Two Major Changes to Nevada’s Tobacco Tax and Sales Laws

Cigarette laying on money

Nevada’s legislature was busy in the tobacco products market this year as it enacted two major changes that will impact distributors and retailers in 2023 and beyond. These new rules will affect the Nevada tobacco products tax owed on the wholesale of premium cigars and lessen the requirements around age verification in casinos. We discuss the details below and how these changes could affect your distribution or retail operations in Nevada.

Nevada Caps Tobacco Product Tax on Premium Cigars (AB 232)

Effective July 1, 2023, Nevada will have a floor and ceiling on the amount of tobacco tax owed on the sale of premium cigars through passage of AB 232. Premium cigars are a type of other tobacco product (OTP), the sale of which Nevada generally applies an excise tax of 30 percent of the wholesale price and is the responsibility of the wholesaler or manufacturer that brings the tobacco into the state for first sale. Failure to pay the tax could lead to seizure of inventory and other fines or charges.

The new amendment to the law defines premium cigars as a cigar “that is rolled by hand, has a wrapper made of whole tobacco leaves, and does not have a filter or mouthpiece.” NRS 370.450(5). AB 232 adjusts the potential tax owed on the wholesale of premium cigars based on the amount of tax collected per cigar. If the tax on the sale of premium cigars would be greater than .50 cents per cigar, then the tax is .50 cents per cigar. Likewise, if the tax on the sale of premium cigars would be less than .30 cents, then the tax is .30 cents per cigar.

This modification to Nevada’s OTP excise tax on premium cigars currently has an expiration date under AB 232 that will take place on June 30, 2027, and would require further legislative action to change.

New Exception for Age Verification Requirements in Casinos (AB 122)

The other noteworthy change to Nevada’s laws on the sale of cigarettes and OTP applies to sales in qualifying casinos and took effect on May 30, 2023. AB 122 established an exception for retailers and their employees in their obligations to verify the age of customers. When selling tobacco products to persons under the age of 40, retailers must generally perform a verification process with enhanced controls using a scanning technology or another automated software-based system. This is to ensure the person is over 21 and failure to follow this rule comes with a $100 civil penalty per offense among other potential punishments.

With passage of AB 122, this requirement will not apply to face-to-face transactions that occur in areas within a casino where loitering by people under the age of 21 is already illegal. The new amendment to NRS 370.521 defines as casino as an establishment with a nonrestricted license under NRS 463.0177 and which operates 16 or more slot machines together with any other game, race book, or sports pool.

Questions About Your Nevada Tobacco Tax and License Obligations?

These changes to Nevada’s laws on its tobacco products tax and age verification requirements could affect your distribution or retail operations in multiple ways, especially if you work through a larger casino. Additionally, the tax changes to premium cigar sales could create opportunities for tobacco tax refunds for sales over the .50 cent cap while carrying risk of assessment for tax deficiency of sales below the .30 cent floor. Get the latest Nevada OTP tax and license assistance for your business with an initial consultation today. We provide guidance to taxpayers and tobacco license holders in all aspects of their compliance efforts, including audit strategies and administrative appeals of their assessments.

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