North Carolina has become the first US state to reach a settlement with Juul over the company’s role in popularising e-cigarettes among young people.

Juul will pay $40m and make “drastic changes to the way it conducts business” as part of the consent order, according to a statement on Monday from the office of Josh Stein, North Carolina’s attorney-general.

“For years, Juul targeted young people, including teens, with its highly addictive e-cigarette. It lit the spark and fanned the flames of a vaping epidemic among our children — one that you can see in any high school in North Carolina,” Stein said.

Juul helped popularise the use of e-cigarettes as an alternative to traditional cigarettes, but it has been hit with claims that it has sparked a surge in e-cigarette usage among younger people by gearing its marketing towards them, and that it failed to warn about the potential harms.

In addition to North Carolina, attorneys-general in 13 states and the District of Columbia have also sued Juul over its marketing claims, including California and New York. A group of 39 states last year announced a co-ordinated probe of Juul’s marketing practices.

Juul said in a statement the settlement with North Carolina was “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”.

As part of its agreement, Juul will pay $40m over six years to fund programmes to help people quit e-cigarettes and prevent addiction, along with other research.

Juul has also committed to changing its business practices in the state in order to avoid appealing to young people, including no marketing that aimed at people under the age of 21 and tighter restrictions and verification requirements for online sales as well as those at physical stores.

In recent years, Juul has faced a political backlash and regulatory scrutiny over the marketing and health effects of its products. According to a person familiar with the situation, litigation concerns were a reason that tobacco group PMI in 2019 walked away from talks for a $200bn merger with rival Altria, which had paid $12.8bn for a 35 per cent stake in Juul in late 2018.

Following the breakdown of the merger talks, Juul overhauled its leadership, and Altria, the maker of Marlboro cigarettes, was subsequently forced to take multibillion-dollar writedowns on its investment.

The 2020 national youth tobacco survey, conducted by the US drug regulator and the country’s top public health agency, showed that of the estimated 4.47m young people using any tobacco product, a “concerningly high” 3.6m young people were using e-cigarettes. However, that was 1.8m fewer US youths using e-cigarettes compared to 2019.