Through our global enforcement operations, the company was able to identify individuals who were offering suspected counterfeit JUUL products at wholesale from China. After in-depth surveillance and monitoring, we were able to locate a clandestine factory manufacturing counterfeit JUUL products for international distribution. We then shared this information with Chinese law enforcement and supported their efforts to investigate and raid the illicit factory.

The raid resulted in a seizure of over 110,000 units of counterfeit JUUL products, including counterfeit packaging and labeling. Also, officials were able to retain a significant amount of documentation on businesses and individuals with purchase history, which will be used in follow-up investigations and enforcement actions. As a result of the raid, both the factory owner and manager have been arrested and will be subject to criminal prosecution.

The raided factory had thousands of counterfeit packaging for JUUL products at 5.0% nicotine by weight in various flavors, with production runs ongoing for counterfeit JUULpods in Menthol flavor. Given the current market landscape, our investigation revealed that the products likely were intended for the U.S. market. In addition, the factory appeared to have been manufacturing disposable vapor products under various brand names and the company will continue to investigate those matters and provide information to relevant law enforcement authorities.

Counterfeit JUUL products are designed to mimic authentic JUUL products and are largely imported from China-based suppliers. In conjunction with U.S. and international law enforcement, Juul Labs has cooperated with authorities to help shut down numerous illicit manufacturing operations, each of which were capable of producing hundreds of thousands of counterfeited products a month.

It is imperative that we continue to partner across stakeholders, including law enforcement, to address the illicit market of vapor products. Similar to illicit trade for other products, black-market ENDS products violate the intellectual property rights of U.S. companies; reduce sources of government revenue through tax evasion; facilitate broader criminal activity and threaten national security; and undercut the rule of law, legal and regulatory frameworks, and public health policies.

Counterfeit and other illicit vapor products may present additional health and safety risks to adult consumers given that they often are produced in unsanitary conditions without manufacturing and quality controls and lack ingredient testing and product characterization. They also may contain harmful chemicals not present in other, authentic products.

Furthermore, sales of illicit vapor products may undermine underage-prevention measures through ease of access. For example, counterfeit products are often sold through nontraditional retail channels, such as social sourcing and online with inadequate age-verification.

While we continue to make great progress in the fight against international and domestic counterfeit operations, Juul Labs remains committed to using our global enforcement program to aggressively disrupt the illicit trade of vapor products and to create a more responsible marketplace for current adult users.

Following a lengthy investigation last year by Juul Labs’ Brand Protection Team into counterfeit operations in the region, the company identified Shenzhen Kang Erqiang Electronic Technology Co. as a large player in the illicit global trade of counterfeit JUUL products. We shared this information with Chinese law enforcement and supported their efforts to conduct raids of the business. Officials seized a total of 14,600 units of counterfeit JUUL products, including counterfeit JUULpods, devices, and packaging. A computer was also seized, which provided authorities with critical information regarding when the illicit operation was launched as well as a rough estimate of counterfeit sales.

Federal authorities in China determined that the counterfeit operation began sometime in 2018, and over a 16 month period, sold roughly $324,000 worth of counterfeit JUUL products. While these are the numbers Chinese authorities used in court during prosecution, actual sales could be far more significant. Officials in China secured a conviction of the factory operator, who confessed to his involvement, and sentenced him to 3 years and 4 months in prison, along with a fine of $163,487.

Counterfeit JUUL products are designed and marketed to mimic authentic JUUL products and are largely imported from China-based suppliers. In conjunction with U.S. and international law enforcement, Juul Labs has cooperated with authorities to help shut down numerous illicit manufacturing operations, each of which were capable of producing hundreds of thousands of counterfeited products a month.

It is imperative that we continue to partner across stakeholders, including law enforcement, to address the illicit market of vapor products. These black-market products present additional health and safety risks to adult consumers given that they often are produced in unsanitary conditions without manufacturing and quality controls and lack ingredient testing and product characterization. They also may contain harmful chemicals not present in other, authentic products.

Furthermore, sales of counterfeit vapor products undermine underage-prevention measures through ease of access. For example, counterfeit products are often sold through nontraditional retail channels, such as social sourcing and online with inadequate age-verification. In addition, investigations run by Juul Labs through its Mystery Shop program have shown that where retailers are willing to carry and sell illicit vapor products, they are often willing to ignore age-verification requirements.

While we continue to make great progress in the fight against international and domestic counterfeit operations, Juul Labs remains committed to using our global enforcement program to aggressively disrupt the illicit trade of vapor products and to create a more responsible marketplace for current adult users. As a leader in vapor technology, it is our obligation to support enforcement against illicit and illegal products as we strive to reset the vapor category and earn a license to operate in society.