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Youth Prevention

JUUL LABS CONTINUES TO BUILD ON NATIONAL PROGRAM TO REDUCE UNDERAGE USE

On August 29, 2019, JUUL Labs began implementing a series of new measures in the United States that build upon our existing efforts to combat the issue of youth access, appeal, and use of vapor products.

We have no higher priority than preventing youth use of our products, and the steps we have taken to date are far-reaching and comprehensive. In November of 2018, in response to the troubling rise of youth vaping, we took a series of aggressive actions, including suspending the distribution of non-tobacco and non-menthol-based flavored JUULpods to all of our traditional retail store partners.

Now we are announcing a new series of aggressive steps to build upon these actions, including:

Retail Access Control Standards (RACS)

We are working with retailers across the U.S. to implement the strictest age-verification point-of-sale standards ever imposed for an age-restricted product at retail, far exceeding those in place for other tobacco products or for alcohol. Under JUUL Labs’ Retail Access Control Standards (RACS) program every retail point-of-sale system immediately locks when a JUUL product is scanned and remains locked until a retailer electronically scans a valid, of-age government-issued I.D. to verify both the age and the I.D. validity. Additionally, RACS imposes automatic limits on the amount of product a legal-age customer can purchase. Scanned personal data will be eliminated immediately following the transaction.

Through this technology, RACS directly combats two large drivers of underage access to vapor products at retail: 1) failure to check and verify I.D., and 2) legal-age individuals buying bulk quantities of age-restricted products to resell to minors.

Over 50 retail chains, totaling more than 40,000 outlets, have already committed to being RACS-compliant. More than 7,000 of those stores are currently in the process of implementing RACS, and we expect more than 15,000 stores to implement by the end of 2019. By mid-2020, we expect that more than half of our sales volume will be through retailers who are RACS-compliant, and plan to stop distributing JUUL products to any retailer that isn’t RACS-certified by May 2021. A third-party auditor will monitor each certification to ensure compliance.

Track & Trace Expansion

Second, we are announcing the national rollout in the U.S. of our Track & Trace program for JUUL devices, which aims to trace confiscated JUUL devices through the distribution chain and identify the retail location where the product was sold. Once identified, our team will work with the retailer and take appropriate action.

We have piloted our Track & Trace program in the Houston area over the past 20 weeks, including a digital advertising awareness campaign to inform educators, school administrators, law enforcement, and parents on how they can help us locate the source of JUUL device sales to minors by entering the device serial number into our online portal. For devices that have been reported, we have already seen significant improvement in traceability.

We plan to build on our success in Houston by expanding the program nationally. As of today, approximately 50 percent of JUUL devices in the U.S. market are fully traceable, and we expect nearly 100 percent to be traceable within 90 days. Our dedicated team will monitor these submissions and track confiscated products. If we see that reported devices are consistently being sold from the same retailer, we will specifically target those stores with our secret shopper program.

OUR ONGOING ACTIONS TO COMBAT UNDERAGE USE

These new steps are part of our ongoing effort to address this issue. In August of 2017, we banned online sales to anyone under the age of 21. In April of 2018, we announced our support for Tobacco 21 laws. In November of 2018, we announced an aggressive plan to address youth access, appeal, and use of JUUL products. We stopped selling non-tobacco and non-menthol based flavored JUULpods to all of our traditional retail store partners (more than 90,000), which represented 50 percent of our revenue at that time, and which we have no intention of re-introducing in retail stores at this time. Additionally, we enhanced our online age-verification process, strengthened our retailer compliance program with over 2,000 secret shop visits per month, and shut down our U.S.-based Facebook and Instagram accounts while working constantly to remove inappropriate social media content generated by others on those platforms.

TIMELINE

August 2017

  • Banned online sales to anyone under the age of 21, even if they resided in a jurisdiction where the legal age of purchase was 18.

April 2018

  • Announced our support of Tobacco 21 legislation, which raises the minimum purchasing age for tobacco products, including vapor products like JUUL, to 21.
  • Worked with social media platforms to delete inappropriate posts and listings featuring our products that were published by unaffiliated third-parties.
  • Announced an investment of $30 million over the next three years dedicated to independent research, youth and parent education, and community engagement efforts.

