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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Cigarette and Tobacco Products Tax Law > Chapter 3 > entire chapter

Cigarette and Tobacco Products Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 13. Cigarette Tax
Chapter 3. Licenses, Bonds and Registration


Article 1. Licenses and Bonds

Article 2. Registration

Article 3. Wholesalers

Article 1. Licenses and Bonds

30140. Distributor's license. Every person desiring to engage in the sale of cigarettes or tobacco products as a distributor (including a common carrier or authorized person mentioned in Section 30104), except a person who desires merely to sell or accept orders for cigarettes or tobacco products which are to be transported from a point outside this state to a consumer within this state, shall file with the board an application, in such form as the board may prescribe, for a distributor's license. A distributor shall apply for and obtain a license for each place of business at which he engages in the business of distributing cigarettes or tobacco products.

History—Stats. 1967, p. 2519, operative August 1, 1967, added "(including a common carrier or authorized person mentioned in Section 30104)" to the first sentence. Stats. 1989, Ch. 634, in effect September 21, 1989, added "or tobacco products" after "cigarettes" throughout text.

30140.1. Licenses; persons not engaged in business in this State. (a) The board may adopt rules and regulations which provide for the issuance of a license to a person who is not engaged in business in this state.

(b) A holder of a license shall collect the tax imposed by this part, give receipts for the collected tax, and pay the tax to the board in the same manner as licensees engaged in business in this state.

History—Added by Stats. 1989, Chapter 634, in effect September 21, 1989.

30141. Bond requirements. Every applicant for a license as a distributor shall file with the board, security in the amount and form as the board prescribes. Any security in the form of cash, insured deposits in banks or savings and loan institutions, or a bond or bonds duly executed by an admitted surety insurer, payable to the state, conditioned upon faithful performance of all the requirements of this part providing for the payment of all taxes, penalties, and other obligations of the person arising out of this part shall be held by the board in trust to be used solely in the manner provided in this section.

History—Stats. 1982, Ch. 517, in effect January 1, 1983, substituted "an admitted surety insurer" for "him … surety" after "executed by." Stats. 1993, Ch. 1113, in effect January 1, 1994, added "security" after "board,"; substituted "the" for "such" before "amount and"; substituted "the" for "such" after "amount and"; substituted a period for a comma after "prescribes"; added "Any security … institutions, or" after "prescribes"; added "duly" after "bonds"; substituted "state" for "people of the State of California" after "payable to the"; added "faithful performance … providing for" after "conditioned upon"; substituted "person" for "distributor" after "obligations of the"; substituted "out of" for "under" after "arising"; and added "shall be … this section" after "part".

30142. Amount of bond. [Repealed by Stats. 2006, Ch. 70 (AB 2001), in effect January 1, 2007.]

30142. Amount of bond. (a) The board shall fix the amount of the security required of any distributor and may increase or reduce the amount at any time. A minimum security in the amount of one thousand dollars ($1,000) shall be furnished by every distributor that is required to be licensed.

(b) Except as provided in subdivision (d), if a distributor desires to defer payments for stamps or meter register settings, as provided in Article 2 (commencing with Section 30166) of Chapter 3.5, the board shall require a security as follows:

(1) If a distributor elects, under Section 30168, to make payments on a monthly basis, the board shall require a security equal to not less than 70 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor's purchases of stamps and meter register settings for which payment may be deferred.

(2) If a distributor elects, under Section 30168, to make payments on a twice-monthly basis, the board shall require a security equal to not less than 50 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor's purchases of stamps and meter register settings for which payment may be deferred.

(3) If a distributor elects, under Section 30168, to make payments on a weekly basis, the board shall require a security equal to not less than 25 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor's purchases of stamps and meter register settings for which payment may be deferred.

(c) The security required by the board pursuant to subdivision (b) may be in the form of any of the following, in the amount required by paragraph (1) or (2) of subdivision (b):

(1) Cash, or a cash equivalent.

(2) A surety bond.

(d) Upon authorization by the board, no additional security shall be required for a distributor that desires to defer payments for stamps or meter register settings, as provided in Article 2 (commencing with Section 30166) of Chapter 3.5, if the distributor's average monthly purchase of stamps or meter register settings for the previous 12 months does not exceed seventy-two thousand (72,000) stamps or meter register settings and if the distributor meets all of the following:

(1) Has been licensed under this part for a minimum of five years.

