Tobacco products licensing in California

If you are looking to sell tobacco products to retail stores and gas stations in California, you will need to meet the appropriate business licensing requirements to get started.

Tobacco products licensing for retailers, wholesalers, importers, distributors, and manufacturers in California is regulated by the California Cigarette and Tobacco Products Licensing Act. The California Department of Tax and Fee Administration (CDTFA) also administers a variety of programs, including issuing seller’s permits, and managing taxation of fuel, alcohol, and cannabis.

A CDTFA license is required for all tobacco products businesses in California in addition to other permits and licenses required based on the nature of your business operations.

Note: Cigarettes may be subject to additional tax, reporting, and other requirements than tobacco products alone.

In this article, we define what a tobacco product is and review the licensing requirements in California for retailers, distributors, manufacturers and wholesalers of tobacco products.

What is a tobacco product?

Under California law, a tobacco product is defined as:

1. A product containing, made, or derived from tobacco or nicotine that is intended for human consumption, including, but not limited to, cigarettes, cigars, little cigars, chewing tobacco, pipe tobacco, or snuff.
2. An electronic smoking or vaping device that delivers nicotine or other vaporized liquids, including, but not limited to, vapes, pipes, hookahs, and e-juices (with and without nicotine).
3. Any component, part, or accessory of a tobacco product, whether or not it is sold separately, such as papers, cigar wraps, atomizers, and e-cigarette batteries.

A tobacco product doesn’t include a product that has been approved by the U.S. Food and Drug Administration for sale as a tobacco cessation product or therapy, such as nicotine patches or gum.

Tobacco products retailer licensing requirements

In California, a tobacco retailer is someone who sells tobacco products directly to the public from a California retail location. A retailer can also include a vending machine operator.

California tobacco products retailer licensing requirements include:

1. Seller’s permit
2. Cigarette and Tobacco Products Retailer's License
3. California Electronic Cigarette Excise Tax (CECET) permit: Required if you are a retailer who sells electronic cigarettes containing or sold with nicotine

At the local level, you may be required to obtain:

1. General business license: Some municipalities require a general business license to operate a business within a jurisdiction.
2. Local tobacco retail license or permit: Some local jurisdictions – including Los Angeles, San Francisco, San Diego, and Santa Cruz – require tobacco retailers to obtain a separate license specific to tobacco businesses.
3. Zoning permission: Tobacco retailers are subject to zoning laws and may require additional permits or approvals at the local level.

Furthermore, a separate Cigarette and Tobacco Products Retailer's License is required for each location or vending machine. If you operate multiple vending machines at a single location, you will still need a separate license for each vending machine.

Note

1. Retail locations are restricted to buildings or vending machines. If you are a mobile seller — meaning you sell from a catering truck, lunch wagon, or other non-static, mobile retail location — you can’t hold a California Cigarette and Tobacco Products Retailer's License and are not permitted to sell cigarettes or tobacco products from such a facility.
2. Locations licensed as a cannabis business are also not permitted to sell cigarette and tobacco products.
3. Effective January 1, 2024, retailers are prohibited from selling flavored tobacco products in California. This includes most flavored e-cigarettes and menthol cigarettes.

Tobacco products wholesaler licensing requirements

A tobacco products wholesaler is a person, other than a licensed tobacco products distributor, who sells tax-paid tobacco products for resale at a specific California location. The CDTFA enforces the following licensing requirements on such sellers:

1. Seller’s permit
2. Cigarette and Tobacco Products Wholesaler’s License
3. Miscellaneous record keeping and reporting

Depending on the business activity and jurisdiction, tobacco wholesalers may have additional license and permit requirements at both the state and local levels. For example, a wholesaler that intends to sell tobacco products directly to the consumer must also obtain a retailer’s license.

Note: California does not allow cigarette and tobacco product distributors to hold a wholesaler’s license.

Tobacco products distributor licensing requirements

A tobacco products distributor is an individual or business that engages in the distribution of tobacco products in California. If you are a tobacco products distributor, you may not hold a wholesaler's license. In general, distributors purchase tobacco products before any California tobacco products tax is due and then pay the tax when the tobacco products are sold or distributed.

Anyone who distributes tobacco products in California must register with the CDTFA as a tobacco products distributor.

Some California requirements for tobacco product distribution include the following:

1. Seller’s permit
2. Cigarette and Tobacco Products Distributor’s License
3. Miscellaneous record keeping and reporting

Depending on the business activity and jurisdiction, tobacco distributors may have additional license and permit requirements at the state and local levels.

Tobacco products manufacturer licensing requirements

In California, a tobacco product manufacturer is defined as the following:

1. Any person, including a repacker or relabeler, who manufactures, fabricates, assembles, mixes, blends, combines, processes, or labels a finished tobacco product.
2. An owner of a brand or formula for a tobacco product who contracts with another person to complete the fabrication and assembly of the product to the brand or formula owner's standard.
3. A retailer who mixes, blends, or combines a tobacco product that is not suitable for human consumption, such as liquid nicotine, with other ingredients or components to make a tobacco product that is suitable for human consumption.

Some of the California requirements for tobacco product manufacturers include the following:

1. Seller's Permit
2. Tobacco Products Manufacturer/Importer's License
3. Miscellaneous record keeping and reporting

Tobacco manufacturers may have additional license and permit requirements at the local level.

Penalties for operating without a license

Cigarettes, tobacco, and tobacco products are highly regulated in California and other states within the U.S. Failure to comply with the licensing requirements could result in the following:

1. Inspection by CDTFA staff and law enforcement officers and possible seizure of any untaxed cigarettes or tobacco products.
2. Your business may be subject to civil and criminal penalties and the seizure and/or forfeiture of any noncompliant product.
3. If you intentionally evade the reporting, assessment, or payment of cigarette or tobacco product taxes that would otherwise be due you can be found guilty of cigarette or tobacco product tax evasion. Evasion of tax liabilities over $25,000 or more in a 12-month period is a felony.
4. A failure to maintain accurate and complete records and include the required information on invoices is a misdemeanor punishable by a fine not to exceed five thousand dollars ($5,000), or imprisonment not to exceed one year in a county jail, or both fine and imprisonment.
5. As a retailer, distributor, or wholesaler, you have a duty to only purchase cigarettes from a manufacturer or person who is licensed. Also, you may not sell cigarettes or tobacco products to a distributor, wholesaler, retailer, or any other person who is not licensed with the CDTFA, or whose license has been suspended or revoked.

California tobacco products license renewals

If you are a retailer, wholesaler, distributor, manufacturer, and/or importer of cigarettes and tobacco products, you must renew your license for each of their locations annually using California’s online registration system.

Furthermore, retailers, wholesalers, and distributors must pay an annual license renewal fee per location to renew their cigarette and tobacco products license, and the fee may not be prorated.

If you add a retail location, you must renew your retailer's license for that retail location based on a 12-month period beginning in the month the license for the first retail location was obtained.

There is no charge to renew a cigarette and tobacco products manufacturer and/or importer's license.

CT Corporation can help

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of general business licenses and tobacco business licenses, you can free up your time to focus on starting and growing your California tobacco products business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, contact a CT Corporation business license specialist.