Tax Guide for
California Electronic Cigarette Excise Tax

California Electronic Cigarette Excise Tax

Beginning July 1, 2022, electronic cigarette retailers are required to collect from the purchaser at the time of sale, a California Electronic Cigarette Excise Tax (CECET) at the rate of 12.5 percent of the retail selling price of electronic cigarettes containing or sold with nicotine. Senate Bill (SB) 395 (Stats. 2021, ch. 489) enacted the Healthy Outcomes and Prevention Education (HOPE) Act, which imposes the CECET.

Beginning July 1, 2022, if you are a retailer of electronic cigarettes containing or sold with nicotine, you must have a CECET permit (account), collect the CECET from the purchaser, file a CECET return electronically, and pay the tax to California Department of Tax and Fee Administration (CDTFA). The collection of the CECET is in addition to the sales and use tax.

This guide is intended to provide general information about the new tax and registration, collection, filing, and payment responsibilities under the HOPE Act.

In addition to the HOPE Act, we administer other cigarette and tobacco products laws affecting retailers of electronic cigarettes containing or sold with nicotine. Retailers of electronic cigarettes containing or sold with nicotine also have responsibilities under the Cigarette and Tobacco Products Licensing Act of 2003. For more information, see our Tax Guide for Cigarettes and Tobacco Products

General Definitions

The following are general definitions for purposes of the HOPE Act:

An electronic cigarette

  • A device or delivery system sold in combination with any liquid substance containing nicotine that can be used to deliver nicotine in aerosolized or vaporized form to a person. Examples include any of the following items sold with any nicotine liquid or nicotine substance that is packaged together as one unit or sold for a single price with: eCigarettes, eCigars, ePipes, vape pens, or eHookahs.
  • A component, part, or accessory of a device described above that is used during the operation of the device if sold in combination with a liquid substance containing nicotine. Examples include any of the following items sold with any nicotine liquid or nicotine substance that is packaged together as one unit or sold for a single price with: atomizers, vaping tanks or mods, batteries, or chargers.
  • A liquid or substance containing nicotine, whether sold separately or sold in combination with any device, that could be used to deliver nicotine in aerosolized or vaporized form to a person. Some examples include eLiquid or eJuice containing nicotine.
  • Does not include delivery devices sold individually or with a liquid or substance containing 0mg nicotine.
  • Does not include products that have been approved by the United States Food and Drug Administration for sale as tobacco cessation products or for other therapeutic purposes if the products are marketed and sold solely for that approved use.

Required Permits, Licenses, and Accounts

Regardless of where a retailer is located, a CECET account is required, in addition:

  • A retailer physically located in California who sells electronic cigarettes containing or sold with nicotine to consumers in California must have a seller’s permit, CECET account, and a Cigarette and Tobacco Products Retailer License (CRL) with us.
  • A retailer located outside California who sells electronic cigarettes containing or sold with nicotine and ships to consumers in California is considered a delivery seller (RTC section 30101.7). Regardless if the out-of-state delivery seller is engaged in business in California (RTC section 30108), the delivery seller must have a CECET account, a Cigarette and Tobacco Products Distributor License, a Tobacco Products Distributor Tax License, and a Prevent All Cigarette Trafficking (PACT) Act account with us, but is not required to have a CRL. The delivery seller may also be required to have a Seller’s Permit or Certificate of Registration for Use Tax with us.

For more information about cigarettes and tobacco products tax and licensing and the PACT Act, please see our Tax Guide for Cigarettes and Tobacco Products and California Cigarette and Tobacco Products Licensing Act of 2003-Retailer License webpage.

Registration

If you are a retailer of electronic cigarettes containing or sold with nicotine, you are responsible for registering for a CECET account with us.

Existing Cigarette and Tobacco Products Retailer License (CRL)

If you responded to our questions regarding your business activities when you registered or renewed your CRL by indicating that you sell electronic cigarettes and nicotine products, we will register you with a CECET account by July 1, 2022. We will notify you by mail of your new CECET account. However, if you indicated that you do not sell electronic cigarettes and nicotine products when you registered or renewed your CRL, we will not register you with a CECET account.

Beginning July 1, 2022, if you intend to sell electronic cigarettes containing or sold with nicotine, and your CRL is not yet due for renewal, you must register online with us for a CECET account prior to engaging in sales of electronic cigarettes containing or sold with nicotine. During the online registration process, you will be prompted to answer questions regarding your business activities, and you will need to indicate that you intend to sell electronic cigarettes containing or sold with nicotine to register for a CECET account.

Cigarette and Tobacco Products Retailer License (CRL) Renewals

Beginning June 1, 2022, when you renew your CRL, you will be prompted to answer additional questions regarding your business activities. During the online renewal process, you will be able to indicate if you sell or intend to sell electronic cigarettes containing or sold with nicotine. Based on your responses, our system will determine whether you need a CECET account.

Multiple Cigarette and Tobacco Products Retailer License (CRL) Locations

If you have multiple Cigarette and Tobacco Products Retailer License (CRL) locations that sell electronic cigarettes containing or sold with nicotine, only one CECET account is issued for reporting all your CRL locations. The total sales of the electronic cigarettes containing or sold with nicotine for all CRL locations will be reported on one CECET return. For example, if you have five CRL locations that all sell electronic cigarettes containing or sold with nicotine, you will report all five locations on your one CECET account.