(2) Has not been delinquent in the filing of any reports or returns required under this part for the preceding three consecutive years.

(3) Has not been delinquent in the payment of any tax under this part, or for any other tax or fee administered or collected by the board, for the preceding three consecutive years.

(4) Provides to the board and updates, as necessary, an electronic mail address for the purpose of receiving payment information, including, but not limited to, amounts owing for stamps and meter register settings purchased.

(5) Any other criteria the board may require.

History—Stats. 1961, p. 2314, operative July 16, 1961, added the second and third sentences. Stats. 1967, p. 2519, operative August 1, 1967, substituted "seventy percent (70%) of" for "twice" and deleted "in a monthly period" following "payment may be deferred" in the last sentence. Stats. 1982, Ch. 454, in effect January 1, 1983, added "(commencing with Section 30161)" after "Article 2," deleted "of this part" after "Chapter 3.5," and substituted "70 percent" for "seventy percent (70%)" after "equal to" in the third sentence. Stats. 1993, Ch. 1113, in effect January 1, 1994, substituted "security" for "bond or bonds" following "amount of the" in the first sentence and before "in the amount" in the second sentence and following "shall require a" in the last sentence; and added "not less than" before "70 percent" and "and no more than twice the amount" following "of the amount" in the last sentence. Stats. 2003, Ch. 867 (AB 1666), in effect January 1, 2004, established the former first and second sentences as subdivision (a), added "that is" after "by every distributor" in the second sentence of subdivision (a); established the former third sentence as subdivision (b) and subdivision (b)(1), substituted "30166" for "30161" after "commencing with Section", added "as follows:" after "require a security" and added "if a distributor elects … require a security" to paragraph (1), and added paragraph (2) to subdivision (b); and added subdivision (c). Stats. 2006, Ch. 70 (AB 2001), in effect January 1, 2007, substituted subdivision (c) for the former subdivision (c) which stated "This section shall remain in effect until January 1, 2007, and as of that date is repealed.". Stats. 2006, Ch. 501 (AB 1749), in effect January 1, 2007, substituted "Except as provided in subdivision (d), if" for "If" before "a distributor desires" and added paragraph (3) to subdivision (b); added subdivision (d).

Note.—SEC. 9. of Stats. 2003. Ch. 867 (AB 1666), effective January 1, 2004, states, The Legislative Analyst, with assistance of, and based on information provided by, the State Board of Equalization, shall, on or before January 1, 2006, prepare a report to the Legislature of the economic impact of this act. The report shall include an evaluation of the State Board of Equalization's ability to collect cigarette tax revenues, additional revenues, if any, generated by the twice-monthly payment program, and the ability of distributors to access security bonds.

30143. Withdrawal of surety. Every bond shall contain a provision substantially to the effect that when the surety exercises his right to withdraw as surety the withdrawal shall be effective on the first day of the calendar month after receipt of the notice by the board if the notice is received on or before the fifteenth day of the month, otherwise the withdrawal shall be effective on the first day of the second calendar month after receipt of the notice by the board.

30144. Suspension of license. The license of any distributor may be suspended without prior notice upon cancellation of his or her bond, or if the bond becomes void or unenforceable for any reason, or if the distributor fails to pay any amounts due under this part. The license shall be reinstated if the distributor files a valid bond, provides other security as defined in Section 30141 or pays the delinquent amounts, as the case may be. Upon the petition of any distributor whose license has been suspended under this section, a hearing shall be afforded him or her after five days' notice of the time and place of hearing.

History—Stats. 1961, p. 2315, operative July 16, 1961, substituted "may be suspended without prior notice" for "shall be automatically suspended" and substituted "amounts" for "taxes or penalties" in the first sentence. The word "automatically" appearing before the word "reinstated" was deleted from the second sentence and "the delinquent amounts" was substituted for "his delinquent taxes". Stats. 1993, Ch. 1113, in effect January 1, 1994, added "or her" following "cancellation of his" in the first sentence and following "afforded him" in the last sentence; and added "provides other security as defined in Section 30141" following "a valid bond," in the second sentence.

