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Step 2: Are you a registered sales tax vendor? If not, you must register for sales tax purposes before any cigarette or tobacco product license can be approved. Sales tax registration is required even if your business will not actually collect or pay sales tax to the Tax Department.
Upon approval of your application, the Tax Department will send you Form DTF-720, Retail Dealer Certificate of Registration for Cigarette & Tobacco Products. Note: As a retail dealer, you only need one registration, even if you will be selling both cigarettes and tobacco products.
Understanding the tax and fee issues specific to cigarette and tobacco products businesses can be time-consuming and complicated, so it is important that you get the information you need in a timely and understandable way, helping you focus on starting and growing your business.
Exception: Flavored cigarettes are banned in the United States (see the Industry Topics section for more information). Products wrapped in tobacco or with a cover made mostly of tobacco (for example, cigars) are not cigarettes when they weigh more than three pounds per thousand sticks. Instead, these products are considered tobacco products.
A distribution includes the sale, use, or consumption of untaxed cigarettes, or untaxed tobacco products in California, and the placing of untaxed cigarettes or untaxed tobacco products into a vending machine or retail stock in California (Revenue and Taxation Code Section 30008).
The CDTFA annually determines the tobacco products tax rate, which is equivalent to the combined rate of the taxes imposed on cigarettes. The calculation of the rate is based on the wholesale cigarette prices reported to the CDTFA as of March 1 each year, and is effective during the next fiscal year (July 1 through June 30). The tobacco products tax rate is calculated by dividing the tax rate imposed on cigarettes by the average wholesale cost of cigarettes:
Starting with fiscal year 2021-22, the tobacco products tax rate calculation is based on cigarette sales as reported to CDTFA by cigarette manufacturers and importers for the preceding November through January. Prior to fiscal year 2021-22, the rate calculation was based on the wholesale premium brand cigarette price as of March 1, as published by the Tobacco Merchants Association.
The Retailer & Wholesaler, Distributor, Manufacturer & Importer, and PACT Act & Consumer sections provide detailed information specific to each person along the cigarette and tobacco products supply chain.
The Cigarette and Tobacco Products Licensing Act of 2003 (Licensing Act) requires us to administer a statewide program to license all persons engaged in the sale of cigarettes and tobacco products in California: manufacturers, importers, distributors, wholesalers, and retailers. These people are required to obtain and maintain a license to sell cigarettes or tobacco products in California. Distributors, wholesalers, and retailers must obtain a separate license for each location where they will sell cigarettes or tobacco products. They may purchase/sell cigarettes and tobacco products only from or to other licensed entities along the supply chain.
California voters approved Proposition 99 (effective January 1989), the Tobacco Tax and Health Protection Act of 1988, which increased the cigarette tax rate and added an equivalent tax on other tobacco products. As a result, tobacco products distributors are also required to hold a license under the Cigarette and Tobacco Products Tax Law for tax reporting and paying. In addition, cigarette and tobacco products wholesalers are required to hold a license under the Cigarette and Tobacco Products Tax Law for information reporting purposes.
Licenses issued under the Licensing Act and the Cigarette and Tobacco Products Tax Law are required in addition to a seller's permit for sales tax or other licenses that may be required. Depending on your business operations, you may be required to obtain more than just a California cigarette and tobacco products license. Before registering for a Cigarette and Tobacco Products Retailer's License, you should check with your local health department, cities, and counties for any local tobacco licensing requirements, which may be more restrictive. Visit the CalGold website for help with permit and licensing requirements by local authorities as well as other state or federal authorities.
Remember, you may not sell cigarettes and/or tobacco products at any location without a valid cigarette and tobacco products license for that location. For more information about online license renewals, please see our frequently asked questions.
Approximately 60 days prior to your license expiring, we will send you an email and paper notice reminding you to renew your license and will send you another reminder email notice approximately 30 days prior to your license expiring. If you do not renew your license before your license period expires, we will send you a final email notice indicating that your license has expired and the date it expired. It is important to renew your license before it expires, as you must have a valid license for each location in order to purchase or sell cigarettes and/or tobacco products at each location.
You must file all applicable cigarette and tobacco products tax returns, reports, and schedules even if you made no transactions or deliveries during the reporting period. You may be required to file other returns or reports with us. You must keep and maintain all your records at your licensed premises in California, unless we have approved another location.
Common carriers making a delivery of cigarettes, originating outside of California, to a consignee located in California, must file a report on or before the 25th day of the calendar month following the calendar month in which the delivery of the cigarettes or tobacco products was made (Regulation 4041). The delivery report is informational only; no tax or fee is due.
A consumer is required to file returns online and pay on or before the last day of the calendar month following the end of a calendar quarter. A consumer is required to report the amount of untaxed cigarettes and/or tobacco products received in the preceding calendar quarter and pay the amount of tax due (Revenue and Taxation Code section 6451, 6452, 30008, 30107, and 30187). For example, if you purchased cigarettes and tobacco products without paying the California excise/use taxes at the time of purchase anytime between January 1, 2022 and March 31, 2022 (the first calendar quarter of the year 2022), you must file and pay the 1st quarter 2022 excise and use tax by April 30, 2022.
PACT Act reports must be filed with us no later than the 10th day of each calendar month for the previous calendar month's shipments. For example, reports for the reporting month of September 2022 would be due by October 10, 2022. The reports must contain detailed information on each transaction made during the previous calendar month. Separate PACT Act monthly reports are to be filed for cigarettes, roll-your-own/smokeless tobacco, and electronic nicotine delivery systems (ENDS).
A retailer is a person who sells cigarettes or tobacco products directly to the public from a California retail location. A retailer includes a person who operates vending machines from which cigarettes or tobacco products are sold in California (Business and Professions Code (BPC) section 22971(p)).
A retailer cannot purchase or be in possession of unstamped (untaxed) cigarettes or untaxed tobacco products unless the retailer also has the cigarette and tobacco products distributor's licenses and accounts for the location. For example, a retailer must hold a California Cigarette and Tobacco Products Distributor's License and tax account if the retailer purchases untaxed tobacco products from a seller located out-of-state that did not charge the excise tax. See our Distributor section.
We offer free instructor-led classes at our offices located throughout the state to help you better understand the state's requirements and your responsibilities as a retailer of cigarettes and tobacco products in California.
We offer an online seminar for cigarette and tobacco products wholesalers to help you better understand the state's requirements and your responsibilities as a wholesaler of cigarettes and tobacco products in California.
The information is presented in sections by topic so you can view the information at your own pace. We highly recommend you view all the topics provided to help you understand and comply with California's cigarette and tobacco products licensing and tax laws. The online seminar webpage also allows you to electronically submit your cigarette or tobacco products questions directly to the CDTFA for a timely response.
The cigarette and tobacco products tax is paid by a distributor upon the distribution of cigarettes and tobacco products in California. A distributor may not be a wholesaler. A wholesaler may not be a distributor. A distribution includes the sale, use or consumption of untaxed cigarettes or untaxed tobacco products in California, and the placing of untaxed cigarettes or untaxed tobacco products into a vending machine or retail stock in California (Revenue and Taxation Code section 30008).
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