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The California State Board of Equalization issued a press release on November 2, 2016, advising “E-Cig” sellers of the new license registration requirements starting on January 1, 2017. The press release, which can be found here, states:
eCigarette Sellers Required to Register for
Cigarette and Tobacco Products Retailer Licenses
Sacramento – Starting on January 1, 2017, sellers of electronic cigarettes (eCigarettes), vaping devices, and other related products will be required to obtain a Cigarette and Tobacco Products Retailer’s License from the California State Board of Equalization (BOE). This license must be obtained prior to making retail sales of these products to consumers. It will cost $265 for a 12-month period, and must be renewed annually at this cost.
In accordance with Senate Bill x2 5 products requiring licensing will now include: any product containing, made, or derived from nicotine; any electronic smoking or vaping device that delivers nicotine or other vaporized liquids to the person inhaling from the device; and any component, part, or accessory, even if it’s sold separately.
For example, selling eCigarettes, vaping tanks or mods, atomizers, and e-juice or e-liquid at a retail store will require a business to obtain a Cigarette and Tobacco Products Retailer’s License. However, these products are not subject to excise taxes imposed by the Cigarette and Tobacco Products Tax Law, and retailers will not be required to maintain purchase invoices or obtain these products from a BOE licensed cigarette or tobacco products distributor or wholesaler. This licensing requirement does not apply to cannabis-related vaping devices that are sold in properly licensed cannabis dispensaries.
Sellers of electronic cigarettes, vaping devices and other related products should also have a California Seller’s Permit. Retailers can register online. for the cigarette and tobacco products retailer license.
Beginning January 1, 2017, anyone found selling or gifting any of these products without obtaining a valid license is in violation of the law and subject to a misdemeanor citation and seizure of inventory. Products seized by the BOE or other law enforcement agency are deemed forfeited and cannot be returned by law.
There is more information in the BOE’s Special Notice (click here). According to that special notice, the definition of tobacco products was expanded by state law to include (1) Any product containing, made, or derived from nicotine that is intended forhuman consumption; (2) Any electronic smoking or vaping device that delivers nicotine or other vaporized liquids; and (3) Any component, part, or accessory of a tobacco product, whether or not sold separately.
Examples include, but are not limited to, eCigarettes, atomizers, vaping tanks or mods, and eLiquid or eJuice. However, the Special Notice has stated that this definition does not include the nicotine patch or other “cessation products” (though some proponents of vaping claim the delivery devices, as they can be used without nicotine, help with quitting, the state legislature does not yet appear to agree). Furthermore, according to the Special Notice, the licensing requirement does not apply to medical cannabis products (which are subject to other licensing requirements).
Daniel W. Layton is the author of this blog post. He is the principal of Tax Attorney OC.