Currently estimated to be worth over $8 billion at this time, the vape shop industry is one of the most lucrative in the country. Being the land of opportunity, the vape industry is a great one for budding entrepreneurs and prospective business owners to enter. If you’d like to turn a healthy profit, then opening your own vape shop is an option worth considering.
That said, opening up a vape shop isn’t as simple as just buying a storefront and stocking an inventory. The first thing you need to do before you spend any money towards opening your first location is to have the proper licenses and permits to operate a vape shop in the United States legally.
In most cases, vape products are considered tobacco products, and both federal and state governments strictly regulate these.
Without the proper licenses, you can’t legally operate a vape shop. If you attempt to do so, there will be some serious legal and financial penalties. Running a vape shop without the right licenses is just about the biggest mistake you could make. Let’s take a look at why these licenses are so important.
Key Takeaways
- You’ll need a variety of licenses and permits to open a vape shop in the USA, which may include a business license, a retail or tax license, a tobacco seller’s license, state-specific E-cigarette and vape licenses, and more.
- There are federal, state, and municipal laws and regulations that all vape shops must adhere to, and these may differ from one state to another.
- There are also certain laws in relation to advertising, signage, and zoning that vape shop operators must follow.
- It’s very important to stress that anybody interested in starting their own vape shop needs to do research in terms of the laws and regulations in their specific state. Furthermore, laws and regulations may change from the time of writing, so you always need to find up-to-date information before getting started.
The Importance of Licensing for Vape Shops
Although licensing is a great way for federal, state, and local governments to obtain some more income to provide public services, the reason why vape shops are required to get licensing is mainly for safety reasons. There are certain health and safety risks associated with vaping, which means that various levels of government closely monitor and regulate the sale and purchase of vape products.
It’s about making sure that only safe vape products are sold to the public, only those authorized for retail are doing the selling, and that only those who meet certain requirements, such as age limits, can purchase these products. Besides that, the biggest reason why licensing is so important is due to legal compliance.
Although requirements, regulations, and penalties differ from one state to another, there may be some very severe consequences for attempting to operate without a license. In most cases, those found in violation may face large fines of several thousand dollars and may face criminal charges as well. Criminal charges may result in a loss of freedom anywhere from several months to years.
Having the proper licenses and permits is also important for customer relations and trust reasons. If you have and display all of the necessary documentation, potential customers can rest assured that not only are you legally compliant, but also selling products that go through quality testing to ensure maximum possible safety.
Vape businesses require licensing to make sure that products meet all necessary standards and that consumers are kept as safe as possible. Now that we know why licensing is so important, let’s determine exactly what types of licenses you’ll need to legally operate a vape shop in the USA.
Primary Licenses Required to Open a Vape Shop
Before we start talking about specific licenses, let’s make it very clear that individual states have differing requirements surrounding vape shop licensing, so always check with the state you’re operating in. For instance, as of 2019, 26 states require operators to have specialized vape or tobacco licenses to sell vape products.
Besides state-specific licenses, which we will touch on further below, there are three main types of licenses that you will most likely require if you plan to legally operate a vape shop in the USA. These include a regular business license, a seller’s permit or resale license, and a tobacco retail license.
Business License
One of the most basic types of licenses you’ll need to legally operate a vape shop in the USA is a regular business license. A business license is a state-based type of license that is issued to various types of businesses.
Although not all businesses require this type of license, such as if you’re just a single person selling some merchandise out of your car. However, you will most likely need a business license to operate a vape shop in the USA, no matter the state you are in.
Remember that tobacco and vape products are strictly regulated, and a business license is designed to ensure that your business is operating safely, especially as far as the safety of the consumer is concerned.
To remain legally compliant in your state when selling vape products (and for many other types of businesses, too), a business license is required. Exactly what type of business license you’ll need for a vape shop depends on the specific state in which you wish to operate it, so doing some research into state-specific laws is recommended.
Seller’s Permit or Resale License
The next type of permit or license you’ll need to operate a vape shop in the USA legally is a seller’s permit, which in some areas may be referred to as a resale license or tax license. This is a special type of state-specific business license that you will need to collect sales taxes on any taxable goods.
Tobacco and nicotine products are considered taxable goods, and for your business to operate legally, you must, therefore, collect state sales taxes on them.
Furthermore, to collect sales taxes on any such product, you need a seller’s permit, which will provide you with a state tax ID number so you can legally pay state taxes. Every state has different taxation requirements for these types of products, so be sure to do adequate research for your specific state.
At this time, however, there are no federal taxes on vape products. However, you will still likely be required to pay taxes on your business income and profits at the federal level. In this case, you will need an EIN or employer identification number, like a social security number provided to businesses by the IRS, for federal taxation purposes.
Tobacco Retail License
It may also be the case that you will require federal licensing in order to operate a vape shop, particularly one related to importing or manufacturing any kind of tobacco-related product. You will likely need to apply for the Alcohol and Tobacco Tax and Trade Bureau (TTB) license.
Many types of tobacco-related businesses must apply for this license to operate legally in the USA. This is a type of license that businesses who plan to manufacture, import, and export tobacco-related products require. You can apply for this right here.
Additional Permits and Considerations
Now that we have covered the most basic licenses and permits you’ll need to operate a vape shop in the USA legally, let’s find out if there are any additional licenses or permits you might need.
State-Specific Vape/E-Cigarette Licenses
As mentioned above, by 2019, 26 individual states required special state-specific E-cigarette or vape licenses to operate a vape shop legally. For a full list of the states that require specific E-cigarette licenses, click on this link.
Just one example of this is New York, where you require an Electronic Cigarette Retail Dealer License to sell any such product. This NY license costs between $150 and $200 and needs to be renewed after every two years.
