Wholesale License Information for Cigarettes and Tobacco Products

‍wholesale cigarettes to the public
In today’s highly regulated market, it is crucial for businesses to understand and comply with the licensing requirements for wholesale dealers of cigarettes and other tobacco products. This comprehensive guide will provide you with all the necessary information about obtaining and renewing licenses in New York City and California, ensuring that you can legally operate as a wholesale dealer while avoiding hefty fines and penalties.

New York City Wholesale License Information

New York City issues a single license for acting as a wholesale dealer in cigarettes and/or other tobacco products. Before applying for a city license, NYC agent-jobbers, sub-jobbers, or vending machine operators must have a state license. It is essential to have both licenses to directly purchase cigarettes from manufacturers or other persons.

Types of Wholesalers in New York City

Cigarette Agent-Jobber: These agents affix cigarette tax stamps on cigarette packs, which are then sold to wholesale dealers. Cigarettes sold within NYC must have the joint state/city stamp, while those sold outside NYC but within the state must have the state-only stamp.
Cigarette Sub-Jobber: These dealers sell cigarettes to retail dealers or other entities for resale. The cigarettes must have cigarette tax stamps affixed to them at the time of sale.
Cigarette Vending Machine Operator: These operators own, operate, or maintain cigarette vending machines at designated areas.

Wholesale Dealer of Other Tobacco Products

In addition to cigarettes, New York City wholesale dealers of other tobacco products must obtain a state tobacco products wholesale license in order to be eligible for a city tobacco products wholesale license. If you are a tobacco retail dealer purchasing or importing other tobacco products directly from manufacturers or out-of-state distributors, you must obtain a New York City wholesale dealer license for other tobacco products and remit the NYC OTP tax.

Applying for or Renewing a License in New York City

To become an agent-jobber, sub-jobber, vending machine operator, or tobacco products wholesale dealer in New York City, you need to complete and submit Form CTX/OTP-AW. The license fee is $600 per year, and the annual licensing period is from February 1 to January 31.

It is important to note that cigarette dealers must be licensed to purchase cigarettes from manufacturers and other licensed dealers. The Department of Finance maintains a list of licensed agent-jobbers, sub-jobbers, and vending machine operators. Similarly, other tobacco products wholesale dealers must only purchase tobacco products from manufacturers and other licensed dealers, and the Department of Finance maintains a list of licensed wholesale tobacco products dealers.

California Wholesale License Information

In California, the California Cigarette and Tobacco Products Licensing Act (CTPLA) mandates that all sellers of cigarettes and tobacco products must be licensed by the California Department of Tax and Fee Administration (CDTFA). This includes retailers, wholesalers, distributors, importers, and manufacturers.

Defining Tobacco Products in California

Under California state law, “tobacco products” encompass a wide range of items, including cigars, little cigars, chewing tobacco, pipe tobacco, shisha, snuff, and electronic cigarettes. Electronic cigarettes are defined as devices or delivery systems that can be used to deliver nicotine in aerosolized or vaporized form, including e-cigarettes, e-cigars, e-pipes, e-hookahs, and vape pens. The law also includes any liquid or substance containing nicotine, whether sold separately or in combination with a device.

Applying for a CDTFA License in California

To obtain a CDTFA cigarette/tobacco products license in California, you need to apply online and pay all license fees. The application process typically takes 7-10 days to process, and upon approval, you can print your license and related information online. It is important to have a valid license before making any purchases or sales.

In California, different licenses are available depending on the type of business:

Retailer License (LRQ): This license allows you to sell tax-paid cigarettes and tobacco products to legal-aged consumers. It requires an annual fee of $265 per location, and each location must have a separate license. The license is valid for 12 months and must be renewed annually.
Wholesaler License (LWQ): If you want to obtain and sell tax-paid cigarettes and tobacco products to retailers and other wholesalers, you need a wholesaler license. The annual fee for this license is $1,200 per location, and each location must have a separate license. The license is valid for the calendar year and should be renewed in October.
Distributor License (LDQ): A distributor license allows you to sell tax-paid cigarettes and tobacco products to retailers, wholesalers, and other distributors. Like the wholesaler license, the annual fee is $1,200 per location, and each location must have a separate license. The distributor license is also valid for the calendar year and should be renewed in October.

It is important to note that beginning in May 2018, the Retailer CTPLA license designation will change from LRQ to CRL.

