Cigarette & Tobacco Products Licensing Act of 2003 – Frequently Asked Questions – Retailer's

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A cigarette and tobacco products retailer is a person who sells cigarettes or tobacco products directly to the public from a California retail location. A retailer includes a person who operates vending machines from which cigarettes or tobacco products are sold in California. (Business and Professions Code (BPC) section 22971(p))

Yes, you must have a Cigarette and Tobacco Products Retailer's License to sell cigarettes and tobacco products to the public from a retail location in California. In accordance with the California Cigarette and Tobacco Products Licensing Act of 2003 (Licensing Act), every retailer who sells or will sell cigarettes or tobacco products in California is required to obtain a Cigarette and Tobacco Products Retailer's License from the California Department of Tax and Fee Administration (CDTFA) and renew it annually. This licensing requirement is in addition to other permits and licenses that may be required depending on your business operations. A valid Cigarette and Tobacco Products Retailer's License is required before you begin making sales of cigarettes and tobacco products in California.

Prospective licensees should consult with their local health department before applying for a California Cigarette and Tobacco Products Retailer's License to determine if there is a local licensing requirement in their community, and learn how to comply with its requirements. In some cases, local licensing requirements may be more restrictive than state licensing requirements. There are severe penalties of up to $5,000 for each offense and/or imprisonment for up to one year in a county jail that may apply if you sell cigarettes or tobacco products without a Cigarette and Tobacco Products Retailer's License (Business and Professions Code sections 22972 (a), 22980.1 (h) and 22981).

As of June 9, 2016, state law expanded the definition of a tobacco product, for cigarette and tobacco products retail licensing purposes, to include:

  • Any product containing, made of, or derived from tobacco or nicotine that is intended for human consumption.
  • Any electronic smoking or vaping device that delivers nicotine or other vaporized liquids.
  • Any component, part, or accessory of a tobacco product, whether or not sold separately.

Examples include, but are not limited to, electronic cigarettes, atomizers, vaping tanks or mods, and eLiquids or eJuices. Tobacco products do not include products that the U.S. Food and Drug Administration have approved as cessation products or for other therapeutic purposes (for example, nicotine patches).

Effective January 1, 2017, any retailer who sells any products included in the expanded definition of a tobacco product is required to obtain and maintain a retailer's license from the CDTFA in order to engage in the retail sale of these products.

Please note: if a retailer sells non-nicotine vape liquids and no other cigarettes or tobacco products, the retailer is still required to hold a valid Cigarette and Tobacco Products Retailer's License. However, if a retailer sells tobacco paraphernalia*, as defined under BPC section 22962(a)(2), and does not sell cigarettes or tobacco products, the retailer is not required to hold a valid Cigarette and Tobacco Products Retailer's License.

*Tobacco paraphernalia includes, but is not limited to, items that do not contain tobacco or nicotine such as cigarette papers or wrappers, pipes, and cigarette rolling machines.

Register for a Cigarette and Tobacco Products Retailer's License, a Seller's Permit, or any other permit, license, or account using the online registration system. Online registration is the convenient way to register and is available 24 hours a day. Upon registration, you will be required to pay the applicable fees.

Depending on your business operations, you may be required to obtain more than just a Cigarette and Tobacco Products Retailer's License. If you are a new retailer, you may need to obtain a seller's permit from the CDTFA to report sales and use tax. Retailers also operating as distributors or wholesalers may need to obtain cigarette and/or tobacco products distributor or wholesaler's licenses under the Licensing Act. For more information, call the Customer Service Center at 1-800-400-7115 (TTY:711) and select "Special Taxes and Fees" from the main menu. Customer service representatives are available weekdays from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays.

