrictions on advertising and promotion and to introduce to them technical requirements. The new Tobacco Control law will come into force in the 2nd quarter of 2016. Pictured: Lady smokes electronic cigarette.

(Michal Fludra/Corbis via Getty Images)

Kiradech Aphibarnrat of Thailand smokes an electric cigarette during day two of the World Cup of Golf at Kingston Heath Golf Club on November 25, 2016 in Melbourne, Australia.

(Photo by Quinn Rooney/Getty Images)

Electric cigarette 'juice' w/various flavors.This is at Cloud 10 in Simi Valley, CA This brand is the most popular at this store. Santa Monica just passed the law no e-cigarettes allowed anywhere. Business is booming at this location.

(Lynne Gilbert via Getty Images

Mitchell Baker who works at the Vapour Place a vaping shop in Bedminster, exhales vapour produced by an e-cigarette on December 30, 2016 in Bristol, England. Recent figures released by the e-cigarette industry has claimed that there as many as 1700 vaping shops across the country, with two new ones opening each day catering for the estimated three million vapers in the UK. The popularity of e-cigarettes has boomed in the last ten years, as it is seen by many as a healthier alternative to traditional cigarettes, however some critics say the devices can carry the same risks as smoking especially as the long term affects are yet to be known.

(Matt Cardy/Getty Images)

E-cigarette merchandise is displayed for sale at the Vapour Place a vaping shop in Bedminster, on December 30, 2016 in Bristol, England. Recent figures released by the e-cigarette industry has claimed that there as many as 1700 vaping shops across the country, with two new ones opening each day catering for the estimated three million vapers in the UK. The popularity of e-cigarettes has boomed in the last ten years, as it is seen by many as a healthier alternative to traditional cigarettes, however some critics say the devices can carry the same risks as smoking especially as the long term affects are yet to be known.

(Photo by Matt Cardy/Getty Images)

A reveller dressed in a Father Christmas costume smokes from an electronic cigarette device as he takes part in Santacon outside Euston Station on December 10, 2016 in London, England. Santacon is an annual parade taking place in cities around the world and sees revellers dressed in Father Christmas costumes take to the streets to spread seasonal cheer.

(Photo by Jack Taylor/Getty Images)

Flavored vape juice bottles are displayed for sale at the Betamorph E-Cigs store in Albuquerque, New Mexico, U.S., on Saturday, Dec. 10, 2016. Sales in the U.S. vapor-device market are projected to rise by 21% annually through 2020, based on Euromonitor Passport data.

(Sergio Flores/Bloomberg via Getty Images)

A woman smokes an electronic cigarette during the Vapexpo 2015 Moscow, at Sokolniki Exhibition Center on December 05, 2015, in Moscow, Russia.

(Photo by Sefa Karacan/Anadolu Agency/Getty Images)

This picture taken on November 19, 2015 shows bottles of concentrated flavors displayed at a vape shop in Kuala Lumpur. Vaping' is soaring in popularity in Malaysia, the largest e-cigarette market in the Asia-Pacific region, but authorities are threatening to ban the habit in for health reasons -- a move that has sparked anger from growing legions of aficionados.

(MOHD RASFAN/AFP/Getty Images)

A man smokes an E-Cigarette in the Vape Lab coffee bar, on August 27, 2014 in London, England. The Department of Health have ruled out the outlawing of 'e-cigs' in enclosed spaces in England, despite calls by WHO, The World Health Organisation to do so. WHO have recommended a ban on indoor smoking of e-cigs as part of tougher regulation of products dangerous to children.

(Photo by Dan Kitwood/Getty Images)

This picture taken on November 19, 2015 shows a worker (R) inspecting a coil, the metal heating element in an e-cigarette that produces vapour from e-juices, at a vape shop in Kuala Lumpur. Vaping' is soaring in popularity in Malaysia, the largest e-cigarette market in the Asia-Pacific region, but authorities are threatening to ban the habit in for health reasons -- a move that has sparked anger from growing legions of aficionados.

(MOHD RASFAN/AFP/Getty Images)

A woman smokes an electronic cigarette during the Vapexpo 2015 Moscow, at Sokolniki Exhibition Center on December 05, 2015, in Moscow, Russia.

(Photo by Sefa Karacan/Anadolu Agency/Getty Images)

A customer smokes an E-Cigarette at Digital Ciggz on January 28, 2015 in San Rafael, California. The California Department of Public Health released a report today that calls E-Cigarettes a health threat and suggests that they should be regulated like regular cigarettes and tobacco products.

(Photo by Justin Sullivan/Getty Images)

E-Cigarettes are sold at the V-Revolution E-Cigarette shop in Covent Garden on August 27, 2014 in London, England. The Department of Health have ruled out the outlawing of 'e-cigs' in enclosed spaces in England, despite calls by WHO, The World Health Organisation to do so. WHO have recommended a ban on indoor smoking of e-cigs as part of tougher regulation of products dangerous to children.

(Photo by Dan Kitwood/Getty Images)

In this photo illustration, a man smokes an E-Cigarette at the V-Revolution E-Cigarette shop in Covent Garden on August 27, 2014 in London, England. The Department of Health have ruled out the outlawing of 'e-cigs' in enclosed spaces in England, despite calls by WHO, The World Health Organisation to do so. WHO have recommended a ban on indoor smoking of e-cigs as part of tougher regulation of products dangerous to children.

