Before investing a single dollar into opening a smoke shop, you should know exactly what it takes to be successful in the tobacco industry.
You’ll have to face complex regulations, steep competition, and constant changes in customers’ shopping habits — but with the right knowledge and planning, you can tackle these challenges and win.
In this blog, we’ll explore the six most important things you need to know before opening a smoke shop, plus tried-and-true tips to help you protect your tobacco license, manage inventory, attract customers, and turn a profit on every single sale.
Snags in the licensing process can delay your shop’s grand opening, but understanding your state’s application process and requirements can make getting your tobacco license stress-free.
Let’s look at the five basic steps to secure a tobacco license:
The CDC’s website is a great place to start researching your state’s tobacco licensing requirements — look for your state on their fact sheet.
Related Read: How To Get a Tobacco License in 4 Steps
Once you’ve secured a tobacco license — your top priority should be to protect it.
Most importantly, you need a plan to avoid underage tobacco sales. Selling tobacco products to customers under 21 is illegal in all states, and the consequences range from hefty fines to the loss of your license.
Each state has additional laws regulating the sale of tobacco and related products. Here are some examples:
A smoke shop-specific point of sale (POS) solution can help you stay compliant with regulations like these. Look for one that includes built-in, scanner-powered age verification, tax compliance tools, and sales reporting.
Related Read: 10 Tobacco Industry Regulations You Need To Know
Competition: It’s probably the biggest challenge you’ll face as a smoke shop owner.
Gas stations, convenience stores, and even some supermarkets offer a wide range of cigarettes, vapes, and nicotine pouches — often at lower prices due to their high volume and huge purchasing power.
That’s why you have to be intentional about developing a unique selling proposition (USP). For example, you might specialize in fine cigars, promise the largest selection of cigarette brands, or offer a unique cigar lounge space.
We also recommend investing time and energy into creating an excellent shopping experience. Provide quick checkouts, expert product recommendations, friendly service, and exciting promotions to keep customers coming back.
Your customers will have wildly diverse product preferences and shopping habits, making it difficult to curate a selection that appeals to all of them.
Our number-one tip is to identify your ideal customer.
Are you serving a specialty market, like cigar connoisseurs looking for high-quality smokes or loose-leaf tobacco enthusiasts? In this case, you need to stay up to date on the latest trends, partner with high-quality suppliers, and aim to be the first smoke shop in town to carry new and exciting products.
You should also stock the essential products customers expect to find in a smoke shop, including cigarettes, cigars, disposable vapes, e-cigarettes and liquids, pipes and loose-leaf tobacco, and smoking accessories like lighters, cutters, and humidors. You might consider adding trending products like CBD, delta-8, and kratom to your shelves, too.
Pro tip: Curating your product selection isn’t a one-and-done task — it’s an ongoing process. Regularly check your POS system’s sales reports to identify your bestsellers, underperforming products, and sales trends. This data helps you tailor your selection to your customers’ actual wants, needs, and habits.
Understanding the importance of inventory management before opening your smoke shop will keep your costs low and customers happy.
In short, you need to strike the right balance when stocking your shelves. If you order too few of your top-selling vapes, you’ll run out, disappoint customers, and lose sales. If you overstock your humidors, you’ll end up with stale cigars, sky-high inventory costs, and low profits.
A POS system with inventory management tools is the best way to prevent these problems. Here are a few must-have features to look for:
The right technology prevents inventory management headaches and saves you hours per week by eliminating manual counts and purchase order creation.
Marketing is crucial for any small business’ success — but smoke shops face unique challenges when it comes to advertising.
For example, Google, Meta, and other advertising hubs prohibit paid tobacco advertising.
But don’t worry: There are still ways to attract and retain customers without violating tobacco industry rules and regulations. Here are some of our favorite smoke shop marketing strategies:
Keeping up with an SMS list or loyalty program might sound overwhelming, but a POS system with built-in marketing features can help! Simply choose one with a loyalty program and customer relationship management (CRM) suite.
Ready to get your smoke shop up and running? Your next step is finding the right retail technology partner.
Our tobacco POS system buyers’ guide includes everything you need to know before investing in software and hardware for your new shop — including must-have features, compliance requirements, support, and more.
Start reading the guide for free!