Texas is another prime example, with the license in the Lone Star State being referred to as an E-Cigarette Retailer Permit. Regardless of the state, the cost of these permits should usually not exceed a few hundred dollars, although there are a select few where they may cost close to $1,000.
Health and Safety Permits
There may be some health and safety permits that individual state or local governments require vape shops to get for a variety of reasons.
One of the most common reasons why a vape shop might need a special health and safety permit is if the shop in question allows people to vape indoors on the premises, although this is becoming rarer as the years go on.
The vast majority of areas in the USA view vaping to be the same as tobacco in terms of where it can and cannot be done. Here’s a great example of a piece of legislation that demonstrates how many places in the USA are banning vaping in most indoor areas.
In most states, vaping is prohibited in the same places as smoking is prohibited, which in most cases means that you can’t vape or smoke in restaurants, bars, workplaces, or any enclosed spaces. If the vape shop in question is an enclosed space or considered a workplace, then vaping inside is likely not permitted.
Signage and Advertising Permits
There may also be some state or local governments that require vape shops to obtain special licenses or permits to engage in on-site advertising or to have signage on the premises.
Beware that the advertising of vape shops and any such products related to nicotine and tobacco is strictly regulated in the USA and in most states, and in many cases outright banned.
It is strongly recommended that you consult tobacco and nicotine advertising and signage laws for the state you are operating in for more information. For instance, the state of New York requires vape shops to clearly display a variety of informational and prohibitory signs with certain pieces of information.
At the very least, all labels and ads on the store’s premises must have warning labels on them in relation to the addictive nature of nicotine. Any signage located on a vape shop’s premises must in general also not make vaping look attractive to minors or be targeted at minors in any way.
In many cases, it is also not lawful to have on-site signage or promotions be visible from the exterior of the vape shop location. Promoting vape products through the press, TV, and other publications is strictly regulated and generally prohibited. Once again, checking with state and local ordinances in regard to vape shop signage and advertising is strongly recommended.
Application Process and Cost Implications
Seeing as we’re talking about licensing, you’re probably wondering how long getting your licenses will take and how much it will cost.
Starting off with a regular business license, this may cost you anywhere from $50 to over $500 depending on the state in question. Once again, this differs from one state to another.
To get a business license, you first need to create a formal business entity, which may take the form of a sole proprietorship, partnership, LLC, or corporation. Depending on the season and how many applications are being processed, to get approved for a business license, it should not take more than a week or two at the most.
Next, whether you call it a seller’s permit, a resale license, or a state tax permit, exactly how to apply for one depends on the state in question. Generally, you need to visit the website for the tax department of the state in question, at which point you’ll be able to fill out an application for this permit.
The cost also depends on the state, as some areas provide seller’s permits free of cost, whereas in other states, it may range anywhere from $20 to $100 or more. If the application is properly filled out and all necessary fees are paid, it should not take more than a few days or a week at the most to obtain your seller’s permit.
As far as the cost of the Alcohol and Tobacco Tax and Trade Bureau (TTB) license is concerned, there is no fee at this time. It may take anywhere from 80 to 160+ days to obtain this license. There may then also be additional costs associated with any of the other permits or licenses as discussed above.
Additional Tips for Starting a Vape Shop
Aside from the licenses and permits required to open a vape shop in the USA, there are also some other important tips to be aware of.
Know the Landscape
Before attempting to open a vape shop, it’s always a good idea to conduct thorough market research.
Knowing what your main target audiences are, which vape products sell the best, where the most vape products are bought, who your competition is, how they perform business, and much more, are all important factors to know.
To be successful in the vape industry, you need to have a good idea of what the landscape looks like. It’s about knowing what the competition is doing, and then doing it better.
Finding the Right Suppliers
Another important aspect when starting your own vape shop is to build good relationships with a plethora of reliable suppliers and wholesalers.
Unless you plan on manufacturing your own vape products, which is a whole different story of its own, you need to know who the biggest players in the industry are who you can purchase your products from at consistent prices.
Not only do you need to find suppliers that will provide you with products at fair prices, but those products need to be high quality and diverse as well.
Opening a Storefront
The other most important aspect to keep in mind here is the location of your physical storefront. There are some laws and regulations to be aware of here, as in many places it’s not legal to open up a vape shop within a certain distance of a school or other such location.
Always do research in terms of zoning regulation and location for vape shops for your state and city.
The location you choose should have a lot of foot traffic and provide you with room for growth. However, the more central your location is, the higher rent costs will be, an economic factor that requires consideration.
Getting Insured
Before you start selling products, getting the right kind of insurance for a vape shop is essential too.
There are various types of vape shop insurance, liability insurance, and property insurance that you’ll want to look into. Not all states require vape shops to have all types of insurance, but it’s always recommended in the event that something goes wrong.
Final Thoughts
The bottom line is that to legally operate a vape shop in the USA, you need to comply with all federal, state, and local laws and regulations. Depending on the state you live in, there are also a variety of permits and licenses that you’ll require.
Once again, exactly what you need to do to remain compliant when operating a vape shop depends on the state you live in, so you always want to do state-specific research before getting started. Remember, regulations constantly change, and you need to stay up to date with these.
Licenses To Open a Vape Shop: Frequently Asked Questions
Let’s quickly answer some of your most frequently asked questions before wrapping things up.
How Long Does it Take to Get Licensed?
If all applications are properly filled out, it may only take a few weeks to get fully licensed, although due to backlogs and wait times, it could easily take several months.
Can I Transfer My Vape Shop License to Another Location or Owner?
No, vape shop licenses are non-transferable.
What Happens if I’m Caught Selling Without the Necessary Licenses?
There are both severe financial and legal repercussions to running a vape shop without the necessary licenses.
