To open a smoke shop in Texas, you need to form a legal business entity, confirm the location is zoned for tobacco retail, and secure a Sales and Use Tax Permit plus a Cigarette, Cigar and/or Tobacco Products Retailer Permit from the Texas Comptroller before your first sale. If you plan to sell vape devices or e-liquids, add an E-Cigarette Retailer’s Permit. If you want to carry hemp or CBD products, a separate registration with the Department of State Health Services runs $5,150 per location per year, and recent law changes have banned cannabinoid vapes outright. The sections below walk through each requirement in the order you’ll actually hit it.
Form the Business Entity First
Every permit application asks for an entity file number and a Federal Employer Identification Number, so the business has to exist on paper before you apply for anything else. Most smoke shop owners form an LLC or corporation through the Texas Secretary of State under the Texas Business Organizations Code.1Office of the Texas Secretary of State. Business Organizations Code FAQs Either structure keeps your personal assets separate from business debts.
If the shop will operate under a name different from the entity’s legal name, file an Assumed Name Certificate with the Secretary of State. The fee is $25.2Office of the Texas Secretary of State. Name Filings FAQs Sole proprietors and general partnerships file that certificate at the county clerk’s office instead.
Once the entity is active, apply for a Federal EIN through the IRS. The online application is free and gives you the number immediately, and the IRS recommends forming your entity first so the application isn’t delayed.3Internal Revenue Service. Get an Employer Identification Number
From that point forward, keep your franchise tax account current. The Comptroller tracks what it now calls “Franchise Tax Account Status,” and if you fall behind on filings, the state can forfeit your right to do business in Texas. Forfeiture makes directors and officers personally liable for entity debts and strips the business of its ability to sue or defend in court.4Texas Comptroller of Public Accounts. Franchise Tax Account Status
Confirm Zoning Before You Sign a Lease
Permit applications require a physical address, which is one reason to pin down a location early. The bigger reason is that zoning kills more smoke shop plans than any other single factor, and the rules vary widely across Texas cities and counties.
A storefront might sit in a general retail zone yet carry an overlay that specifically prohibits tobacco or vape shops. Some municipalities impose proximity rules keeping tobacco retailers a set distance from schools, churches, or parks. These are local ordinances, not statewide rules, so call the planning or zoning department for the city or county where you plan to open and get the answer in writing before you sign anything.
You will also need a Certificate of Occupancy from the local building department before opening to the public, confirming the space meets fire, electrical, and plumbing codes for retail use. If the previous tenant ran a different kind of business, expect inspections, and build time into the schedule for a possible re-inspection.
The Comptroller Permits You Need
The Texas Comptroller of Public Accounts issues the permits that let you collect sales tax and legally sell tobacco and vape products. You need at least two, and most smoke shops need three.
Sales and Use Tax Permit
Every retail business in Texas must have a Sales and Use Tax Permit before making its first sale. The permit authorizes you to collect the 6.25 percent state sales tax plus local sales tax of up to 2 percent, for a combined maximum of 8.25 percent.5Texas Comptroller of Public Accounts. Local Sales and Use Tax Collection – A Guide for Sellers Apply using Form AP-201 on the Comptroller’s website or through its Webfile system.6Texas Comptroller of Public Accounts. Texas Application for Sales Tax Permit This permit does not expire on its own, but it can be revoked for failure to file returns.
Tobacco Retailer’s Permit
To sell cigarettes, cigars, or other tobacco products, you need a Cigarette, Cigar and/or Tobacco Products Retailer Permit. Texas Tax Code Chapters 154 and 155 define cigarette and tobacco retailers as any person in the business of selling those products to consumers.7Texas Comptroller of Public Accounts. Cigarette, Cigar and/or Tobacco Products Retailer Permit One application, Form AP-193, covers all traditional tobacco categories.8Texas Comptroller of Public Accounts. Texas Application for Retailer Cigarette, Cigar and/or Tobacco Products Taxes Permit
The permit runs on a fixed two-year cycle, June 1 through May 31 of even-numbered years, with a base fee of $180. Mid-cycle applications are prorated by month.9Texas Comptroller of Public Accounts. Cigar and Tobacco Products Tax Each location needs its own permit, and permits are non-transferable.
E-Cigarette Retailer’s Permit
Selling vape devices, e-liquids, or any electronic nicotine delivery system requires a separate E-Cigarette Retailer’s Permit. The fee structure matches the tobacco permit: $180 for the full two-year period, prorated for mid-cycle applications.10Texas Comptroller of Public Accounts. E-Cigarette Retailer Permit You need an active Sales Tax Permit for the same location before the Comptroller will issue the e-cigarette permit.
Every permit must be displayed in your store where customers and state inspectors can see it.11Texas Administrative Code. 34 Texas Admin Code 3.1207 – E-Cigarette Retailer Permits Operating without a required permit, or with an expired one, exposes you to civil penalties for each day of noncompliance plus possible criminal charges.