30145. Deposit of money or securities in lieu of bond. [Repealed by Stats. 1982, Ch. 517, in effect January 1, 1983.]

30146. Liquidation of security. Upon receipt of a certificate of the board setting forth the amount of a distributor's delinquencies, the State Treasurer shall pay to the board the amount so certified from the money deposited with him by the distributor or from the amounts received from the sale of bonds or other obligations deposited with the Treasurer by the distributor. Securities deposited with the State Treasurer which have a prevailing market price may be sold by him for the purposes of this section at private sale at a price not lower than the prevailing market price thereof.

30147. Issuance and display of license. Upon receipt of a completed application and such bonds or other security as may be required by the board under this part, the board shall issue to the applicant a license as a distributor. A separate license shall be issued for each place of business of the distributor within the State. A license is valid only for engaging in business as a distributor at the place designated thereon, and it shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until canceled, suspended, or revoked.

30148. Revocation of license. Whenever any distributor fails to comply with any provision of this part or any rule or regulation of the board prescribed and adopted under this part, the board upon hearing, after giving the distributor at least 10 days' notice in writing specifying the time and place of hearing and requiring him to show cause why his license should not be revoked, may revoke the license held by him. The notice may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a new license to a distributor whose license has been revoked unless it is satisfied that he will comply with the provisions of this part and the rules and regulations of the board.

30149. Misdemeanor. Any person required to obtain a license as a distributor under this chapter who engages in business as a distributor without a license or after a license has been canceled, suspended, or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor.

Article 2. Registration

30151. Registration of unlicensed distributors. Every distributor, except one to whom a license is issued under Article 1 (commencing with Section 30140), required under Section 30108 to collect the tax imposed under this part from a purchaser shall register with the board and give the names and addresses of all agents operating in this state, the location of all distribution or sales houses or offices or other places of business in this state, and such other information as the board may require.

History—Stats. 1961, p. 2315, operative July 16, 1961, renumbered this section without other change from former Section 30161. Stats. 1982, Ch. 454, in effect January 1, 1983, substituted "(commencing with Section 30140)" for "of this chapter" after "Article 1."

Article 3. Wholesalers1

1Article 3 was added by Stats. 1968, p. 2249, in effect November 13, 1968.

30155. Wholesaler's license. Every person desiring to engage in the sale of cigarettes or tobacco products as a wholesaler shall file with the board an application, in that form as the board may prescribe, for a wholesaler's license. A wholesaler shall apply for and obtain a license for each place of business at which he or she engages in the business of selling cigarettes or tobacco products as a wholesaler.

History—Stats. 1994, Ch. 903, in effect January 1, 1995, added "or tobacco products" after "sale of cigarettes" in the first sentence and "of selling cigarettes" in the second sentence; substituted "that" for "such" after "an application, in" in the first sentence; and added "or she" after "at which he" in the second sentence.

30156. Fee or bond prohibited. No fee shall be charged nor shall a bond be required of any person for the issuance to him of a wholesaler's license.

30157. Issuance and display of license. Upon receipt of a completed application, the board shall issue to the applicant a license as a wholesaler. A separate license shall be issued for each place of business of the wholesaler within the state. A license is valid only for engaging in business as a wholesaler at the place designated thereon, and it shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until canceled, suspended, or revoked.

30158. Revocation of license. Whenever any wholesaler fails to comply with any provision of this part or any rule or regulation of the board prescribed and adopted under this part, the board upon hearing, after giving the wholesaler at least 10 days' notice in writing specifying the time and place of hearing and requiring him to show cause why his license should not be revoked or suspended, may revoke or suspend the license held by him. The notice may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a license to a wholesaler whose license has been revoked or suspended unless it is satisfied that he will comply with the provisions of this part and the rules and regulations of the board.

History—Stats. 1970, p. 1058, operative November 23, 1970. Substitutes "wholesaler" for "distributor" in last sentence.

30159. Misdemeanor. Any person required to obtain a license as a wholesaler under this part who engages in business as a wholesaler without a license or after a license has been canceled, suspended, or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor.