Tobacco products are the third most common item found in stores after food and beverages. According to a recent State of the Industry Report, tobacco products account for a third of convenience store sales, generating upwards of $575,000 in revenue for the average store.
What’s more, the E-cigarette and vape market was reportedly valued at $18.13 billion in 2021 with projections to increase by 30% by 2030.
Having said that, selling a variety of tobacco products in a convenience store is a must if you want to remain profitable. Tobacco is a federally regulated product, it’s not quite the same as selling soda and Hostess cupcakes.
Therefore the question is how do you sell tobacco products in your store and which are the biggest money-making wholesale tobacco products? Read on to learn more.
How to Sell Tobacco Products in Your Convenience Store
Tobacco sales generate roughly 35% of a convenience store’s “in-store” sales. However, their profitability depends directly on compliance with several federal regulations. That means you and your employees must take the time to learn about the said rules and regulations to ensure you’re selling these products responsibly. It is the responsibility of Retailers to check customers’ government-issued I.D.s to ensure customers are 21+ years of age; the current age threshold.
Here’s the right way to start selling tobacco products in your convenience store:
Get the Appropriate Licensing
The first thing you need to sell tobacco products is the official Cigarette and Tobacco Products Retailer’s License. You’ll also need to register as a “Cigarette and Tobacco Retailer” in your state and display your license so it’s visible to the public. You’ll also have to obtain this licensing and registration for each retail store you own that sells tobacco products of any kind.
Generally speaking, you’ll need to proceed with the application process, submitting the proper identification and other required documentation. You’ll also be required to pay a one-time application fee. Keep in mind that each state will have different requirements and regulations, which you’ll be presented with once you’ve obtained your retailer’s license.
Know What Tobacco Products Are and Who Can Purchase Them
A tobacco product is any product that contains tobacco or nicotine designed for human consumption — which includes e-cigarettes. Having said that, any wholesale tobacco products you purchase for resale MUST be clearly labeled as tobacco products.
Additionally, tobacco products may only be sold to those who can prove that they are of legal age or older via a valid form of ID. However, the minimum age for purchasing tobacco products has been raised in some states, counties, and cities. Therefore, you’ll need to make sure that you aren’t unknowingly violating any local tobacco sales ordinances.
Understand the Penalties for Selling to Minors
Selling tobacco products comes with a certain level of risk. While there isn’t exactly a federal penalty for selling tobacco products to minors, each state does have its own repercussions for doing so. State-specific regulations will determine the following repercussions for selling these products to minors:
- Whether or not you’ll be fined for a “first offense” and how much
- How many offenses will cause your tobacco license to be suspended or revoked completely (and permanently)
- Whether the individual who sold the tobacco product or store/company is liable
Know Your Tax Liabilities
The current federal tax on cigarettes is $1.0066 per pack. Additionally, each state excises its own tax, which can range from $0.30 to $4.35 or more. Cities and counties can also add taxes on top of that.
Of course, the taxes on a pack of cigarettes are separate from other tobacco products, such as e-cigarettes, chewing tobacco, cigars, and so on. Therefore, you’ll need to do specific research based on where your store or stores are located.
Failure to pay taxes on tobacco products sold can result in the suspension of your retailer’s license and fines — in addition to paying back taxes.
Which Tobacco Products Should I Sell in My Store?
Marlboro, Camel, and Newport are among the top-selling cigarette brands. E-cigarettes and vapor products have grown over the years as well. Smokeless tobacco is popular, as are cigars, cigarillos, flavored tobacco products, roll-your-own tobacco, and New Modern Oral nicotine products.
When it comes to selling tobacco products in your convenience store, the general rule of thumb is to provide the right variety and top-selling brands. However, top-selling brands undoubtedly vary depending on the state, county, city/area that your store is located.
Figuring out exactly which and how many tobacco products to sell in your store will take some market research. It doesn’t hurt to ask around and get insight from other local stores. You can also talk to your wholesale tobacco products or wholesale cigar distributors to find out what other stores are buying up in larger amounts.
Don’t have a wholesale cigarette and tobacco supplier? Atlantic Dominion offers one of the most extensive Total Tobacco/Nicotine product offerings in the country with relationships with manufacturers of over 125 years. Get in touch with Atlantic Dominion today to learn about our distribution services and more!