How to Apply
The fastest route is the Comptroller’s Webfile system, which accepts credit card payments and tracks applications in real time. Paper filers mail completed forms to Austin with a check. Either way, have the following ready before you start:
- The entity file number assigned by the Secretary of State
- Your federal EIN
- Physical and mailing addresses for the shop
- Names, addresses, and Social Security Numbers for all owners, partners, or corporate officers
- The NAICS code for specialized tobacco stores, 453991
Mismatches between your permit application and your Secretary of State record are the most common cause of processing delays, so verify every field matches.
Age Verification Rules Before Your First Sale
Texas prohibits selling cigarettes, e-cigarettes, or any tobacco product to anyone under 21. Making the sale, even by negligence, is a Class C misdemeanor for the employee who completes the transaction, with a fine of up to $500.12State of Texas. Texas Health and Safety Code 161.082 – Sale of Cigarettes, E-Cigarettes, or Tobacco Products to Persons Younger Than 21 Years of Age Prohibited Criminal liability attaches to the cashier, not just the owner, which is why training is not optional. The age restriction does not apply to active members of the U.S. military or state military forces.
Ask for a government-issued photo ID from anyone who appears to be under 30. The ID must include a photograph, physical description, and date of birth showing the buyer is at least 21. Driver’s licenses from any state, U.S. passports, military IDs, and state-issued identification cards all qualify. Decline the sale if the ID is expired, lacks a date of birth, or doesn’t match the person in front of you.
Within 72 hours of a new employee’s first day selling restricted products, give them written notice of the age-21 law and the penalties for violating it. Have them sign a document confirming they received and understood the training, and keep that document on file for inspectors.
You must also post the state-prescribed warning sign near the point of sale, visible to both customers and employees. The Comptroller provides the sign free of charge. Failing to display it is a separate Class C misdemeanor.13State of Texas. Texas Health and Safety Code 161.084 – Warning Notice
Hemp, CBD, and the Cannabinoid Vape Ban
If you plan to carry hemp-derived products, understand the current rules before you order inventory. This area of Texas law has changed significantly and continues to shift.
Retailers selling consumable hemp products without altering them must register with the Texas Department of State Health Services for $5,150 per location per year. If you repackage, relabel, or white-label hemp products, you need a full Consumable Hemp Product License at $10,300 per location per year.14Texas DSHS. Licensing and Registration
As of September 2025, selling e-cigarettes or vape products that contain any cannabinoids, including CBD and delta-8 THC, is a Class A misdemeanor in Texas. The ban covers all cannabinoid vapes regardless of THC content.15Texas State Law Library. CBD and Delta-8 A Class A misdemeanor carries far heavier penalties than the Class C offenses in the age-verification rules.
The status of delta-8 THC products more broadly remains unsettled. After the state initially classified delta-8 as a controlled substance, a court issued a temporary injunction blocking that classification, and the case is pending before the Texas Supreme Court as of 2026. Separately, a DSHS rule effective March 31, 2026 includes THCA when calculating THC levels in consumable hemp products, which effectively bans smokable hemp.15Texas State Law Library. CBD and Delta-8 If smokable hemp or delta-8 is central to your business model, get current legal advice before buying inventory.
Ongoing Compliance After You Open
Keep invoices and records for every tobacco and e-cigarette product you purchase or receive. Texas requires those records to be available for state inspection for at least four years, and longer if the Comptroller is assessing taxes, penalties, or interest, or if any proceeding is pending. Failure to produce records when an auditor asks is treated as evidence that products were received without proper taxes being paid.16Texas Comptroller of Public Accounts. Cigar and Tobacco Products Tax Manual – Chapter 1 – Permits, Records, and Reports
Both the tobacco and e-cigarette retailer permits expire on May 31 of even-numbered years. The Comptroller sends renewal notices, but track the deadline yourself. An expired permit carries the same penalty exposure as no permit at all.
Your LLC or corporation must also file an annual franchise tax report with the Comptroller, even if no tax is owed. Miss that filing and the Comptroller starts the forfeiture process, giving you only 45 days after a notice of pending forfeiture to fix it.4Texas Comptroller of Public Accounts. Franchise Tax Account Status
Texas levies a cigarette excise tax of $1.41 per pack, but it’s paid at the distributor level before products reach your shelves. Your job is to collect state and local sales tax on every transaction and remit it on your filing schedule. Verify your suppliers are permitted Texas distributors, because buying from an unlicensed source creates liability for unpaid taxes.
If You Plan to Ship Products
The permits above cover in-store sales. If you plan to sell tobacco or vape products online or ship across state lines, the federal Prevent All Cigarette Trafficking Act requires registration with the Bureau of Alcohol, Tobacco, Firearms and Explosives and with the tobacco tax administrator in every state you ship to, monthly state reporting, and age verification at delivery. The U.S. Postal Service will not accept these products for mailing.17Bureau of Alcohol, Tobacco, Firearms and Explosives. Prevent All Cigarette Trafficking (PACT) Act Most storefront operators avoid this entire regime by selling only in person; if delivery is part of your model, budget for the compliance work from day one.