California Cigarette & Tobacco Products Licensing Act of 2003

On October 12, 2003, the State of California enacted the Cigarette and Tobacco Products Licensing Act (Assembly Bill 71 [Chapter 890, Statutes 2003]) (Act) which established a statewide licensing program under Division 8.6 (commencing with section 22970) of the California Business and Professions Code. The Act imposed licensing requirements on all retailers, wholesalers, and distributors of cigarettes and tobacco products and all manufacturers and importers of cigarettes. These licensing requirements are in addition to the permits and licenses that may be required depending on your business operations. The Act, intended to decrease tax evasion on the sales of cigarettes and tobacco products in California, also included provisions for new recordkeeping requirements, inspection and seizure of any untaxed cigarettes or tobacco products, and imposed civil and criminal penalties for violations.

Who is required to have a license?

Retail sellers of cigarettes and tobacco products in California must have a Cigarette and Tobacco Products Retailer's License. There is a one-time fee of $100 for each location from which you sell cigarettes or tobacco products at retail. The license is valid for one year and must be renewed annually. There is no additional charge to renew a license. However, if you fail to renew your license timely and allow your license to expire, you will be required to pay a reinstatement fee of $100.00 as a precondition for reinstatement. Please remember that you may not sell cigarette and/or tobacco products without a valid Cigarette and Tobacco Products Retail License.

Wholesalers of cigarettes and tobacco products (as defined in section 30016 of the Revenue and Taxation Code) are also required to annually obtain and maintain a license to engage in the sale of cigarettes and tobacco products. If you purchase tax-paid cigarettes or tobacco products for resale, you must obtain a wholesaler's license. The fee for a wholesaler's license is $1,000 a year for each location.

Distributors of cigarettes and tobacco products (as defined in section 30011 of the Revenue and Taxation Code) are also required to annually obtain and maintain a license to engage in the sale of cigarettes or tobacco products in California. If you purchase cigarettes and tobacco products from an out-of-state seller who does not have a license issued under the Act, you must obtain a distributor's license. The fee for a distributor's license is $1,000 a year for each location.

Manufacturers and Importers

In accordance with the Act, every manufacturer and importer of cigarettes and/or tobacco products is required to obtain a license from the BOE in order to engage in the sale of cigarettes in California.

Retailers of Cigarette and Tobacco Products Transfers Between Multiple Locations

If you are a retailer of cigarette and tobacco products operating multiple retail locations in California and hold a Cigarette and Tobacco Products Retailer’s License for each location, we recognize there are occasions when transfers of cigarettes or tobacco products between your retail stores take place.   However, a transfer of products between your retail stores is permitted only in specific instances.

A retailer with multiple locations may transfer product from one location to another only when the retailer is the legal owner of both locations, there is documentation to prove that the product is tax-paid and the documentation is made available to BOE staff during an inspection.  In order to prove that the transferred product is tax-paid, the retailer must provide at the time of inspection (1) a copy of the original purchase invoice(s); (2) legible records showing the name, address and license number of each retail location; (3) the date the transfer took place; (4) a detailed description of the items transferred including packaging, flavor and style; and (5) the number of items transferred.  The description must match exactly the description on the original purchase invoice(s) and the number of items transferred cannot exceed the number of items on the original purchase invoice(s).  Without this documentation available at the time of inspection, it is not possible to establish that the product is tax-paid and the product is subject to seizure.

Please refer to Publication 78, Sales of Cigarettes and Tobacco Products in California, for additional information in regard to the transfer of product between retail locations.

Who is enforcing this Act?

The licensing of manufacturers/importers, retailers, distributors, and wholesalers will be administered by the BOE and monitored by the Department of Health Services and local authorities. In addition, the BOE, the Office of the Attorney General, and any law enforcement officer in this state has authority to enforce the provisions of this Act. For detailed information about enforcement provisions of AB 71 or cigarette and tobacco product tax evasion, visit the Investigations Division webpage.

How do I apply for a license?

You may register for a permit, license, or account using online registration. Online registration is the convenient way to register and is available 24 hours a day.

Information About

Special Notices

Forms and Publications

  • Publication 78, Sales of Cigarettes and Tobacco Products in California - License Requirement for Retailers

Resources

Legislation

Related Websites

If you have additional questions about how the California Cigarette and Tobacco Products Licensing Act of 2003 applies to your business, you may call our Information Center at 1-800-400-7115 and select the "Cigarette and Tobacco Products" option. Staff is available to help you weekdays from 8:00 a.m. to 5:00 p.m., except State holidays, or you may write to the Board of Equalization, Special Taxes and Fees, P.O. Box 948279, Sacramento, California, 94279-0088. You may also email your questions to: Email Your Tax Questions.