Smoke Shop and Vape Store Resale Certificate Guide: Tobacco, Vape, and CBD Tax Rules
Smoke shops, vape stores, and CBD retailers carry diverse inventory: tobacco products, rolling papers, vape devices, e-liquids, glass pieces, CBD oils, edibles, and accessories. Monthly inventory purchases can range from $3,000 for a small shop to $30,000 or more for a busy multi-category retailer.
A resale certificate lets you buy all of this inventory without paying sales tax at the point of purchase. You collect sales tax from your customers when they buy from you. The principle is the same as any retail business.
But tobacco and vape products add layers of complexity. Excise taxes, tobacco licenses, and rapidly changing vape regulations exist alongside the standard sales tax framework. This guide separates what you need to know.
Smoke Shop
How Resale Certificates Work for Smoke Shops
You are a retailer. You purchase products from wholesalers and distributors, mark them up, and sell them to consumers. Your resale certificate exempts your wholesale purchases from sales tax because the products are not for your personal use. They are inventory for resale.
This is standard retail tax treatment. The certificate does not exempt you from excise taxes, tobacco license requirements, or other regulatory fees. Those are separate systems with separate rules.
Apply for Your Resale Certificate
What You Can Buy Tax-Free (Sales Tax Exempt)
Tax-Exempt Purchases (Resale Items)
Everything you stock for retail sale qualifies for the resale exemption:
- Cigarettes and cigars (sales tax exempt at wholesale; excise tax still applies separately)
- Pipe tobacco, rolling tobacco, and chewing tobacco
- Rolling papers, cones, and tobacco wraps
- Vape devices (mods, pod systems, disposables, starter kits)
- E-liquid and vape juice (all nicotine levels, including zero-nicotine)
- Vape coils, pods, and replacement parts sold at retail
- Glass pipes, water pipes, and accessories
- Lighters, torches, and butane sold at retail
- CBD products (oils, tinctures, edibles, topicals, flower)
- Delta-8 and hemp-derived products (where legal)
- Hookah pipes and shisha tobacco
- Incense, candles, and novelty items
- Display packaging (blister packs, boxes) that transfer to the customer
- Branded merchandise (t-shirts, hats, stickers)
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Display cases and shelving | Business property |
| Security cameras and alarm systems | Business equipment |
| Age verification equipment | Business equipment |
| Cleaning supplies for the shop | Business use |
| Shop decor and signage | Business property |
| Point-of-sale hardware | Business equipment |
| Packaging bags (in most states) | Consumable business supply |
| Office supplies | Business use |
Excise Tax vs. Sales Tax: Two Different Taxes
This is the most important distinction for smoke shop owners to understand. Excise tax and sales tax are separate taxes that operate independently.
Sales Tax
- Applied at the point of retail sale to the consumer
- Your resale certificate exempts your wholesale purchases from sales tax
- You collect sales tax from customers and remit it to the state
- Rates vary by state and locality (typically 4% to 10%)
Excise Tax
- Applied to specific products (tobacco, vape products, sometimes CBD)
- Usually paid at the manufacturer or distributor level
- Built into the wholesale price you pay, or paid separately with a tobacco tax return
- Your resale certificate does NOT exempt you from excise taxes
- Excise tax rates vary wildly by state and product type
Cigarette Excise Tax Examples
| State | Cigarette Excise Tax (per pack) |
|---|---|
| Missouri | $0.17 |
| Virginia | $0.60 |
| California | $2.87 |
| New York | $5.35 |
| Connecticut | $4.35 |
| District of Columbia | $5.03 |
These excise taxes are in addition to regular sales tax. A pack of cigarettes in New York City faces $5.35 state excise tax, $1.50 city excise tax, plus state and local sales tax. Your resale certificate only addresses the sales tax portion.
Vape Product Excise Taxes
Vape excise taxes are newer and vary significantly:
| State | Vape Excise Tax Structure |
|---|---|
| California | 56.93% of wholesale price |
| Minnesota | 95% of wholesale price |
| Pennsylvania | 40% of wholesale price |
| West Virginia | $0.075 per mL of e-liquid |
| Kansas | $0.05 per mL of e-liquid |
These are separate from sales tax. If your state imposes a vape excise tax, you owe it regardless of your resale certificate status.
Tobacco License Requirements
Most states require a separate tobacco retail license or tobacco dealer permit to sell tobacco products. This is a regulatory license, not a tax certificate. You typically need:
- State tobacco retail license (application through your state's alcohol/tobacco regulatory agency)
- Resale certificate or sales tax permit (from your state's tax/revenue department)
- Local business license (from your city or county)
Some states (California, for example) require an additional tobacco retailer's license at the city level. Check both state and local requirements.
