California Raises Tobacco Retailer License Fees

California tobacco retailers will face higher annual licensing costs after Gov. Gavin Newsom signed AB 573 into law. The bill raises fees by nearly $200 per retail location, effective 1 July 2026.

Currently, a retailer’s license costs $265 per location. Under the new law, the fee increases to $450, an $185 hike. Retailers will pay this amount annually.

Reason for the Increase

The state’s Cigarette and Tobacco Products Licensing Act of 2003 requires the California Department of Tax and Fee Administration (CDTFA) to license manufacturers, distributors, and retailers.

AB 573 cites that the 2020 ban on most flavoured tobacco products increased seizure costs and reduced inspection capacity. Previously, fewer than 15% of retailers were inspected each year, roughly once every eight years. Violations have risen from 2% to 14% since the flavoured tobacco ban.

Raising fees is intended to fund more inspections, ensuring better compliance with state tobacco laws and tax regulations.

Additional Provisions

The bill allows CDTFA to raise the license fee up to $600 after 1 July 2026 to maintain the Cigarette and Tobacco Products Compliance Fund.

It also requires the legislative analyst to submit two reports on enforcement. The first is due 1 December 2027, and the second on 1 December 2029.

Legislative Approval

AB 573 was introduced by Assembly Member Chris Rogers (D-2). It passed both chambers with overwhelming support: the Assembly approved it 62-1 with 17 abstentions, and the Senate passed it 33-0 with seven not voting.

The law aims to enhance inspections, increase compliance, and ensure the state can enforce tobacco regulations more effectively in California.