We all know there are strict federal and state laws regarding the sale of tobacco products… but for many of us, our knowledge stops there.
Sure, advertising tobacco is illegal in most places, but what about actually selling it? What if your store sells liquor and tobacco — do you need separate licenses for each, or just one?
If you find yourself asking these questions, we don’t blame you. Tobacco laws and regulations are complicated, to say the least.
But knowing your licensing requirements is worth it. While cigarette sales are falling, sales of cigars, pipe tobacco, vapes, and other tobacco products are steady or rising. And if you want to capitalize on these trends, you need to keep your business on the up and up.
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?
Let’s start by answering the key question: Do you need a license to sell tobacco? The short answer is yes. Most states require a tobacco sales license to sell cigarettes, cigars, and e-cigarettes.
The FDA’s age restrictions on tobacco products apply to all tobacco products, not just traditional cigarettes. Also, many states require you to get a state tobacco retail license and one for your county.
In most cases, cities and states include all forms of smokeless tobacco under the umbrella of tobacco retail (as opposed to setting up a separate license). At the time of writing, 36 states require a retail license to sell vapes and other types of e-cigarettes over the counter. These states are:
However, don’t assume that a tobacco retail license is all you need. In Texas, for example, you need a separate e-cigarette license that’s $180 every two years, or prorated to $90 if you have an existing tobacco license.
Every license needs to be prominently displayed in your store, including required signage about health and age warnings.
We wish there were a simpler, universal answer — but because tobacco rules vary by location, it’s best to check with your local government before selling any new tobacco products or starting a new smoke shop.
What Specific Licenses Do You Need?
The exact license you need depends on where you operate and what you plan to sell in your smoke shop. Let’s examine the most common types of licenses you need in order to sell tobacco products legally:
- 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.
- Wholesale License: A Wholesale License is required for businesses engaged in the wholesale distribution of tobacco products. This allows them to sell these products in bulk to retailers or other businesses.
- Manufacturing License: A Manufacturing License is essential for entities involved in the production or manufacture of tobacco products, which ensures adherence to quality, safety, and regulatory standards.
- Importer License: An Importer License is necessary for businesses importing tobacco products into a particular jurisdiction, ensuring compliance with import regulations and quality standards. If you get your imported products through a supplier, it’s the supplier that needs this license, not your store.
- Special Use Permit: A Special Use Permit might be required in certain areas for specific tobacco-related events. This ensures compliance with local regulations for temporary activities like trade shows or special promotions.
If you run a cigar lounge, hookah bar, or any other establishment where you sell and smoke on-site, there are additional rules you need to consider: - Zoning permit: If you allow smoking on-site, you must follow specific zoning rules. This may also include zoning approval for air filtration systems.
- Fire safety inspections: Some states require additional fire inspections for venues that allow indoor smoking.
- Liquor license: Though both tobacco and liquor can only be sold to people 21 and older, they usually require separate licenses and have different tax rates.
For a more detailed overview of permits, check the Alcohol and Tobacco Tax and Trade Bureau’s website.
How Much Does a Tobacco License Cost?
The average cost of a tobacco license is about $200 every year. However, the price range varies drastically by location. It can be as low as $5 in some locations and as high as $1,200 in others.
Generally speaking, tobacco licenses tend to be cheaper than liquor licenses. And, unlike liquor licenses, you usually don’t need a different type of tobacco license depending on the type of store you run (e.g., grocery store, cigar lounge, smoke shop, convenience store).
Renewal fees are usually minimal, too. Where many retailers trip up isn’t in affording licensing fees, but in preventing underage sales and following tobacco advertising rules.
How To Stay Compliant With Tobacco Licensing Laws
In most states, getting a tobacco license is easy. Keeping it is the trickier part. Your store has to follow strict federal, state, and local tobacco regulations or risk fines or a suspension of your license.
Even minor fines might not look bad on paper, but they can be bad for your reputation. Here are a few general rules to follow to stay compliant:
- Follow strict age verification processes. Check all customers’ IDs to ensure they’re over 21. Speed up the process and avoid errors by using an ID scanner at checkout.
- Know advertising and display rules. In most states, you cannot display tobacco advertisements outside your shop or online. In-store advertisements require prominent health warnings to stay compliant.
- Don’t give out free samples or sponsor events. In most states, tobacco retailers cannot give out free samples (even to customers of age) or sponsor non-tobacco events.
- Keep licenses up to date. Getting a tobacco license is relatively easy, so don’t forget to renew it. In most states, you need to renew annually, so set a date on your calendar a few weeks in advance to make sure everything is in order.
- Get the correct license type for each of your locations. One tobacco license is good for one location. Also, because licensing standards can vary county by county, don’t assume that the same type of license at one location will be good for another.
- Manage variable tax rates per product and location. Tobacco product taxes vary by location or by product type. Use your point of sale (POS) system to automatically apply the correct tax rates for different product categories and locations.
- Know your state’s reporting requirements. In some states, you must keep detailed inventory and sales records to submit to local authorities. Use a tobacco store POS system to ensure you have easy access to the necessary records.
Do You Need a License To Sell Tobacco? Yes! (+ How Your POS System Helps Maintain Compliance)
With so many different rules about tobacco licensing, figuring out the licenses your store needs can be a headache.
So once you go through the hassle of getting a license, don’t put it at risk. Using the right technology is a key piece of staying compliant with local tobacco rules. With built-in inventory and sales reports, age verification features, and tax rate management, a tobacco store POS system handles the nitty-gritty details so you don’t have to.
Cigars POS is one of the only systems on the market specifically built for smoke shops, cigar lounges, and tobacco retailers. Schedule a custom demo today to see how Cigars POS both reduces your compliance risk and boosts sales.