CBD Products: Evolving Tax Rules
CBD products occupy a rapidly changing regulatory and tax landscape. Here is the current general picture:
Sales tax: CBD products are subject to standard sales tax in most states. Your resale certificate exempts your wholesale purchases. You collect sales tax from customers.
Excise tax: Some states have begun imposing excise taxes on hemp-derived products (CBD, Delta-8, etc.). This is a newer development and rules are still being established in many states.
Legality: CBD derived from hemp (less than 0.3% THC) is federally legal under the 2018 Farm Bill. Delta-8 THC legality varies by state. Ensure the products you carry are legal in your state before purchasing inventory.
Dollar Savings for Smoke Shops
| Business Type | Monthly Inventory Spend | Annual Tax Savings (7%) |
|---|---|---|
| Small CBD-only shop | $2,000 | $1,680 |
| Small smoke/vape shop | $5,000 | $4,200 |
| Mid-size multi-category shop | $12,000 | $10,080 |
| Large smoke shop or chain location | $30,000+ | $25,200+ |
A mid-size shop spending $12,000 per month on inventory saves over $10,000 per year on sales tax alone. Remember, this does not affect your excise tax obligations.
State-Specific Notes
California
California requires a seller's permit, a California Cigarette and Tobacco Products Retailer's License, and in many cities, a local tobacco retail permit. The state imposes steep excise taxes on cigarettes ($2.87/pack), other tobacco products (56.93% of wholesale), and vape products (56.93% of wholesale). Sales tax is separate. Your seller's permit exempts wholesale purchases from sales tax.
Texas
Texas requires a Cigarette and Tobacco Products Retailer's Permit. The state excise tax on cigarettes is $1.41 per pack. Other tobacco products are taxed at 40% of the manufacturer's list price. Vape products do not have a separate state excise tax as of early 2026. Your resale certificate (Form 01-339) covers sales tax exemption on inventory.
Florida
Florida requires a Tobacco Products Dealer Permit. Cigarette excise tax is $1.339 per pack. Other tobacco products are taxed at 25% of wholesale price. Florida does not impose a separate excise tax on vape products. Sales tax registration and a resale certificate cover your inventory purchases for sales tax purposes.
New York
New York has some of the highest tobacco taxes in the country. Cigarette excise tax is $5.35 per pack (plus New York City's additional $1.50). Other tobacco products are taxed at 75% of wholesale price. Vape products are subject to a 20% supplemental tax on retail price. You need a Cigarette Retail Dealer License, and your resale certificate (Form ST-120) exempts inventory from sales tax.
Illinois
Illinois imposes a $2.98 per pack cigarette excise tax (Cook County adds $3.00). Other tobacco products are taxed at 36% of wholesale. E-cigarettes face a $0.05 per mL tax on e-liquid. You need proper state and local licenses along with your resale certificate for sales tax exemption.
Common Mistakes Smoke Shop Owners Make
Confusing Excise Tax With Sales Tax
Your resale certificate exempts you from sales tax on inventory purchases. It does not touch excise taxes. These are separate systems. Pay your excise taxes in full and on time.
Not Getting the Proper Tobacco License
A resale certificate does not authorize you to sell tobacco. You need a tobacco retail license from your state (and possibly your city). Operating without one can result in fines, product seizure, or business closure.
Failing to Track Product Categories
Different product categories may have different excise tax rates. Cigarettes, other tobacco products, vape products, and non-tobacco items (glass, CBD, accessories) may all have different tax treatments. Your accounting system needs to track these separately.
Using the Resale Certificate for Personal Use Items
Buying a personal vape device or cigarettes through your business account tax-free is misuse of the certificate. Auditors look for this, especially in businesses that carry products the owner personally uses.
How to Get Started
Step 1: Obtain Required Licenses
Get your tobacco retail license, any required local permits, and state sales tax registration. These are prerequisites.
Step 2: Apply for Your Resale Certificate
Apply through your state's tax authority or use our application service. This covers the sales tax exemption on your wholesale purchases.
Step 3: Set Up Distributor Accounts
Provide your resale certificate, tobacco license, and business credentials to distributors. Major distributors will not open accounts without proper documentation.
Step 4: Establish Accounting by Product Category
Set up your books to track cigarettes, other tobacco products, vape products, CBD, and accessories separately. Each category may have different excise tax obligations.
Step 5: Collect Sales Tax From Customers
Charge the correct sales tax rate on all retail sales. File and remit on schedule. Keep records meticulously.
Apply for Your Resale Certificate