Every cigarette and tobacco products retailer that sells cigarettes or tobacco products; which include, any product containing, made of, or derived from nicotine that is intended for human consumption; any electronic smoking or vaping device that delivers nicotine or other vaporized liquids; or any component, part, or accessory of a tobacco product, whether or not sold separately; must apply for and obtain a Cigarette and Tobacco Products Retailer's License prior to making retail sales. All new applications must be submitted with a license fee payment for each retail location. Each retail location must have a separate license. A retail location means both: 1) any building from which cigarettes or tobacco products are sold at retail, or 2) a vending machine. A Cigarette and Tobacco Products Retailer's License is valid for a 12-month period, is not assignable or transferable, and must be renewed annually. An annual license fee payment must be submitted with each license renewal. If you add another retail location, your license for that new location will be renewed based on a 12-month period. This 12-month period would begin in the month you obtained your retailer's license for your first retail location. See our rates page for the current license fee amounts.

Beginning January 1, 2017, you will be required to pay an annual renewal fee for each retail location (BPC section 22972 (d), section 22973.), and section 22973.3 (e). If you fail to renew your license(s) timely, your license(s) will expire. Please remember you may not sell cigarettes or tobacco products without a valid Cigarette and Tobacco Products Retailer's License.

As a retailer of cigarettes or tobacco products you must:

  • Obtain a Seller's Permit.
  • Maintain a valid license for each retail location.
  • Conspicuously display the license at each retail location in a manner visible to the public.
  • Keep complete and legible purchase invoices for cigarettes and tobacco products for four (4) years.* See specific invoice requirements below.
  • Keep purchase invoices at each licensed location for at least one year after the date of purchase.*
  • Allow CDTFA or law enforcement agency personnel to review your purchase invoices upon request.*
  • Purchase and sell only those cigarettes and roll-your-own (RYO) tobacco authorized for sale in California as listed on the Office of the Attorney General's California Tobacco Directory. Retailers should be aware that it is illegal to sell cigarettes and RYO products that are not listed on the Attorney General's California Tobacco Directory. Please refer to the California Tobacco Directory for a list of manufacturers and brand families that are certified as being in compliance with California law. This requirement does not apply to products that were recently added to the definition of a tobacco product for licensing purposes such as eCigarettes, atomizers, vaping tanks or mods and eLiquids or eJuices.

* Does not apply to tobacco products that are not subject to the tobacco products tax. For example, vape liquids that do not contain any nicotine are not subject to the tobacco products tax; however, they are subject to retail licensing.

The law also adds recordkeeping requirements and other provisions related to your purchase of cigarettes and tobacco products. Your cigarette and tobacco products purchase invoices must meet certain legal requirements.

Each purchase invoice must be legible, readable, and include*:

  • The wholesaler or distributor's name, address, telephone number, and their California Cigarette and Tobacco Products Wholesaler or Distributor's License number. It is illegal to buy cigarettes or tobacco products from a person who does not have a license.
  • Your name, address, and California Cigarette and Tobacco Products Retailer's License number.
  • An itemized list of the cigarette or tobacco products you purchased. Cigarettes must be listed by the brand and style names, flavor, filter, and/or packaging when applicable, number of cartons or packs sold, and the sales price. Tobacco products must be listed by brand, type (such as pipe, cigars, or RYO), flavor, packaging (such as pouches, tins, or boxes), quantity sold, and sales price.
  • The date you purchased the cigarette or tobacco products.
  • The amount of California cigarette and tobacco products taxes due to the CDTFA by the distributor on the sale of cigarettes and tobacco products listed on the invoice. Note: a licensed cigarette and tobacco products distributor that is also a licensed cigarette and tobacco products retailer or manufacturer may include this statement on each invoice for the sale of cigarettes or tobacco products instead of listing the amount of cigarette and tobacco products taxes due to the CDTFA: "All California cigarette and tobacco products taxes are included in the total amount of this invoice."

* These requirements do not apply to tobacco products that are not subject to the tobacco products tax. For example, vape liquids that do not contain any nicotine are not subject to the tobacco products tax; however, they are subject to retail licensing.

Violations of the law are subject to civil and criminal penalties, and products not listed on the California Tobacco Directory in a retailer's possession can be seized and forfeited to the State.

Penalties

You must maintain accurate and complete records**, including purchase invoices. Failure to do so is a misdemeanor punishable by a fine not to exceed five thousand dollars ($5,000) per offense and/or imprisonment not to exceed one year in a county jail.

