To sell tobacco in Illinois, you need an Illinois tobacco license from the Department of Revenue before your first sale. Retailers pay $150 per location each year; distributors pay nothing for the license itself but usually have to post a surety bond. Which license you need depends on what you sell and whether you sell to consumers or to other businesses.
Which License You Need
Illinois regulates tobacco under two separate tax acts, and the Department of Revenue issues three main license types through MyTax Illinois.1Illinois Department of Revenue. Do I Need to Register for the Tobacco Products Distributor’s License?
- A Tobacco Products Retailer license covers direct-to-consumer sales of tobacco products other than cigarettes, including cigars, pipe tobacco, and smokeless tobacco.
- A Cigarette and Tobacco Products Retailer license covers cigarettes plus other tobacco products. Most convenience stores and gas stations need this one.
- A Tobacco Products Distributor license covers wholesale sales to retailers, end users, or other licensed distributors.
If your business both distributes and retails, you need both licenses. Each retail location needs its own license.
Retailer License: Fee and Application
You apply electronically through the Department of Revenue with your name and address, the address of the sales location, and any additional information the Department requests.2Illinois General Assembly. Illinois Code 35 ILCS 143/10-21 – Retailer’s License
The fee is $150 per retail location per year, paid when you submit the application. That amount doubled from $75 on July 1, 2025, under Public Act 104-0006.3Illinois Department of Revenue. Tobacco Retailer License Fee Increases A separate fee applies to every location where you sell tobacco.
Two categories of applicants are ineligible. Anyone convicted of a federal or state felony for tobacco smuggling or tobacco tax evasion cannot get a license unless the Department determines they have been sufficiently rehabilitated. A corporation is also ineligible if any officer, manager, director, or stockholder owning more than 5% of the stock would be individually ineligible.2Illinois General Assembly. Illinois Code 35 ILCS 143/10-21 – Retailer’s License Your business must already be registered under the Retailers’ Occupation Tax Act before the Department will issue the tobacco license.
The license is valid for up to one year and cannot be transferred or assigned.
Distributor License: No Fee, but a Bond
The tobacco products distributor license itself is free, but most distributors have to post a surety bond.4Illinois General Assembly. Illinois Code 35 ILCS 143 – Tobacco Products Tax Act of 1995 – Section 10-20 Two groups are exempt: first-time applicants, and distributors whose tax liability in the preceding year was under $50,000.
For everyone else, the Department sets the bond at up to three times your average monthly tax liability, or $50,000, whichever is lower. The bond stays in force for the license period and covers unpaid taxes. Each location needs its own application and bond.
The separate cigarette distributor license under the Cigarette Tax Act (35 ILCS 130) carries a $250 annual fee. If you distribute both cigarettes and other tobacco products, you need licenses under both acts.
Tax Filings Once You’re Licensed
Distributors owe tax on every tobacco product sold or disposed of in Illinois. The rate on the wholesale price, including moist snuff and electronic cigarettes, is 45%.5Illinois Department of Revenue. Changes to the Tobacco Products Tax
Returns are due monthly, by the 15th of each month for the previous calendar month, along with payment.6Illinois General Assembly. Illinois Code 35 ILCS 143 – Tobacco Products Tax Act of 1995 – Section 10-30 Missed filings and unpaid tax are the most common triggers for suspension or revocation.
Penalties for Selling to Anyone Under 21
Illinois prohibits selling, giving, or furnishing any tobacco product, electronic cigarette, or alternative nicotine product to anyone under 21. You must verify the buyer is at least 21 before completing the sale.7Illinois General Assembly. Illinois Code 720 ILCS 675 – Prevention of Tobacco Use by Persons Under 21 Years of Age and Sale and Distribution of Tobacco Products Act
The offense is a petty offense. Fines escalate within a rolling 24-month window:
- First offense: $200
- Second offense: $400
- Third offense: $600
- Fourth or subsequent offense: $800
The bigger risk is your license.8Illinois General Assembly. Illinois Code 720 ILCS 675 – Prevention of Tobacco Use by Persons Under 21 Years of Age and Sale and Distribution of Tobacco Products Act – Section 2 A retailer without a documented employee compliance training program faces a three-day license suspension after just two violations. A retailer with a training program does not face suspension until the fourth violation. Repeat violations without training lead to suspensions of seven days or more.9Legal Information Institute. Illinois Administrative Code Title 86 Section 660.45 – License Actions A written training program is one of the cheapest ways to protect the license.
Penalties for Operating Without a License
Selling tobacco without the required license exposes the business to civil penalties of up to $1,000 for a first violation and up to $3,000 for each subsequent violation. The Department can also shut the tobacco operation down entirely through revocation proceedings.9Legal Information Institute. Illinois Administrative Code Title 86 Section 660.45 – License Actions
Before revoking, canceling, or suspending a license, the Department must give written notice of the alleged violations and an opportunity for a hearing. Grounds include failing to file returns or pay taxes under any act the Department administers, violating any provision of the Tobacco Products Tax Act, and repeated underage sales.
Records You Must Keep
Both distributors and retailers must keep complete records of tobacco products they hold, purchase, sell, or dispose of.
Distributors must preserve invoices, bills of lading, sales records, copies of bills of sale, wholesale price documentation, and an annual inventory as of December 31 or fiscal year-end. Retailers must keep invoices, sales records, and related purchase and sale documents, and must keep original purchase invoices on the licensed premises for at least 90 days after purchase unless the Department grants a waiver for centralized or electronic records.10Illinois General Assembly. Illinois Code 35 ILCS 143/10-35 – Record Keeping
Records must be preserved for the full period during which the Department can issue a notice of tax liability. The statute does not name a fixed number of years; three to four years is a practical benchmark tied to the Department’s typical assessment window.11Illinois General Assembly. Illinois Code 35 ILCS 143/10-35 – Record Keeping
Renewal
Tobacco licenses expire one year after issuance. Renewal fees go through MyTax Illinois.12Illinois Department of Revenue. Tobacco Products Tax Retailers pay the same $150 per location. Distributor licenses renew at no cost, though the Department may reassess the bond.
Report any changes in ownership, location, or corporate structure during renewal. Those changes can affect eligibility, and the Department expects to hear about them before an audit finds them. Letting a license lapse and continuing to sell is treated the same as operating without a license.
Federal and Local Rules That Also Apply
An Illinois license is not the only approval some tobacco businesses need. If you manufacture tobacco products, import them into the United States, or operate a tobacco export warehouse, you also need a permit from the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) before starting operations. There is no fee for a TTB permit, and most applications go through Permits Online. Straight retailers do not need a TTB permit.13Alcohol and Tobacco Tax and Trade Bureau. Permits
Anyone selling, transferring, or shipping cigarettes or smokeless tobacco across state lines into a state that taxes them is covered by the Prevent All Cigarette Trafficking (PACT) Act, which requires ATF registration, registration with each destination state’s tax administrator, monthly state reports, and compliance with every state and local rule in each jurisdiction.14Bureau of Alcohol, Tobacco, Firearms and Explosives. Prevent All Cigarette Trafficking (PACT) Act USPS generally will not mail cigarettes, roll-your-own tobacco, or smokeless tobacco; cigars are an exception.15U.S. Customs and Border Protection. Mailing Tobacco Products to the United States Through the Postal Service and Other Carrier Services
Local rules matter too. Many Illinois municipalities impose their own tobacco licensing, zoning restrictions, or flavored-product bans on top of the state requirements. If a city or county requires its own permit, you need both that and the state license. A local violation can bring its own fines and can give the state grounds to act against your state license. Check with the city or county clerk before opening.