State Tobacco Licenses
Many businesses have shifted to the Internet to sell their products in today’s modern economy. In addition to mainstream products, many tobacco companies such as online cigar stores, have begun moving to an online sales model. Using an online platform, online tobacco retailers and wholesalers can reach more customers than ever before.
We commonly get the question - Is a business allowed to sell online? If they do, is a state allowed to enforce its taxing obligations? What happens if I do not get a license?
Can a Tobacco Wholesaler Use E-Commerce to Sell Products?
In general tobacco companies can sell online into multiple jurisdictions. Some states, like Maryland, do not allow the online sale of cigars into their state. Assuming you can sell into a state over the Internet, many states require that you have a wholesale or retail license.
Like most areas of tobacco regulation, the answer to the questions posed above depends on the state. While the online sale of cigarettes is generally not allowed, most states allow the online sale of other tobacco or cigars from a website into the state. However, most states require a license (retail or wholesale) in order to do so. For example, when asked about selling into Pennsylvania, a representative responded as follows:
Just received your email concerning [tobacco] internet sales. All the company would need is to fill out the REV-633 on our website revenue.pa.gov. If they are a wholesaler or Manufacture will cost $1500.00. If they are only selling over the internet it will be $25.00
Similarly, Washington responded:
They will need to obtain a general business license and tobacco endorsement through the Business Licensing Service; they may also need to file with Secretary of State if they are established in Washington.
Depending on the company’s structure, location of offices and/or employees, and sales volume into a state, there may be additional sales tax and secretary of state considerations as well.
Therefore, it is imperative that you contact a professional well versed in tobacco laws to determine if you should get licensed to sell into a jurisdiction.
What If I Sell Without a License?
While many startups and online companies elect to not get properly licensed into states they sell into, there are significant risks. Tobacco is a highly regulated industry and selling without a license can result in severe civil and sometimes criminal penalties. Illinois, for example, may impose up to a class 4 felony for selling tobacco into their state without a license. If you are caught selling tobacco or cigarettes without a license in California the penalties can amount to “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.” This requirement does not apply to products such as electronic cigarettes, atomizer, vaping tanks or mods and eLiquid or eJuice.
How Do I Get Licensed?
Assuming you can sell to an end user over the Internet and the state requires a license to do so, how do you get a license? Generally, there are 3 main steps to get licensed.
1. Determine Which States and What Licenses are Needed
Assuming you can sell into a state, states require either a wholesale or retail license, and sometimes both. If you are selling to retailers, you generally need a wholesale license. If you are selling to end users, then a retail license is generally required.
2. Prepare the Documents
After you decide on which licenses are needed, there is usually a truckload of information to piece together and organize. Applications can range from 1 page, like Idaho, to a package of information. The state usually wants information about the company, its officers, financial institutions, criminal history, vendors, and locations. Some states require references and surety companies as well. It can be quite burdensome to put all of this information together and fill out what seems like endless forms.
3. Fill out Applications
Once you have all of your information together, you can go through the tedious process of filling out applications. Many states have an application fee to go along with the form. Most states allow the form to be completed online, but some still require paper form submissions.
Get Licensed with TTR
Tobacco Tax Refund offers a comprehensive licensing program that will help you get licensed in any jurisdiction you wish. Our recommendation is to apply in all of the jurisdictions you may need a license for and let the state tell you that you do not need to sell online into their state. Without a store front, states may not allow you to sell online into the state. Contact us today or fill out the from below to get started!
Other Business & Tax Registrations
Using the information provided, Tobacco Tax Refund can assist you with sales tax and other registrations you need. However, it’s on you to determine which applications you want. We can, however, discuss which licenses you will and will not need for a small consultation fee.