Cigarette and Tobacco Products Licensing Act of 2003
The Cigarette and Tobacco Products Licensing Act of 2003 that took effect January 1, 2004, establishes a statewide licensure program to help stem the tide of untaxed purchases and illegal sales of cigarettes and tobacco products in the State of California. The Board of Equalization (Board) estimates that California loses approximately $238 million each year in unpaid cigarette taxes. The new licensing requirements of this law are in addition to the Board's current permit and licensing programs. This new law applies to retailers, distributors, wholesalers, manufacturers, and importers of cigarettes or tobacco products.
If you sell or distribute cigarettes or tobacco products in the state of California, you must obtain this new license. For information about which license you must obtain, how to apply for it, deadlines for filing applications, and other requirements you must follow in order to comply with this new law, click here.
What if I refuse to get a license?
If you do not obtain a license and continue to sell cigarettes or tobacco products, you may be subject to fines up to $5,000, up to one year imprisonment in the county jail, or both the fine and imprisonment. The Board of Equalization, the Department of Health Services, and local authorities will monitor licensing.
Do I have to post the license?
Yes. Retailers must conspicuously display their license at each retail location in a manner visible to the public. If retailers fail to display the license, they are liable for a penalty of $500 and their license may ultimately be subject to suspension or revocation.
Who will be enforcing this Act?
The State Board of Equalization, the Office of the Attorney General and any law enforcement officer in this state has enforcement authority.
What other enforcement provisions does this Act provide?
- You must allow Board staff or law enforcement agencies to review your invoices upon request. Note: Cigarette and tobacco product purchase records must be kept for four years and you must keep these records on file at the location identified on your license for at least one year after the date of purchase.
- Board staff and law enforcement agency employees may inspect retail locations and seize any untaxed cigarettes and tobacco products, including cigarettes without tax stamps or with counterfeit stamps, or cigarette and tobacco products to which cigarette tax stamps or meter impressions are affixed in violation of the specified prohibitions under the Master Settlement Agreement (Revenue & Taxation Code section 30165.1). "Unstamped" cigarette packages may also include a package of cigarettes that bears a tax stamp of another state, or cigarette package, stamped or unstamped, that is marked "Not for sale in the United States." These inspectors will identify themselves and provide credentials.
Other informative links
- More information about this law (Assembly Bill 71, Chapter 890, Statutes 2003)
- Cigarette and Tobacco Products Tax Evasion
- Special Notices - Retailers, Distributors and Wholesalers
- Publication 78, Sales of Cigarettes and Tobacco Products in California - License Requirement for Retailers
To get more information about noncompliance penalties and enforcement provisions of this law, contact the Board's Investigations Division at 916-324-0105.