Electronic cigarette giant Juul Labs will pay $40m (£29m) to North Carolina in a legal settlement, following accusations that the company has fuelled a rise in teen vaping.
A state judge accepted the first-of-its-kind agreement which also states that Juul will not advertise to anyone under the age of 21 in North Carolina.
The state's Attorney General Josh Stein had sued Juul, accusing it of unfairly marketing its nicotine vaping products towards young people.
The agreement also stipulates that the company limit online sales and only sells its products behind counters at retailers that have ID scanners to ensure customers are of age.
Teen use of e-cigarettes skyrocketed more than 70% after Juul's launch in 2015, leading the US Food and Drug Administration to declare an "epidemic" of underage vaping among teenagers.
Health experts said the unprecedented increase risked hooking a generation of young people on nicotine - an addictive chemical that is harmful to the developing brain.
"This win will go a long way in keeping Juul products out of kids' hands, keeping its chemical vapour out of their lungs, and keeping its nicotine from poisoning and addicting their brains," Mr Stein said in a news release.
Juul has seen state sales fall after halting all advertising and social media promotion and pulling most of its flavours except for menthol.
"This 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," Juul said in a statement after the court hearing. "We seek to continue to earn trust through action."
Several states have filed their own lawsuits against Juul. A group of 39 state attorneys general have been co-operatively investigating the company's marketing and products since February 2020.
Juul also faces hundreds of personal injury lawsuits from customers and families of young people who said they were hurt or addicted by the company's products. Those have been consolidated in a California federal case.