Do You Need a License To Sell Tobacco? 8 Regulations To Follow

You know there are strict federal and state laws regarding the sale of tobacco products… but you’re not entirely sure what those laws entail. Do you need a license to sell tobacco? And what happens if you sell without one?

Tobacco is one of the most highly regulated products in the United States. The industry is also a highly profitable one, with sales and revenue steadily growing year over year. If you play your cards right, you can create a store that churns out sales and returns on your startup investments. However, if you miss a regulation or fall out of compliance, you can be saddled with fees, penalties, and other consequences. 

This post covers the basics of tobacco licenses and regulations. We’ll talk about what licenses you need, how much those licenses cost, and how to maintain compliance with state and federal laws. 

Do You Need a License To Sell Tobacco? Rules By Product

Let’s start by answering the key question of this post: Do you need a license to sell tobacco? The short answer is yes. However, you need to understand some nuances and specific regulations if you plan to sell various tobacco products in your store. 

Let’s examine some different types of tobacco products carrying different regulations:

• Cigarettes: Federal regulations dictate mandated warning labels on all cigarette packs. Additionally, many states have state-specific tax requirements you must follow when selling cigarettes in your store. 

• Cigars: Cigar shop regulations differ based on your store location. Depending on your state of operation, you may have different size and packaging requirements. 

• Hookah and Pipe Tobacco: Aside from the age restrictions on all tobacco products, hookah and pipe tobacco is also strictly regulated in some states. You may not be able to offer flavored tobacco products in your store depending on your location.
• Vapes: Vapes are a rapidly evolving market with a host of state and federal regulations, including age verification and labeling requirements. Additionally, in states like California, you cannot sell flavored vape juice. 

As we dive into the body of this post, we'll explore the intricacies of selling tobacco — covering everything from age verification to product labeling. Whether you're a seasoned tobacco store owner or a budding entrepreneur, understanding these nuances is essential for a successful and compliant business. 

What Licenses Do You Need?

You may need various licenses, depending on where you operate and what you plan to sell in your smoke shop. Let’s examine the two most common types of license you’ll need in order to sell tobacco products legally:

1. Tobacco Retail License (TRL): A Tobacco Retail License (also sometimes called a Retail Tobacco License) is needed to legally sell tobacco products at retail establishments, ensuring compliance with local and state regulations.
   
   Related Read: How To Obtain a Tobacco Retail License: 5 Steps
   
   
2. Wholesale License: A Wholesale License is required for businesses engaged in the wholesale distribution of tobacco products, allowing them to sell these products in bulk to retailers or other businesses.
3. Manufacturing License: A Manufacturing License is essential for entities involved in the production or manufacture of tobacco products, ensuring adherence to quality, safety, and regulatory standards.
4. Importer License: An Importer License is necessary for businesses importing tobacco products into a particular jurisdiction, ensuring compliance with import regulations and quality standards.
5. Special Use Permit: A Special Use Permit might be required in certain areas for specific tobacco-related events, ensuring compliance with local regulations for temporary activities such as trade shows or special promotions.

Whether crafting tobacco products or managing the distribution chain, holding the right licenses is non-negotiable. The three-tiered tobacco licensing system — manufacturer, wholesaler, and retailer — creates a web of regulations to ensure that every entity involved in the tobacco trade adheres to the necessary legal standards.

How Much Does a Tobacco License Cost? 

Let’s talk numbers. If you’re gearing up to start your own vape shop or tobacco store, you need to know how much budget you’ll need to apply to your licensing fees. So, how much does a tobacco license cost?

Unfortunately, there is no one-size-fits-all price tag. Your price will vary depending on where you set up shop. Application fees for a tobacco license can range from around $100 to $1,000 — or more— depending on your state. Note that your licensing fees aren’t a one-time expense either; most licenses require renewal, often annually, with renewal fees mirroring the initial application cost. So, before you jump into the tobacco business, it's wise to budget for the upfront fees and ongoing costs of maintaining your license.

Related Read: How Much Does It Cost To Open a Smoke Shop? A Quick Guide

Let’s explore some examples of what you can expect to pay in a few different states. For instance, the tobacco license application fee in Oregon is between $900 and $1,000. In Georgia, on the other hand, the application fee hovers around $250, with a yearly renewal fee of $125. Chicago, Illinois has an application fee $330 per location and per each register selling tobacco. Check your state and local requirements for tobacco licenses to determine your cost.

Now, let's talk consequences: What happens if you forgo getting the proper licenses before opening up shop? This mistake is an expensive one. Depending on the jurisdiction, fines can range from a few hundred dollars to thousands. It's not just about the financial hit; unauthorized sales can lead to future license suspension or revocation, putting your entire business at risk. The takeaway? Regardless of the cost in your state, you need a license before you open your store. 

Maintaining Compliance With Tobacco Sales Regulations 

Finally, let’s discuss maintaining compliance. Once you achieve your license, that’s only the first step in a long process to ensure you comply with all applicable laws and regulations to keep your store open and operating legally. 

If you want to keep your store in business, you need to follow these key requirements:

• Age Verification: Age verification is a crucial aspect of selling tobacco products, ensuring compliance with legal requirements restricting sales to individuals under a specific age. Implementing robust age verification measures, such as ID checks or electronic verification systems, is essential to prevent underage sales.

• Tobacco Packaging Regulations: Tobacco packaging regulations dictate specific guidelines for packaging and labeling tobacco products. These regulations often include requirements for health warnings, product labeling, and packaging designs to inform consumers about health risks associated with tobacco use and ensure standardized packaging across various brands.
• Self-Service and Free Sample Restrictions: Regulations often restrict self-service displays of tobacco products and free samples to prevent easy access and promotion of tobacco consumption. These restrictions aim to minimize youth exposure to tobacco products by limiting direct access and reducing marketing tactics that might incentivize product experimentation.

You need to take some critical steps to navigate compliance for your store. Start by training all employees on age verification processes to ensure every staff member knows how to properly ID a customer. You also want to maintain accurate invoices for your store. This process creates a paper trail that acts as a safeguard in case of audits or inquiries. 

These steps can feel overwhelming, but when you have the right tools in place, you can manage your store without breaking into a cold sweat whenever someone says “compliance.” A robust point of sale (POS) system is your best partner in maintaining compliance and running a legally sound business. 

When you implement a POS system designed for smoke and tobacco shops, like Cigars POS, you’ll enjoy the benefits of features like automatic age verification prompts, real-time inventory tracking, scan data reporting, and detailed invoices. By simplifying and automating critical processes, a specialized POS system ensures that maintaining compliance isn't a burden but a built-in feature of your daily operations.

Do You Need a License To Sell Tobacco: Yes! (+ How Your POS System Helps Maintain Compliance) 

Navigating the labyrinth of tobacco regulations can be a headache, but the information in this guide should provide a solid foundation to help you determine the licenses you need, budget for application and renewal fees, and maintain compliance over time with the help of a point of sale system.

Your point of sale system can help you maintain your store’s licenses and regulatory requirements with real-time tracking and monitoring of sales, seamless age verification prompts, and inventory management that keeps you on top of your game. Imagine generating accurate records, including detailed invoices for tobacco products and foolproof age verification for each purchase. 

Ready to experience the difference a specialized tobacco POS system can make? Take the next step in ensuring your compliance by scheduling a demo of Cigars POS. See firsthand how our tobacco-specific point of sale solution can simplify your operations, enhance compliance, and pave the way for your store’s success.