Responsibilities and Restrictions for Retailers, Wholesalers, and Distributors

Retailers

A retailer license allows you to sell tax-paid cigarettes and other tobacco products directly to the public from a retail location. It is important to purchase only tax-paid inventory from a CDTFA-licensed wholesaler or distributor. “Tax-paid” means that California excise taxes have been paid on the cigarettes and tobacco products. Retailers cannot sell to other retailers, wholesalers, or distributors, and the license is not transferable.

Wholesalers

Wholesalers are authorized to sell cigarettes and tobacco products for resale and are not distributors by definition. They resell tax-stamped cigarettes and tax-paid tobacco products. Wholesalers cannot possess untaxed cigarettes or tobacco products and cannot purchase inventory from importers or manufacturers. Before making sales, wholesalers must obtain a seller’s permit (SR) and a cigarette/OTP license (LWQ) from the CDTFA. If wholesalers also plan to make retail sales, they must obtain a retailer’s license (LRQ) in addition to the wholesaler’s license.

When registering for a wholesaler license, the CDTFA will assign either a CW license for cigarettes or a TW license for tobacco products, depending on the type of products sold. The CW license requires reporting on beginning inventory, purchases, and sales of stamped cigarettes, while the TW license has no reporting requirements.

Distributors

Distributors sell or distribute cigarettes and tobacco products and may possess untaxed inventory. They can purchase inventory directly from importers or manufacturers and apply California cigarette tax stamps to the cigarette packs they sell in California. Distributors pay the excise tax on tobacco products and resell the tax-paid products. Like wholesalers, distributors must obtain a seller’s permit (SR), distributor license (LDQ), and specific licenses for cigarettes (CR) and/or tobacco (CP) from the CDTFA. If distributors also plan to make retail sales, they must obtain a retailer’s license (LRQ) in addition to the distributor’s license.

When registering for a distributor license, the CDTFA will assign a CR license for cigarettes and/or a CP license for tobacco products, depending on the type of products sold. The CR license requires reporting on monthly levels of stamped and unstamped cigarettes, while the CP license requires reporting on the wholesale cost of all tobacco products. wholesale cigarettes to the public

Inspections and Compliance

The CDTFA’s Investigations Division (ID) conducts inspections of all businesses selling cigarettes and tobacco products. Wholesaler inspections are typically conducted during regular business hours without prior scheduling, while distributors usually receive prior contact from ID before an inspection. During an inspection, CDTFA inspectors will verify the validity of licenses, check for appropriate signage and tax stamps, and ensure compliance with relevant laws and regulations. wholesale cigarettes to the public

California Tobacco Directory

The California Tobacco Directory is a crucial resource for wholesalers and distributors. Only cigarettes and roll-your-own (RYO) tobacco brands certified by the California Attorney General’s Office (AG’s Office) are listed in the directory. Wholesalers and distributors are only allowed to sell, offer for sale, or possess for sale in California the brands listed in the directory. The AG’s Office can add or remove brands from the directory, and wholesalers and distributors must comply with these changes.

Invoices and Record-Keeping

Distributors and wholesalers must maintain legible sales and purchase invoices for cigarettes and tobacco products. These invoices must include the seller’s information, itemized lists of products sold, and purchaser’s information. Invoices must be kept on the business premises for the last 12 months and off-premises for a total of 4 years. Failure to have the required invoices on the premises may result in citations. wholesale cigarettes to the public

Transferring Products and Seizures

Licensed distributors and wholesalers in California can transfer cigarettes or tobacco products between their business locations under certain conditions. The legal owner of the licensed location transferring the product must be the same as the legal owner of the licensed location receiving the product. Proper documentation, including transfer logs and related invoices, should be kept at both locations. wholesale cigarettes to the public

Seizures of cigarettes or tobacco products can occur for various reasons, such as counterfeit stamps, unstamped or out-of-state stamps, reused stamps, counterfeit cigarettes, or possession of untaxed tobacco. It is essential to comply with all regulations to avoid potential seizures. wholesale cigarettes to the public

Conclusion

Obtaining and maintaining the necessary licenses for wholesale dealers of cigarettes and tobacco products is crucial for operating legally and avoiding penalties. Whether in New York City or California, understanding the specific requirements and regulations is essential. By following the guidelines outlined in this article, you can ensure compliance and successfully navigate the wholesale market for cigarettes and tobacco products.