As a cigarette and tobacco products retailer, pursuant to the Licensing Act, it is illegal for you to purchase cigarettes from an unlicensed manufacturer, importer, distributor, wholesaler, any other unlicensed person, or any person whose license has been suspended or revoked*. Doing so could result in suspension or revocation of your license, fines, seizure of the products, and/or imprisonment. If a retailer intends to purchase tobacco products from an unlicensed person located out of state, then the retailer then becomes responsible for the tobacco products tax and must first register with the CDTFA as a distributor (see information above regarding the need to apply for other permits).

**Does not apply to tobacco products that are not subject to the tobacco products tax. For example, vape liquids that do not contain any nicotine are not subject to the tobacco products tax; however, they are subject to retail licensing.

The Investigations Division of the CDTFA may issue citations to a licensee that is not in compliance with the provisions of the Licensing Act or the Cigarette and Tobacco Products Tax Law. Two types of citations may be issued: civil citations and criminal citations. The criminal citation is a Notice to Appear in court. Both types of citations are subject to civil penalties.

Criminal citations are processed through the court system. Depending on the violation(s) cited, the court may impose fines, jail time, or both. Once the criminal proceedings are complete, the CDTFA may impose additional civil penalties.

A civil appeals process is available to the licensee for violations cited, civil penalties imposed, and suspension or revocation of a license. Additional information on the California Cigarette and Tobacco Products Licensing Act of 2003 – Civil Appeals Process is available on the Investigations Division website. You can also review the Frequently Asked Questions regarding the appeals process.

For additional information regarding penalties for noncompliance and enforcement provisions under the Licensing Act, visit the Investigations Division website or contact them by phone at 1-916-324-0105.

Other informative links

If you have additional questions about how the California Cigarette and Tobacco Products Licensing Act of 2003 applies to your business, you may also call our Customer Service Center at 1-800-400-7115 (TTY:711) and select the Special Taxes and Fees option. Customer service representatives are available to assist you weekdays from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays, or you may write to the California Department of Tax and Fee Administration, Business Tax and Fee Division, P.O. Box 948279, Sacramento, California, 94279-0088.

See our tax and fee rates page for the retailer's license fees.

You must obtain a license for each retail location you own or operate. For example, if you operate in several different locations and each sells cigarettes or tobacco products, or any product containing, made of, or derived from nicotine that is intended for human consumption; any electronic smoking or vaping device that delivers nicotine or other vaporized liquids; or any component, part, or accessory of a tobacco product, whether or not sold separately; you must obtain a separate license for each retail location. However, you may submit a single application for multiple locations, and include the application fee for each location's license (Business and Professions Code section 22972 (a), 22973(d), and 22973.3(d)). See our rates page for license fee amounts.

Yes. The Cigarette and Tobacco Products Retailer's License must be renewed annually. If you fail to renew your license(s) timely, your license(s) will expire. Please remember that you may not sell cigarette and/or tobacco products, including any product containing, made of, or derived from nicotine that is intended for human consumption; any electronic smoking or vaping device that delivers nicotine or other vaporized liquids; or any component, part, or accessory of a tobacco product, whether or not sold separately, without a valid Cigarette and Tobacco Products Retailer's License.

Each retail location must have a separate license for that location. A retail location means both: 1) any building from which cigarettes or tobacco products are sold at retail, and 2) a vending machine. A Cigarette and Tobacco Products Retailer's License is valid for a 12-month period, is not assignable or transferable, and must be renewed annually. An annual license fee payment must be submitted with each license renewal and may not be prorated. If you add another retail location, your license for that new location will be renewed based on a 12-month period. This 12-month period would begin in the month you obtained your retailer's license for your first retail location. See our rates page for the license fee amounts.

A corporate office may submit a single application for all of its retail locations, but the appropriate information (addresses, etc.) must be stated on the application along with the submission of the fee for each retail location (Business and Professions Code sections 22972 (a), 22973 (d), and 22973.3 (d)).