(Photo by Dan Kitwood/Getty Images)

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Juul spokesman Ted Kwong declined to answer specific questions about the investigations in an emailed statement but reiterated past company steps to prevent youth use. Juul announced Thursday that 50 retail chains have pledged to adopt the company's age-verification system, which requires sellers to scan a customer's ID before selling Juul products.

A senior Illinois law enforcement official described to AP a wide-ranging inquiry being conducted by the office of Illinois Attorney General Kwame Raoul that is centered on whether Juul violated state consumer fraud laws and other statutes by designing and marketing its products to appeal to underage teens. The official was not authorized to speak publicly and requested anonymity.

Marrisa Geller, a spokeswoman for District of Columbia Attorney General Karl Racine, confirmed in an emailed statement an investigation of Juul is underway. She said Racine is concerned about "the dramatic increase in the use of vaping products by district youth" as well as the policies and practices employed by e-cigarette manufacturers to prevent minors from using their products.

The attorneys general in Colorado, Connecticut and Massachusetts have announced investigations of Juul related to concerns over underage use of its products. North Carolina's attorney general filed a lawsuit against Juul in May, asking a court to limit the company's sales and marketing in the state.

All six attorneys general are Democrats.

Juul has repeatedly stated that it understands the concerns about youth vaping and has taken "the most aggressive actions" of any company in the industry to combat the problem. It has spent millions of dollars on newspaper, radio and online advertisements pledging to keep its products out of the hands of young people.

The company also has denied it ever marketed to anyone underage.

Electronic cigarettes, which have been available in the U.S. since about 2007 and have grown into a more than $6 billion-a-year industry, are battery-powered devices that typically heat a flavored nicotine solution into an inhalable aerosol.

Juul, which launched in 2015, now controls roughly three-quarters of the U.S. retail market for e-cigarettes. Last year, one in five U.S. high school students reported vaping in the previous month, according to government survey figures.

Most experts agree the aerosol is less harmful than cigarette smoke since it doesn't contain most of the cancer-causing byproducts of burning tobacco. But there is virtually no research on the long-term effects of the vaping chemicals, some of which are toxic.

The Centers for Disease Control and Prevention said last week that 193 teens and adults in 22 states including Illinois have contracted severe respiratory illnesses after vaping. However, they said a clear-cut common cause of the illnesses hasn't been identified and that they are being called "potential cases" that are still under investigation. A CDC official said no specific product has been identified or conclusively linked to the illnesses while noting that a number of the people who got sick had vaped a substance containing THC, the high-inducing ingredient in marijuana.

Kevin Burns, Juul's chief executive officer, told "CBS This Morning" on Wednesday the illnesses are "worrisome" for the industry and for Juul "if we contributed to it." He said the company is in close contact with the CDC to get as much information as it can "so if there's any issue that was ... associated with us, that we can get to the root cause and understand that."

In Illinois, the state's Department of Public Health has called e-cigarette use among teens an "epidemic" and said there is an alarming lack of understanding about the risk for nicotine addiction.

Other areas being investigated by Raoul's office include: how Juul verifies the ages of people who make online purchases from the company's website; the amount of nicotine in the flavored solution and how safe those levels are; and whether Juul has improperly advertised its e-cigarette as a smoking-cessation tool.

Kwong said the Juul system is designed to help adult smokers switch from combustible cigarettes and is not intended to be used as a cessation product. Neither Juul nor any other e-cigarette has yet been approved by the Food and Drug Administration to help people who smoke traditional paper-and-tobacco cigarettes quit.

The Illinois probe began in the spring. Raoul's office is not coordinating its investigation with other attorneys general, the official said.

Geller, the spokeswoman for Racine, declined to discuss the scope of the district's inquiry. However, a senior official in Racine's office wrote to a Juul representative in early February and asked for a trove of information about how district residents purchase the company's products.

Among the data sought by Benjamin Wiseman, director of consumer protection, was a list of authorized retail stores and third-party online retailers that failed to comply with Juul's rules for preventing minors from buying and using its products. Wiseman also asked that the company "describe in detail the nature of the retailer's failure to comply" and what action Juul took in response.

Racine's office, Wiseman wrote, learned from news reports and conversations with community members and other government officials that use of Juul's products by young teenagers in the district has increased dramatically in recent years.

"Remarkably, one district high school principal estimates that half of the juniors and seniors at her school are using e-cigarettes, many of which we believe are Juul's products," Wiseman told Patrick Lynch, a former attorney general of Rhode Island who runs a lobbying and consulting firm that represents Juul.

Lynch's firm arranged for a meeting in the attorney general's office last November that included himself, Juul chief administrative officer Ashley Gould, Wiseman and Assistant DC Attorney General Brian Caldwell, according to emails obtained through an open records request. Lynch is not registered as a lobbyist in the District of Columbia.

The agenda for the meeting isn't described in the records, although one email from Lynch said they discussed Juul's efforts "to dramatically diminish youth access to their product."

In November, Racine was elected to a second term as attorney general and Raoul was elected to his first. Juul's political action committee gave money to both campaigns. Racine accepted the $1,500 contribution from Juul, the maximum amount allowed by District of Columbia code. But Raoul refused the company's $3,000 donation because it conflicted with his professional responsibilities and personal views, according to Hanah Jubeh, a spokeswoman for Raoul's campaign.

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