Don't let confusion around licensing regulations let your vape shop dreams go up in smoke.
Getting your vape shop off the ground is within your reach, but confusion around your licensing needs can result in lost revenue, wasted effort, and unnecessary frustration.
Without a clear grasp of the regulatory intricacies — dictating everything from tax compliance to age verification protocols — you open yourself to potentially business-ending fines before you even open. But with the right knowledge, you can set yourself up to legally sell vape products to consumers in your area.
In this article, we’ll dive into the licenses you need and how to verify your state’s requirements.
You want to open a vape shop, but you know vapes are restricted products. As a result, you know you need to follow strict legal protocols to run your business legally. The first of those protocols is to obtain the right licenses. But how important are these licenses to your business? Incredibly important. Let’s examine why.
First and foremost, these business licenses are mandatory to open your doors to customers legally. States regulate the retail sale of vaping products, requiring store owners to complete applications for valid licenses. Approval must be granted before moving forward.
Related Read: ANSWERED: How Much Does It Cost To Open a Vape Shop?
Licensing also allows you to establish supplier relationships and purchase wholesale inventory. Reputable vape distributors will not work with unlicensed retailers to avoid penalties under the law. Plus, manufacturers can only legally ship products to properly credentialed store owners. Attempting operations without this barrier cleared will have you tearing out your hair in no time.
Additionally, severe fines and legal action accompany operating without licenses. Regulatory agencies conduct oversight of vape shops, issuing warnings and tickets to noncompliant owners. Consequences escalate from fees to permanent closure. All inventory from unapproved purchases would also be confiscated.
Opening a vape shop can be a complex process, but you must follow five critical steps to get started:
With this in mind, let’s examine the three licenses every vape shop owner should understand before opening their shop.
Nearly every state, county, and municipal jurisdiction requires a general business license to operate commercially. Though this license can feel like a formality, it is crucial to opening your business. Your business license registers your establishment with local authorities, allowing them to conduct oversight to ensure compliance with state and local laws.
The requirements and fees of obtaining a business license differ widely based on population thresholds. Some rural counties merely request occupation reporting without much formality, while large metro areas impose thorough permitting processes. Check regulations with your specific administrative authority before signing any lease to ensure vape retail is permitted in your area.
Related Read: How To Open a Retail Store: 7-Step Checklist
The business license application process can vary by location. However, most require the four steps below:
The second permit every vape store owner should be aware of is a seller’s permit. This permit allows you to collect and properly remit sales tax owed on any products you sell in your store. You may also obtain a sales tax ID number or resale certificate if a state seller’s permit is not the right choice for your shop.
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Additionally, depending on your location, you may not need to collect sales tax. Five U.S. states impose no sales tax, but the remainder require sales tax rates ranging from two percent to over nine percent, depending on your jurisdiction. Seller's permits legally designate your business as a retailer for tracking tax proceeds.
Apply for your seller’s permit following the requirements listed by your state. However, most businesses must follow the below steps:
Though vape products do not contain tobacco, most states still classify them as tobacco products for licensing purposes. As a result, you must obtain a retail tobacco license or tobacco retailer permit to operate your vape store legally.
Your tobacco license fee depends on your state and locality. Some areas charge only $25 for a retail tobacco license, whereas others require paying $500 or more to get licensed. Additionally, some localities, like New York City, impose further restrictions on vape stores and tobacco shops. For example, in N.Y.C., you cannot run or advertise your tobacco or vape shop within 500 feet of a school.
Consider all possible challenges and licensing requirements before leasing a space for your vape store.
Applications will, once again, vary depending on your area. However, you can expect to follow the four steps below as a part of your process:
After crossing the t’s and dotting the regulatory i’s involved with licensing, you’ll be excited to stock your shelves and open your doors to that first wave of customers. However, before you can cut that opening-day ribbon, you must ensure you have the right tools and technology to make your store a success.
Your point of sale solution is the most critical tool in your arsenal. A robust POS system can help you manage inventory, run customer loyalty programs, and maintain licensing compliance by automating age verification scans at the register. POS Nation offers a point of sale system with all these features and more, giving small retailers everything they need to open their shop without tacking on the expensive bells and whistles they can go without.
Schedule a demo of POS Nation today to see how our solution can help you optimize your vape shop from the back office to the front counter.