So you want to sell tobacco?
You’re in good company. Although smoking has declined in the last decade, sales remain steady, and a new generation has embraced more niche areas like cigars along with e-cigarettes and other smokeless tobacco products.
Whether you’re opening a tobacco store or have an established store and want to start selling tobacco products, you’ll need a tobacco license. It’s an age-restrictive business, and the industry is tightly regulated.
This blog post will detail the licenses you need to obtain, the requirements you need to fulfill, and the associated costs of each — everything you need to know to make an informed decision.
How Much Is a Tobacco License?
You need a license to sell, import, or manufacture cigarettes and other tobacco products.
The cost of a tobacco retailer license typically falls between $15 and $200.
Other tobacco products may have less strict licensing requirements than cigarettes, but it varies by state. Your local, state, or federal authority will issue your license depending on the location of your business and whether you plan to only sell products, or open a cigar lounge or smoker’s cafe.
As of January 2024, 40 states require a license for over-the-counter tobacco sales. A license indicates that you’re legally allowed to sell cigarettes and other tobacco products according to state law. Unfortunately, the state can and will reject applications, so ensure you cover the criteria you need for a successful application.
Depending on the location of your store, you’ll be subject to fines for selling tobacco products without a valid license. In Alabama, for example, you could pay fines of $100 to $500 for the first offense, and $500 to $1,500 for subsequent violations.
What Kind of Tobacco License Do You Need?
Most states have four types of tobacco licenses:
- Retail license: Allows you to legally sell cigarettes, cigars, and other tobacco products, including vapes, in most states. Note that CBD and cannabis products generally require a separate license.
- Wholesaler license: Allows you to act as a supplier of tobacco products for other retailers throughout the state.
- Importer/Exporter license: Allows you to import raw tobacco or other tobacco products and requires you to apply for a federal license with the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- Manufacturer license: If you plan to make tobacco products like cigars, pipe tobacco, hookah tobacco, chewing tobacco, etc., you will need to apply for a local license and a federal license from the TTB.
In most cases, if you’re simply selling tobacco products to consumers, you’ll only need a tobacco retail license. You can apply for a license online, but some states require you to apply in person.
In most cases, to apply for a tobacco retail license, you will need to provide:
- License application
- Sales Tax identification number
- Proof of business and home address
- License Fee
- Any other documents required by your state
Remember that you’ll need to renew your license annually or bi-annually, depending on your state.
How Much Does a Tobacco License Cost?
The cost of a tobacco license varies by state. In all cases, you’ll apply for a license and pay a one-time fee, valid for 12 or 24 months. Generally, fees range from $15 to $200; however, in some states, like Oregon, the cost could be as high as $953.
The licensing fee for retailers in Georgia is $10, renewable annually, but in Chicago, it’s $550 per location, renewable every two years. You need a separate license for each store if you have more than one retail location. In most states, you can submit a single application for multiple locations.
In addition to your license fee, there are sometimes required (and nonrefundable) process fees attached to submitting a new application. To avoid paying unnecessary fees, ensure you have all your necessary paperwork before submitting.
Getting a renewal license is relatively straightforward as long as you’ve stayed compliant with tobacco laws and haven’t incurred fines or penalties. You could be fined or suspended for several reasons, including selling tobacco products to minors or failing to display the correct signage.
As of December 2019, the federal age of sale for tobacco products is 21, with no exemption for military personnel. If you violate laws, you could be subject to jail time, fines, or revocation of your license to sell tobacco products.
However, it’s important to note that many laws and zoning requirements vary by state, county, or city. So, do your due diligence and find out the laws and regulations for your state.
What Responsibilities Do You Have as a Tobacco License Holder?
To avoid fines and keep your tobacco license up to date, it’s essential to comply with your license's rules and regulations. In general, you must:
- Prominently display your license for the public to see.
- Keep purchasing invoices for tobacco products for four years. For the first year, you must keep those invoices at the location where you have a license. You have to allow relevant authorities access to your invoices upon request.
- Only sell packaging that displays the required warning statement on the label, and comply with FDA requirements for all self-service displays and labeling. You must also follow the FDA’s advertising, marketing, and promotion rules.
- Ensure you only sell tobacco to customers over 21 years of age.
A tobacco point of sale (POS) system can make it significantly easier to maintain state and local compliance. A modern POS will keep records of every order and invoice in its inventory management system, along with a comprehensive record of sales.
Some POS systems also integrate with ID scanners, allowing cashiers to quickly validate a customer’s license without slowing down checkout.
How a Modern Tobacco POS System Helps You Take Control of Your Business
Despite the headache of applying for licenses and the requirements that come with it, cigarettes and tobacco products are a goldmine for many retail store owners and smoke shops. As long as you’re diligent, you’ll be good to go.
POS Nation works with hundreds of tobacco shops and cigar lounges nationwide to simplify their daily operations and help them stay compliant. Whether you own a standalone tobacco store or sell tobacco at a small grocery or convenience store, we help match small businesses with the right hardware and software for their needs.
Discover more about the features you need and the questions you should ask when looking for a POS system for your business with our Tobacco POS System Buyers’ Guide.
