Resale Certificate for Vape Shops and Smoke Shops: Buy Inventory Wholesale Tax-Free
Vape and smoke shops carry diverse inventory at various price points: disposable vapes at $8-15 wholesale, premium mods at $30-80, e-liquids, coils, batteries, glass pipes, CBD products, tobacco, and accessories. A standard shop purchases $10,000 to $40,000 in wholesale inventory per month. At 7% sales tax, that is $8,400 to $33,600 per year in unnecessary cost.
This industry has a critical tax layer beyond sales tax: excise taxes on tobacco and vapor products. Your resale certificate eliminates sales tax on inventory purchases but does NOT affect excise taxes, which are calculated differently and imposed at different points in the supply chain.
Sales Tax vs. Excise Tax: Two Separate Systems
Understanding this distinction is essential for smoke and vape shop owners.
Sales tax is a percentage of the selling price, collected from the customer at the point of sale. Your resale certificate exempts your wholesale purchases from sales tax because you are buying inventory for resale.
Excise tax is a fixed amount per unit or a percentage of wholesale price, imposed on manufacturers, distributors, or retailers depending on the state. Excise taxes on cigarettes, cigars, smokeless tobacco, and now vapor products exist in nearly every state. Your resale certificate has no effect on these excise taxes.
Example: Cigarettes. Federal excise tax is $1.01 per pack (collected at the manufacturer level). State excise taxes range from $0.17 per pack (Missouri) to $5.35 per pack (Connecticut). These are embedded in or added to the wholesale price your distributor charges. On top of excise taxes, the customer also pays sales tax on the retail price in most states.
Example: Vapor products. State excise taxes on e-liquids and vapor devices vary widely. Some states tax per milliliter of liquid. Some tax as a percentage of wholesale price. Some have no vapor excise tax yet. This is a rapidly changing area of tax law.
What You Can Buy Tax-Free (With Your Resale Certificate)
- E-liquids and vape juice (bottled, salt nic, freebase, disposable pod cartridges)
- Vape devices (disposable vapes, pod systems, box mods, pen-style)
- Coils and replacement atomizers
- Vape batteries and chargers (sold at retail)
- Cigarettes (if you carry traditional tobacco)
- Cigars and cigarillos
- Smokeless tobacco (dip, chew, snus, nicotine pouches)
- Rolling papers and wraps
- Lighters and torch lighters
- Glass pipes and water pipes
- Grinders and accessories
- CBD products (gummies, tinctures, topicals, flower where legal)
- Delta-8 and hemp-derived products (where state-legal)
- Hookah supplies (shisha, charcoal, hoses, bowls)
- Kratom (where legal, sold at retail)
- Incense and candles (retail stock)
- Phone accessories and small electronics (if you carry them)
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Display cases and fixtures | Store equipment |
| POS system | Business equipment |
| Security cameras and safe | Business equipment |
| Age verification system (ID scanner) | Business equipment |
| E-liquid testing/sampling supplies (if you allow sampling) | Consumed, not sold |
| Store signage | Business property |
Tester and sampling supplies. If your shop allows customers to sample e-liquid flavors (in states and localities where this is still permitted), the e-liquid consumed during testing is not sold. It is a marketing expense. Track sampling inventory separately from retail inventory.
Tobacco and Vapor Licensing
Before your resale certificate matters, you need the proper licenses:
Federal. TTB (Alcohol and Tobacco Tax and Trade Bureau) does not require a federal retail license for tobacco sales, but manufacturers and importers do.
State tobacco license. Nearly every state requires a tobacco retailer license or permit. This is separate from your resale certificate/seller's permit. Some states charge significant licensing fees.
State vapor product license. A growing number of states now require a separate vapor product retailer license. This is newer legislation (post-2019 in many states) and the requirements change frequently.
Local permits. Many cities and counties require their own tobacco/vapor retail permits, often with distance requirements from schools and other restrictions.
Your resale certificate covers sales tax. These licenses cover your legal authority to sell these products. You need both.
Wholesale Distributors
Major distributors that require your resale certificate:
Tobacco distributors:
- McLane Company (largest convenience distribution, carries tobacco)
- Core-Mark (now part of Performance Food Group)
- S&M Brands (discount cigarettes)
- General Cigar / Scandinavian Tobacco Group (premium cigars)
- Swedish Match (ZYN nicotine pouches, smokeless)
Vapor product distributors:
- Vapor Hub International
- Vapor Beast (online wholesale)
- Direct from manufacturers (JUUL, NJOY, Vuse/RJ Reynolds, and independent e-liquid brands)
- Wholesale vape supply platforms (multiple online B2B platforms specializing in vape products)
Glass and accessories:
- Wholesale glass distributors (varies by region)
- Zippo / BIC (lighters, direct or through tobacco distributors)
PACT Act and Online Sales
The Prevent All Cigarette Trafficking (PACT) Act heavily restricts online and mail-order sales of cigarettes and smokeless tobacco. If you sell online, understand:
- USPS will not ship tobacco products (with very limited exceptions)
- Private carriers (UPS, FedEx) have restricted or banned tobacco shipments
- Online sellers must register with ATF and state authorities, collect all applicable taxes, and verify age
- Many vapor products are now covered under the amended PACT Act (as of 2021)
This means vape and smoke shops are primarily brick-and-mortar businesses. Your resale certificate applies to your in-store wholesale purchasing.
Dollar Savings (Sales Tax Savings Only)
| Shop Type | Monthly Wholesale Purchases | Annual Tax Savings (7%) |
|---|---|---|
| Small vape-only shop | $6,000 | $5,040 |
| Standard vape/smoke shop | $15,000 | $12,600 |
| High-volume smoke shop | $30,000 | $25,200 |
| Multi-location operator | $80,000+ | $67,200+ |
These figures represent sales tax savings only. Excise taxes are additional costs that the resale certificate does not affect.
Common Mistakes
Confusing sales tax exemption with excise tax exemption. Your resale certificate eliminates sales tax on wholesale purchases. It does not reduce or eliminate tobacco or vapor excise taxes. These are completely separate tax systems.
Not tracking excise taxes separately. Some states impose excise tax at the distributor level (embedded in your wholesale cost). Others impose it at the retail level (you calculate and remit it). Know where the excise obligation falls in your state.
Selling to other retailers without their certificate. If another shop buys from you at wholesale, collect their resale certificate. Without it, you are liable for the uncollected sales tax.
Not understanding CBD/hemp tax rules. CBD and hemp-derived products have varying legal and tax status by state. Some states tax them as general merchandise. Others have specific hemp or cannabis tax categories. The regulatory landscape changes frequently.
Failing to maintain proper age verification records. While not a tax issue, losing your tobacco license for compliance failures shuts down your business entirely.
How to Get Started
- Apply for your resale certificate through your state or our service.
- Obtain your state tobacco retailer license and vapor product license (if required separately).
- Open accounts with wholesale distributors. McLane, Core-Mark, and vapor product wholesalers need both your resale certificate and tobacco license.
- Set up your POS to handle multiple tax categories. Standard sales tax on merchandise, plus any retail-level excise taxes on tobacco and vapor products.
- Track excise tax obligations separately from sales tax. These may have different filing schedules and go to different agencies.