Laws, Regulations & Annotations


Business Taxes Law Guide – Revision 2021

Cigarette and Tobacco Products Tax Annotations

TOBACCO PRODUCTS—Section 30121(b)

Measure of Tax for Tobacco Products. The rate of the tobacco products tax is required by Revenue & Taxation Code Section 30123 to be "based on the wholesale cost of these products … which is equivalent to the combined rate of tax imposed on cigarettes … " . Since the calculated wholesale cost of cigarettes does not include the cost of incoming freight charges, the wholesale cost of tobacco products should also exclude freight. 4/20/89.

Tobacco Products—Tobacco Content. The Cigarette and Tobacco Products Tax applies to all forms of cigars, smoking tobacco, chewing tobacco, and snuff, regardless of the amount of tobacco they contain. In addition, the tax applies to any other articles or products which are made entirely of tobacco or contain at least 50 percent tobacco, excluding cigarettes. 9/27/96.

Tobacco Products—Chewing Gum. Chewing gum containing any tobacco is chewing tobacco and is therefore subject to the Cigarette and Tobacco Products Tax. 9/27/96.

Package of Cigar Wraps. A distributor sells three cigar wraps together in a single package. The package contains one natural leaf cigar wrap, composed entirely of tobacco, which meets the statutory definition of a tobacco product. The package also contains two homogenized tobacco leaf wraps that contain less than 50 percent tobacco and do not meet the statutory definition of tobacco products. If the distributor can establish through documentary evidence, such as purchase invoices, the actual wholesale cost of the natural leaf wrap, the Board would accept that the tax could be reported on the actual wholesale cost of the natural leaf wrap (the tobacco product). Because it is assumed that the cost of the natural leaf wrap is much higher than the wraps that are not tobacco products, if the distributor is unable to establish through documentary evidence the actual wholesale cost of the leaf wrap, the Board assumes the wholesale cost of the package is subject to tax. 10/22/09.