Yes. Business and Professions Code section 22972 (b) requires retailers to conspicuously display their Cigarette and Tobacco Products Retailer's License at each retail location in a manner visible to the public. If retailers fail to display the license, they may be liable for a penalty of $500 for each offense (Business and Professions Code section 22974.5) and their license may ultimately be subject to suspension and revocation.

The CDTFA, the Office of the Attorney General and any law enforcement officer in this state have enforcement authority.

Licensing will be monitored by the CDTFA, the Department of Health Services, and local authorities.

If you do not obtain a retailer's license and continue to sell cigarettes or tobacco products or any product containing, made of, or derived from nicotine that is intended for human consumption; any electronic smoking or vaping device that delivers nicotine or other vaporized liquids; or any component, part, or accessory of a tobacco product, whether or not sold separately; you may be subject to fines of up to $5,000 for each offense and/or imprisonment up to one year in a county jail (Business and Professions Code sections 22980.1 (h) and 22981).

Cigarettes

Under the California Cigarette and Tobacco Products Tax Law (Revenue and Taxation Code § 30003), "cigarette" is defined as a rolled product for smoking, of any size or shape, that:

  • Is made of any tobacco, flavored or not, and
  • Has a wrapper made of paper or another material.

Exception: Flavored cigarettes are banned in the United States. See the Cigarette and Tobacco Products Tax Guide–Industry Topics section for more information. Products wrapped in tobacco or with a cover made mostly of tobacco are not cigarettes when they weigh more than three pounds per thousand sticks (for example, cigars are considered tobacco products).

Tobacco Products

In November 2016, California voters approved Proposition 56, which amended the definition of "tobacco products," under the California Cigarette and Tobacco Products Tax Law (Revenue and Taxation Code § 30121) to include new tobacco products (identified as "New!" below). Beginning April 1, 2017, the distribution of these new tobacco products will be subject to the tobacco products tax. Tobacco products include, but are not limited to:

  • Cigars
  • Little cigars (little cigars were previously considered cigarettes and required a cigarette tax stamp prior to the passage of Proposition 56; however, beginning April 1, 2017, little cigars will be taxed as a tobacco product) New!
  • Smoking or pipe tobacco (including shisha)
  • Chewing tobacco
  • Snuff
  • Any product containing, made of, or derived from any amount of tobacco that is intended for human consumption (prior to the passage of Proposition 56, tobacco products, other than cigars, smoking or chewing tobacco, or snuff, had to contain at least 50 percent tobacco) New!
  • Any product containing, made of, or derived from any amount of nicotine that is intended for human consumption and sold with or without a delivery device or system New!
  • Electronic cigarettes or any device or delivery system sold in combination (for a single price) with nicotine New!
  • Any component, part, or accessory of an electronic cigarette that is used during the operation of the device when sold in combination (for a single price) with nicotine (for example, a battery used in the operation of the device sold with nicotine) New!

Notes

  1. Tobacco products do not include cigarettes. Tobacco products do not include any product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes (for example, nicotine patches) where that product is marketed and sold solely for such approved use.
  2. Nicotine does not include any food products as defined in Revenue and Taxation Code §6359.
  3. Electronic cigarettes do not include delivery devices (for example, eCigarettes or vape pens) sold individually or with a liquid or substance containing 0mg nicotine and are not considered tobacco products.

Expanded Definition of Tobacco Products for Retail Licensing

As of June 9, 2016, state law expanded the definition of a tobacco product for cigarette and tobacco products retail licensing purposes to include:

  • Any product containing, made of, or derived from tobacco or nicotine that is intended for human consumption.
  • Any electronic smoking or vaping device that delivers nicotine or other vaporized liquids.
  • Any component, part, or accessory of a tobacco product, whether or not sold separately.

Examples include, but are not limited to, electronic cigarettes, atomizers, vaping tanks or mods, and eLiquids or eJuices.

Effective January 1, 2017, any retailer that sells any product included in the expanded definition of tobacco products is required to obtain and maintain a Cigarette and Tobacco Products Retailer's License from the CDTFA in order to engage in the retail sale of these products.

