A man's hands holding an electronic cigarette
ComplianceAugust 01, 2022

Do I need a license to sell e-cigarettes?

If you sell e-cigarettes (or any other tobacco products), you must comply with federal, state, and local laws and regulations for retailers.

These laws are designed to curb the use of e-cigarettes and make them less attractive to youth.

If you want to open a vape shop or a business that sells e-cigarettes, here’s what you need to know about licensing requirements.

What are e-cigarettes?

E-cigarettes or vaping products use a battery to heat up liquid that usually contains nicotine, flavorings, and other additives. Users inhale this aerosol into their lungs. E-cigarettes can also be used to deliver cannabinoids such as marijuana, and other drugs.

E-cigarettes come in different shapes and sizes. Some e-cigarettes look like regular cigarettes, cigars, or pipes or other everyday items (e.g., pens and flash drives). These devices also have a variety of names, including e-cigs, vapes, vape pens, dab pens, tanks, mods, pro-mods, and electronic nicotine delivery systems (ENDS).

Changing regulatory landscape

E-cigarettes have surged in use in the past decade, and the retail regulatory landscape has changed rapidly to keep pace.

In December 2019, the Federal Food, Drug, and Cosmetic Act was amended to raise the minimum age for the sale of tobacco products from 18 to 21 years, making it illegal to sell these products — including e-cigarettes — to anyone under 21. The Act also applies to active-duty military personnel or veterans aged 18 to 20.

The law evolved again in 2020, when the Food and Drug Administration (FDA) moved to limit children’s access to certain flavored e-cigarette products, including fruit and mint. At that time, the FDA finalized an enforcement policy that required companies to cease manufacturing, distributing, and selling these products within 30 days or risk enforcement actions. The policy does not apply to non-cartridge-based disposable products.

In recent years, some U.S. states and cities have also moved to impose flavor and online sales bans for e-cigarettes and related products.

Federal requirements for e-cigarette retailers

The FDA regulates all tobacco products, including e-cigarettes, vapes, cigars, and hookah tobacco. As such, it has outlined specific rules on to whom retailers can sell and how products can be sold and marketed. For example, stores are not permitted to display ads for e-cigarettes, e-liquids, or other ENDS without a health warning statement.

To ensure compliance, the FDA conducts undercover inspections of retail establishments, often using a minor to test the retailer’s accordance with the law. A failure to comply with applicable laws and regulations and correct all violations can result in enforcement actions, including fines or a No-Tobacco-Sale Order (NTSO). During the NTSO period, retailers cannot sell tobacco products at the specified location.

To help retailers comply with federal tobacco regulations, the FDA’s Center for Tobacco Products provides a complete toolkit of resources, including posters, stickers, age verification tools, and more.

State licensing and tax requirements for e-cigarette retailers

Most states are currently expanding the scope of cigarette retail licenses to apply to vape shops and e-cigarette sellers — including over the counter, vending machines, and online.

To comply with these state laws, you must obtain a retail cigarette and tobacco license or permit.

Furthermore, since e-cigarettes are typically subject to sales tax, you will need to register for sales tax in each state where you sell vape products.

Other licensing requirements for e-cigarette retailers

Like any other business, a vape shop or e-cigarette business is subject to state and local general business licensing requirements. You may need to obtain a basic operating license, certificate of occupancy, building permit (if you plan to remodel), sales tax license/sellers permit, and more. If you plan to temporarily sell e-cigarette products, you may need to apply for a vendor license or transient merchant license.

Vape shops that mix e-liquids or modify products

If you operate a vape shop that mixes or prepares liquid nicotine or nicotine-containing e-liquids, or if you create or modify ENDS, you may be considered both a manufacturer and retailer and must comply with FDA requirements for manufacturers.

CT Corporation can help

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources.

By working with a full-service management provider who specializes in the efficient processing of business licenses you can free up your staff to focus on high-value business activities while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us or call us at (844) 701-2064.

The CT Corporation staff is comprised of experts, offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.

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