What License Do I Need To Open a Vape Shop?

Don't let confusion around licensing regulations let your vape shop dreams go up in smoke.

Getting your vape shop off the ground is within your reach, but confusion around your licensing needs can result in lost revenue, wasted effort, and unnecessary frustration.

Without a clear grasp of the regulatory intricacies — dictating everything from tax compliance to age verification protocols — you open yourself to potentially business-ending fines before you even open. But with the right knowledge, you can set yourself up to legally sell vape products to consumers in your area. 

In this article, we’ll dive into the licenses you need and how to verify your state’s requirements. 

What License Do I Need To Open a Vape Shop and How Do I Apply? 

You want to open a vape shop, but you know vapes are restricted products. As a result, you know you need to follow strict legal protocols to run your business legally. The first of those protocols is to obtain the right licenses. But how important are these licenses to your business? Incredibly important. Let’s examine why.

First and foremost, these business licenses are mandatory to open your doors to customers legally. States regulate the retail sale of vaping products, requiring store owners to complete applications for valid licenses. Approval must be granted before moving forward.

Related Read: ANSWERED: How Much Does It Cost To Open a Vape Shop?

Licensing also allows you to establish supplier relationships and purchase wholesale inventory. Reputable vape distributors will not work with unlicensed retailers to avoid penalties under the law. Plus, manufacturers can only legally ship products to properly credentialed store owners. Attempting operations without this barrier cleared will have you tearing out your hair in no time. 

Additionally, severe fines and legal action accompany operating without licenses. Regulatory agencies conduct oversight of vape shops, issuing warnings and tickets to noncompliant owners. Consequences escalate from fees to permanent closure. All inventory from unapproved purchases would also be confiscated.

What are some of the other key steps in opening a vape shop? 

Opening a vape shop can be a complex process, but you must follow five critical steps to get started: 

1. Secure a strategic retail location and sign a lease.
2. Conduct market research on consumer demand and local competitors.
3. Create a business plan and secure financing from investors or small business loans.
4. Establish supplier relationships once licensed and place initial inventory orders.
5. Implement store technology like point of sale (POS) systems for checkout and inventory management.
6. Develop hiring and training programs for future staff.

With this in mind, let’s examine the three licenses every vape shop owner should understand before opening their shop. 

1. Business License 

Nearly every state, county, and municipal jurisdiction requires a general business license to operate commercially. Though this license can feel like a formality, it is crucial to opening your business. Your business license registers your establishment with local authorities, allowing them to conduct oversight to ensure compliance with state and local laws. 

The requirements and fees of obtaining a business license differ widely based on population thresholds. Some rural counties merely request occupation reporting without much formality, while large metro areas impose thorough permitting processes. Check regulations with your specific administrative authority before signing any lease to ensure vape retail is permitted in your area.

Related Read: How To Open a Retail Store: 7-Step Checklist

How to apply? 

The business license application process can vary by location. However, most require the four steps below:

1. Submit an application form with your employer identification number (EIN), business identity, ownership structure, location, and planned activities.
2. Obtain zoning confirmation that the property and planned vape retail activities are permitted there.
3. Pay your license fees. Pricing often based on place and projected annual sales.
4. Periodically renew your license through added paperwork and recurring charges.
   
   

2. Seller's Permit 

The second permit every vape store owner should be aware of is a seller’s permit. This permit allows you to collect and properly remit sales tax owed on any products you sell in your store. You may also obtain a sales tax ID number or resale certificate if a state seller’s permit is not the right choice for your shop. 

Related Read: Average Vape Shop Profit Margins: How Much Do Vape Shops Make?

Additionally, depending on your location, you may not need to collect sales tax. Five U.S. states impose no sales tax, but the remainder require sales tax rates ranging from two percent to over nine percent, depending on your jurisdiction. Seller's permits legally designate your business as a retailer for tracking tax proceeds.

How to apply? 

Apply for your seller’s permit following the requirements listed by your state. However, most businesses must follow the below steps:

1. File a resale certificate application documenting your business identity and planned sales.
2. Provide a valid federal EIN already tied to your business structure.
3. Prepare to pay modest licensing fees to your state revenue or taxation department.
4. Commit to the ongoing, accurate calculation of locality sales tax rates owed on all taxable transactions.
   
   

3. Retail Tobacco License 

Though vape products do not contain tobacco, most states still classify them as tobacco products for licensing purposes. As a result, you must obtain a retail tobacco license or tobacco retailer permit to operate your vape store legally. 

Your tobacco license fee depends on your state and locality. Some areas charge only $25 for a retail tobacco license, whereas others require paying $500 or more to get licensed. Additionally, some localities, like New York City, impose further restrictions on vape stores and tobacco shops. For example, in N.Y.C., you cannot run or advertise your tobacco or vape shop within 500 feet of a school. 

Consider all possible challenges and licensing requirements before leasing a space for your vape store. 

How to apply? 

Applications will, once again, vary depending on your area. However, you can expect to follow the four steps below as a part of your process:

1. Submit an application documenting your registered business identity and planned vape retail activities.
2. Provide acknowledgment and proof of minimum age requirements for all staff.
3. Prepare to pay state (or possibly municipal) tobacco licensing fees.
4. Visibly post your license on-premises to verify compliance to customers and inspectors.
   
   

What License Do I Need To Open a Vape Shop? And What Comes After Licensing? 

After crossing the t’s and dotting the regulatory i’s involved with licensing, you’ll be excited to stock your shelves and open your doors to that first wave of customers. However, before you can cut that opening-day ribbon, you must ensure you have the right tools and technology to make your store a success.  

Your point of sale solution is the most critical tool in your arsenal. A robust POS system can help you manage inventory, run customer loyalty programs, and maintain licensing compliance by automating age verification scans at the register. POS Nation offers a point of sale system with all these features and more, giving small retailers everything they need to open their shop without tacking on the expensive bells and whistles they can go without. 

Schedule a demo of POS Nation today to see how our solution can help you optimize your vape shop from the back office to the front counter.