Running a smoke shop can be extremely rewarding — but it’s not without its challenges, some of which crop up before you even get started.
Smoke shop licenses can be confusing, especially since the rules differ by state, city, or even the county your smoke shop is in. Taking the time to research tobacco licensing will set your business up for success from day one.
What licenses do you need to open a smoke shop? How much do they cost? What happens if sell tobacco without one?
In this article, we break down the various types of tobacco licenses and offer tips on keeping your shop in good legal standing once it’s open.
Licenses Required To Open a Smoke Shop
What licenses do you need to open a smoke shop? That depends.
The type(s) of licenses you’ll need will depend on:
- Who you’re selling to
- Whether customers can smoke products in-store
- Where your inventory comes from
- Whether you’re making products yourself
Most new smoke shop owners who plan to sell cigarettes, cigars, or vapes directly to customers will need a business license and a tobacco retailer license.
Here are some more details about the different types of licenses you may need:
1. Retail Business License and Local Licenses
A business license is the basic license every retailer needs to operate legally in their state. The exact process for obtaining a license differs depending on where you’re based, but generally, business licenses are issued by the Secretary of State’s office. You can also go to your local Small Business Association office for more resources on exactly what you’ll need.
Remember, even if your state doesn’t require a business license to operate, the county or city you’re in might. Double-check with your local government to make sure you’re operating legally.
Some local governments issue licenses for certain types of businesses, particularly if you are going to be serving food or alcohol (like in a cigar lounge). So once you have your smoke shop business plan ready, check with your local Department of Commerce to see what additional local licenses you might need.
2. Tobacco Retail License
A tobacco retail license is something all smoke shops must have to sell cigarettes and other tobacco products directly to customers.
Unfortunately, there’s no one standard way to apply for a tobacco retail license because the rules and methods surrounding them aren’t universal. The CDC’s State Licensure Fact Sheet is a good resource to get started. From there, contact the appropriate state or local offices to apply and pay the initial application fee.
Related Read: How Much Does It Cost To Open a Smoke Shop? A Quick Guide
The cost of a tobacco retailer license can vary considerably depending on what state you’re in or even by city or county. For instance, in Georgia, a retail license costs only $10 anywhere in the state while in Chicago the cost is $550 per location.
Finally, a tobacco retail license typically needs to be renewed every one or two years. So make sure you keep your license up to date.
Additional Responsibilities for Tobacco License Holders
In addition to paying for your license and keeping it up to date, retail tobacco license holders are generally required to:
- Publicly display the license at all locations
- Keep sales records for any tobacco products for at least four years
- Strictly sell only to customers who are over the legal age
- Follow tobacco advertising rules
These are all necessary to stay in compliance with state and federal laws.
3. Tobacco Wholesaler License
A tobacco wholesaler license is for businesses that sell tobacco products in bulk to other retailers or businesses. A wholesale license typically does not cover the sale of products to individual consumers, so you would need a separate license if you plan to do so.
A wholesale license is issued by the state you’re operating in and may require you to keep detailed records of your invoices for periodic inspection.
4. Tobacco Importer License
A tobacco importer is anyone who imports cigarettes, raw tobacco, cigars, snuff, and other tobacco products from outside the U.S.. This also includes smokeless products that contain nicotine.
Because you’re bringing products into the country you’ll need to apply for a federal permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB) and comply with the U.S. Food and Drug Administration’s (FDA) rules.
5. Health Permits and Zoning Approvals (for On-Premises Smoking)
If you are planning to open a smoke shop with a lounge, you will also need to make sure you follow appropriate zoning laws. Not all states allow smoking indoors, but some make exceptions for businesses that primarily sell tobacco products or for private clubs.
You may also need to apply for a Health Permit to show that you meet the standards for air ventilation, safety, and cleanliness.
If you’re planning to open a cigar lounge or other type of business where the goal is to let your customers use the products on premises, check your local laws first.
6. Tobacco Manufacturer License
If you plan on making your own cigars or shisha, roll-your-own tobacco products, or any other tobacco products, you’ll need a tobacco manufacturer’s license. Tobacco manufacturers have to apply for a federal permit from the TTB. You may also need a local license within the state where you manufacture your products.
Your products must also follow all labeling rules set out by the FDA.
Penalties for Not Having a Tobacco License or Violating State Laws
Penalties for selling or importing tobacco products without an appropriate license can be steep. For instance, in Colorado, selling cigarettes without a valid license incurs a $1000 fine which increases with subsequent violations. For small businesses operating on a tight margin, this can be devastating.
Additionally, violating state law (like selling cigarettes to a minor) can result in fines and, in some areas, a license suspension. Even a one-week suspension means lost sales and missed opportunities to attract new customers.
Long story short: don’t be lax when it comes to tobacco licenses.
How Smoke Shop POS Software Helps You Stay Legally Compliant
Beyond knowing what licenses you need for your smoke shop, you’ll also need to make sure your business stays in compliance with tobacco-specific laws.
A smoke shop point of sale (POS) solution like Cigars POS can make it easier for tobacco sellers to stay in compliance with many useful features, such as:
- Age verification and ID scanning: Easily scan IDs to protect your business from fines or worse.
- High-risk processing: Many tobacco shops are classified as “high-risk” and require specialized payment processors to accept debit/credit cards and digital payments.
- Compliant advertising: Tobacco stores have limits on how they can advertise and what kind of customer loyalty programs they can offer, making an industry-specific POS solution a must.
- Real-time and historical sales data: Many licenses require that you keep a detailed record of sales for at least four years — which our POS software does.
Tobacco store POS software also comes with many features that can help you improve the customer experience, increase sales, and reduce operating costs.
To see how Cigars POS can simplify the way you run your new smoke shop, schedule a demo today.
