Thanks to the recently enacted Senate Bill X2-5 (SBX2-5), California retailers of e-cigs, vaping technology, and other related products will be required to register with the state. If everything goes as planned, the business will obtain a Cigarette and Tobacco Products Retailer’s License from the California State Board of Equalization (BOE). The license must be in-place by January 1, 2017, leaving many retailers only a couple of months to submit the application.
The cost for the application and license is $265 for a 12-month period. Renewals must occur annually and at the same cost. Per SBX2-5, retailers selling any products containing, derived, or made from nicotine require the new California license. This legislation also explicitly includes electronic smoking or vaping devices delivering nicotine, include the individual parts, coils, accessories, and e-liquids, even if these items are sold separately.
The licensing requirements do not apply to cannabis-related electronic vaping devices sold legally through state-licensed dispensaries. There are already laws in place for those types of devices, so there is not threat of double taxation. Furthermore, retailers of conventional e-cigs and vaping products will be exempt from paying the excise taxes imposed by California’s other piece of tobacco legislation, The Cigarette and Tobacco Products Tax Law.
SBX2-5: Taxes, penalties, and additional requirements
Retailers will also not be required to purchase their inventory from a BOE-licensed tobacco products wholesaler or distributor. They will also be exempt from maintaining purchase invoices per the Cigarette and Tobacco Products Tax Law. However, in addition to the BOE License, retailers of electronic cigarettes must also obtain a California Seller’s Permit or a Cigarette and Tobacco Products Retailer’s License which can be acquired through the at www.boe.ca.gov.
For retailers who do not obtain the new BOE license, they can be charge with a misdemeanor if they are found selling or giving away merchandise after the January 1, 2017 date. Their inventory can also be confiscated by the State of California and deemed “counterfeit.”
This may all sound rather confusing to the average consumer, and most vape shop owners will wholeheartedly agree. Similar legislation has already been passed and enacted in several other states, including Minnesota where the Vapes.com office are located. For California business owners in need of further information or clarification, please visit the California Tax Service Center.
(Related Article: JERRY BROWN SIGNS CALIFORNIA BILL SBX2-5 RAISING SMOKING AGE TO 21)