November 2018

Announced an aggressive, comprehensive plan to address youth access, appeal, and use of JUUL products. The plan had six elements:

TOBACCO 21

Stepped up our advocacy for Tobacco 21 legislation. Since the beginning of 2019, nearly a dozen states passed such laws – over 50% of the U.S. population is now covered by T21 laws – and federal legislation was introduced in Congress.

RESTRICTING FLAVORS

Stopped selling non-tobacco and non-menthol-based flavored JUULpods to all of our traditional retail store partners (over 90,000 stores), which represented 50 percent of our revenue at that time.

ONLINE AGE VERIFICATION

Enhanced our industry-leading third-party age-verification process online that limits sales to adults 21+ regardless of jurisdiction, and added more stringent online bulk-purchasing restrictions.

RETAIL CONTROLS

Expanded our retailer compliance program from 500 to over 2,000 secret shop visits per month. Since March of 2019, we have issued almost 500 violations to the FDA to be investigated for further action.

SOCIAL MEDIA

Shut down our U.S.-based Facebook and Instagram accounts and are constantly working to remove inappropriate social media content generated by third-parties. To date, we have helped remove 31,889 social media posts and listings.

TECH-BASED SOLUTIONS

Committed to developing tech-based solutions to further restrict underage access and use, including work on our Bluetooth-connected device. This new product, that allows users to lock their device, launched in select markets in 2019.

AUGUST 2019

RETAIL ACCESS CONTROL STANDARDS

To combat underage use of JUUL products, we are working with retailers across the U.S. to implement the strictest age-verification standards ever imposed for an age-restricted product, far exceeding those in place for other tobacco products or alcohol. Under JUUL Labs’ Retail Access Control Standards (RACS) program, every retail point-of-sale system immediately locks when a JUUL product is scanned until a retailer electronically scans a valid, of-age government-issued I.D. to verify age and I.D. validity. Additionally, RACS imposes automatic limits on the amount of product a legal-age customer can purchase. Through this technology, RACS directly combats two large drivers of underage access to JUUL products at retail: 1) failure to check and verify I.D., and 2) legal-age individuals buying bulk quantities of products to resell to minors.

TRACK & TRACE EXPANSION

We are announcing the national rollout in the U.S. of our Track & Trace program, which aims to trace confiscated JUUL devices through the distribution chain in order to potentially identify the retail location where the product was sold. Once identified, we will work with the retailer and take appropriate action.

SECRET SHOPPER PROGRAM ENHANCEMENT

JUUL Labs is taking steps to further enhance our already robust secret shopper program with significant consequences for non-compliant retailers. The new 3-Strikes-And-You’re-Out program will revoke the authorization of retailers to sell JUUL products for a minimum of one year and require RACS-certification if they receive three age-verification and/or bulk-purchase violations within the same year.

  • First Inspection Failure: JUUL Labs will issue a letter notifying the retailer of its first violation. The letter will reiterate our youth prevention policies and penalty escalation structure.
  • Second Inspection Failure: If there is a second violation within one year of the first violation, JUUL Labs will issue a letter notifying the retailer of the second violation. The retailer will lose the opportunity to participate in two JUUL promotional cycles following the date of the second failed inspection. For a JUUL Labs-sponsored age-verification inspection failure, JUUL Labs will communicate the age-verification non-compliance to FDA.
  • Third Inspection Failure: If there is a third violation within one year of the first violation, JUUL Labs will issue a letter notifying the retailer of the third violation. The retailer will lose the opportunity to order and sell JUUL product for one year from the date of the third failed inspection unless they choose to become RACS-compliant. JUUL Labs will notify wholesalers, distributors and sub-distributors of the enforcement action. For a JUUL-sponsored age-verification inspection failure, JUUL Labs will communicate the age-verification non-compliance to FDA.

Youth use of vapor products is detrimental to our mission, and to our business. Our target market is the one billion adult smokers globally, more than 70 percent of whom want to quit using combustible cigarettes (per CDC). Offering these adult smokers a real alternative to cigarettes is a public health and commercial opportunity of historic proportions, with over 7 million preventable deaths per year caused by cigarettes. Youth use puts this all at risk.

Through shared effort, we can significantly reduce youth access to, and usage of, all vapor products, including JUUL, while at the same time ensuring that adult smokers can access a product that is helping millions of them switch from combustible cigarettes – a goal we all share.