Non-Cigarette and Tobacco Products Retailer License Holders

If you do not already hold a cigarette and tobacco products retailer license, beginning June 1, 2022, you may register for a CRL and a CECET account at the same time using our Online Services Portal. To register, please:

  1. Visit https://onlineservices.cdtfa.ca.gov/_/.
  2. Log in to your account with your username and password.
  3. Select More under the I Want To.
  4. Select Register aNew Business Activity.
  5. Follow the prompts to complete the account registration process.
    • Based on your responses to questions regarding your business activities, our system will identify the permits, licenses, and accounts you need. If you indicate that you will sell electronic cigarettes containing or sold with nicotine, you will be registered for a CECET account.

Sales Requirements

Beginning July 1, 2022, when selling to consumers, you are required to:

  • Collect the CECET of 12.5 percent of the sales price from purchasers when you sell electronic cigarettes. The electronic cigarette excise tax is not subject to sales and use tax. Sales and use tax only applies to the total selling price of the electronic cigarette product, excluding the electronic cigarette excise tax.

    Example 1:

    Electronic Cigarettes
    $20.00
    CECET ($20 x 0.125)
    $2.50
    Sales Tax ($20 x 0.08)
    $1.60
    Total due:
    $24.10

    Example 2:

    Scenario
    If a delivery device with 0mg nicotine is sold for $20 and on the same receipt eLiquid containing nicotine is sold for $15, would the CECET only apply to the $15 charge?

    Response
    The answer is yes, the CECET would only apply to the $15, eLiquid containing nicotine. The delivery device of $20 is not subject to the CECET because they are not packaged as one unit or sold for a single price.

    Delivery Device (0mg nicotine)
    $20.00
    eLiquid (containing nicotine)
    $15.00
    CECET ($15 x 0.125)
    $1.88
    Sales Tax ($35 x 0.08)
    $2.80
    Total due:
    $39.68

    Notes

    1. Device and eLiquid containing nicotine packaged as one unit or sold for a single price.
    2. 8.00 percent sales tax rate is used for demonstration only.
  • Provide the purchaser with a receipt or other document that separately identifies the California Electronic Cigarette Excise Tax and the amount the purchaser paid on each electronic cigarette retail sale.
  • Include the CECET amount in any electronic cigarette marketing sign or display that includes the price.

File Returns and Make Payments

As a retailer of electronic cigarettes containing or sold with nicotine, you are required to use our Online Services to file and pay the quarterly CECET returns. You must electronically file your CECET return separately from any other reports or returns you are required to file.

Due date

The tax and CECET return are due on or before the last day of the month following each calendar quarterly period for the preceding quarterly period. For example, the first CECET return and payment of the tax is due October 31, 2022, for the period, July 1, 2022, through September 30, 2022. In addition to filing your return, you may also make payments online.

For more information on filing returns and making payments, please refer to the following:

Tax Return Filing Deadlines – Find your filing due dates.

Tax Return Online Filing Portal – File online. Our service is easy, fast, and free!

Online Payment Options – Make payments online for tax and fee programs.

Retailer Cost Reimbursement

You may retain one percent of the CECET as cost reimbursement for collecting the CECET.

Revocation or Suspension of CECET Permit

If we suspend or revoke your seller’s permit or CRL license, we may also suspend or revoke your CECET permit. We will notify you in writing that action against your CECET permit is being considered. You will have 10 days to explain why your permit should not be revoked.

We will provide you 10 days’ written notice requesting you to appear for a hearing at a specified CDTFA office location, date, and time to address any citation of the permit. If you clear the cause of the citation prior to the hearing date, the hearing will no longer be necessary, and your permit will not be revoked. If you do not clear the cause of the citation on or before the date and time specified and fail to appear for the hearing, your permit will be revoked.

Reasons for Revocations

  1. Your seller’s permit has been suspended or revoked.
  2. Your CRL has been suspended or revoked.
  3. Failure to comply with the business and professions codes for the CRL license.
  4. Failure to comply with any provisions of the applicable law or regulation for the CECET program.

Reinstatement Fee for CECET Permit

To reinstate a revoked CECET permit, you must clear the cause of the revocation. The reinstatement fee for a CECET permit is $100.

How the CECET Revenue is Used

Revenues collected, including interest and penalties, from the CECET shall be deposited into the California Electronic Cigarette Excise Tax Fund. The proceeds from the CECET, less refunds and administration/collection expenses, will be used to fund essential safety net services and provide grants to students from disadvantaged backgrounds pursuing an education in the health field to combat the long-term negative impacts of tobacco products.

Resources

Laws and Regulations

Guides

Tax Guide for Cigarettes and Tobacco Products

Publications

Special Notices and Notification Letters

Business Location Visits/Inspections

Other Helpful Resources

  • CDTFA Online Services – A listing of CDTFA online services, including online registration for seller's permits and other accounts.
  • CDTFA Offices – A comprehensive listing of all CDTFA offices and contact information.
  • City and County Tax Rates – A listing of current and historical tax rates.
  • Find Your Tax Rate – You can look up the current sales and use tax rate for a specific address.
  • Contact Us – A listing of CDTFA contacts for your questions and concerns.
  • Get It in Writing! – The Sales and Use Tax Law can be complex, and you are encouraged to put your tax questions in writing.
  • Sign Up for CDTFA Updates – Subscribe to our email lists to receive the latest news, newsletters, tax and fee updates, and other announcements.
  • Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels, when they want information regarding procedures, or when there are apparent rights violations.

If You Need Help

If at any time you need assistance, feel free to contact us by telephone or email. For contact information and hours of operation, please see our How to Contact Us webpage.

If you have suggestions for improving this guide, please contact us via email.