Please note, if a retailer sells non-nicotine vape liquids and no other cigarettes or tobacco products, the retailer is still required to hold a valid retailer's license. However, if a retailer sells tobacco paraphernalia*, as defined under section 22962(a)(2) of the Business and Professions Code, and does not sell cigarettes or tobacco products, the retailer is not required to hold a valid retailer's license.

*Tobacco paraphernalia includes, but is not limited to, items that do not contain tobacco or nicotine such as cigarette papers or wrappers, pipes, and cigarette rolling machines.

Pursuant to Business and Professions Code section 22980.1, no cigarette manufacturer, distributor, wholesaler or importer is permitted to sell or distribute cigarettes or tobacco products to retailers who are not licensed or have had their license suspended or revoked. Additionally, retailers are not permitted to purchase cigarettes or tobacco products from an unlicensed cigarette or tobacco wholesaler, distributor, or importer. Retailers who fail to comply with these requirements may be subject to fines of up to $5,000 for each offense and/or imprisonment up to one year in a county jail (Business and Professions Code section 22981). Additionally, failure to comply with these provisions is a misdemeanor under Revenue and Taxation Code section 30478.

Yes. Business and Professions Code section 22971.3 permits cities and counties to enact local tobacco retail licensing requirements that may include annual fees and provide for the suspension or revocation of the local license for any violation of a state tobacco control law. Retailers are advised to check with their local health department for any local tobacco licensing requirements and restrictions before obtaining a Cigarette and Tobacco Products Retailer's License from the CDTFA.

Prospective licensees should consult with their local health department before applying for a California Cigarette and Tobacco Products Retailer's License to determine if there is a local licensing requirement in their community and to learn how to comply with its requirements. In some cases, local licensing requirements may be more restrictive than state licensing requirements. Visit the CalGold website for help with permit and licensing requirements for local authorities as well as other state or federal authorities.

Visit the California Department of Public Health's Tobacco 21 webpage for more information about the new landmark California Tobacco 21 law.

This law does not affect any laws or regulations regarding medical cannabis.

Yes. If a retailer sells 0mg or non-nicotine eJuice or vape liquids and no other cigarettes or tobacco products, the retailer is still required to hold a valid Cigarette and Tobacco Products Retailer's License in order to sell these products.

Due to the passage of Senate Bill x2-5, which was effective June 9, 2016, the definition of a tobacco product was expanded, for cigarette and tobacco products retail licensing purposes, to include:

  • Any product containing, made of, or derived from nicotine that is intended for human consumption.
  • Any electronic smoking or vaping device that delivers nicotine or other vaporized liquids.
  • Any component, part, or accessory of a tobacco product, whether or not sold separately.

Effective January 1, 2017, any retailer that sells any of the products listed above (including non-nicotine eJuice), is required to obtain and maintain a Cigarette and Tobacco Products Retailer's License from the CDTFA in order to engage in the retail sale of these products.

Yes. A separate Cigarette and Tobacco Products Retailer's License is required for each vending machine from which retail sales of cigarettes or tobacco products are made. The annual retailer's license fee applies to each vending machine. Visit the tax rate page to view current cigarette and tobacco products license fees.

Business and Professions Code (BPC) section 22972 requires all retail sales of cigarettes or tobacco products to take place at a licensed retail location. Each vending machine is considered a "retail location". BPC section 22971, subdivision (q) defines "Retail Location" to mean both of the following:

  1. Any building from which cigarettes or tobacco products are sold at retail.
  2. A vending machine.

A retailer's license application fee is required for each new retail location. A retailer's license is valid for a 12-month period from the date of issuance and must be renewed annually. A retailer's license renewal fee is required along with a completed license renewal application each subsequent year to renew the license. License fees may not be prorated. If you add another retail location, your license will be renewed for that new retail location based on a 12-month period beginning in the month you obtained your retailer's license for your first retail location.

For additional information regarding California cigarette and tobacco products taxes, please view the Cigarette and Tobacco Products Tax Guide located on the CDTFA's public website.