Cigarette Tax Stamp Contract

Senate Bill 1701 (Chapter 881, Statutes 2002) was enacted to combat the increasing use of counterfeit cigarette tax stamps. California was losing an estimated $280 million in cigarette taxes annually. SB 1701 required the California Department of Tax and Fee Administration (CDTFA) to replace the heat-applied decal tax stamps with a technology based counterfeit resistant stamp capable of being read by a scanning or similar device, and encrypted with specific information.

A multi-year contract for encrypted cigarette tax stamps was awarded to SICPA Product Security, LLC, by the Department of General Services on July 23, 2010. The contract provides for encrypted cigarette tax stamps, stamping machinery, stamp validation equipment, and necessary services to support the administration of the California Cigarette and Tobacco Products Tax Law (Revenue and Taxation Code section 30161 et seq.). The new contract is for a set term of five years and contains optional provisions to extend the term up to an additional four years (in two year increments).

The CDTFA and SICPA are currently developing an implementation plan for the roll out of some improvements and system software upgrades in the contract including a new look to the cigarette tax stamp.

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