E cigarettes are battery powered devices that provide inhaled doses of nicotine through a vaporized solution contained in cartridges inserted into the device. No smoke or combustion is involved the device emits only vapor when used.
E cigarettes may be legally sold in the United States under federal law. In 200, the U.S. Food and Drug Administration (FDA) sought to establish authority over e cigarettes as drugs or drug delivery devices, but in 2010 a federal appeals court ruled the FDA does not have that authority. 1 The ruling does not necessarily apply to all e cigarettes on the market. If an e cigarette company markets its products as a smoking cessation aid, the FDA may still have the authority to regulate it as a drug or drug delivery device.
History of the FDA s Attempt to Regulate E Cigarettes
In 2008, the FDA moved to establish authority over e cigarettes as drugs or drug delivery devices by blocking the import of new e cigarette shipments into the United States. The FDA has authority to regulate drugs, devices, or drug/device combinations through the Food, Drug and Cosmetic Act. 2
In 2009, the e cigarette manufacturer Sottera, which makes NJOY e cigarettes, sued the FDA. Sottera said the agency didn t have the authority over e cigarettes as drugs or drug delivery devices and therefore could not stop shipments from entering the country. The manufacturer asked the federal district court in Washington, D.C., for an injunction (a court order) to prohibit the FDA from continuing to ban incoming e cigarette shipments.
In January 2010, the district court agreed with the e cigarette manufacturer and held that the FDA may not regulate e cigarettes as a drug or drug delivery device. Instead, because the nicotine contained in the e cigarette cartridges is derived from tobacco, the court held that the FDA may regulate them as a tobacco product.
The FDA appealed the lower court s ruling to the federal Court of Appeals in Washington, DC. A three judge panel at the Court of Appeals ruled on December 7, 2010 that the lower court was correct. It held that because the NJOY e cigarettes are not marketed as tobacco cessation aids (such as nicotine gum or patches), the FDA does not have authority over e cigarettes as a drug or drug delivery device.
The court s decision limits the FDA s ability to test NJOY e cigarettes for safety and prohibits it from banning e cigarettes entirely. However, the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) expressly allows state and local governments to regulate the sale or use of tobacco products, which would include e cigarettes. 3
What s Next for the FDA and E Cigarettes?
The FDA decided not to appeal the ruling to the U.S. Supreme Court, announcing instead that it plans to issue regulations on e cigarettes as a tobacco product under the 2009 FDA Law. The FDA’s process of establishing authority over e cigarettes and issuing regulations for them will take some period of time likely a year or more.
The FDA may still have the authority to regulate e cigarettes that are marketed as a smoking cessation aid under its power to regulate drugs or drug delivery devices. If so, the FDA could conduct safety tests on these e cigarettes, ban e cigarettes that it finds unsafe, or require a doctor s prescription to obtain e cigarettes marketed as a smoking cessation aid. 4
The FDA s website on e cigarettes is a good resource for following the agency s next moves regarding e cigarette regulation.
Although the FDA’s ability to regulate e cigarettes is somewhat limited, local and state governments may create much stronger restrictions on e cigarettes, up to and including a complete ban on their sale or use. If you have any questions about the e cigarette court decision or creating new restrictions on e cigarettes, please submit your question to us.
For more information about legal limits on e cigarettes, please see our associated FAQ Are There Restrictions on the Use or Sale of E Cigarettes? and our fact sheet Electronic Cigarettes How They Are and Could Be Regulated.”
1 Sottera, Inc. v. FDA, No. 10 5032 (D.C. Cir. 2010).
2 21 U.S.C. 321(g) and (h).
3 21 U.S.C. 387p.
4 21 U.S.C.A. 301 et seq.
Cigarette and tobacco products tax
Important Developments
Change in Policy Regarding the Filing of Quarterly Informational Returns by Wholesale Dealers of Cigarettes N 14 1 Informational Return Filing Requirements for Wholesale Dealers of Cigarettes CG 89 online filing instructions
Determining a Distributor’s Wholesale Price of Cigars Using the Industry Standard Adjustment Ratio TSB M 13(12)M Indian tax exemption coupons / prior approval system View/Report Indian Tax Exempt Cigarette Sales
New York State imposes an excise tax on cigarettes at the rate of $4.35 per package of twenty cigarettes. New York City imposes a local excise tax at the rate of $1.50 per package of twenty cigarettes, bringing the combined tax rate in New York City to $5.85.
A tax stamp affixed to the bottom of each pack of cigarettes sold in the State provides evidence that the taxes were paid. A state tax stamp is evidence that the state excise tax was paid. A joint state/city tax stamp is evidence that both the state and city taxes were paid.
New York State also imposes an excise tax on tobacco products at the following rates
- 75% of the wholesale price on cigars and tobacco products (other than little cigars and snuff)
- $4.35 per twenty little cigars
- $2 per container of snuff one ounce or less, and $2 per ounce and a proportionate rate on any fractional amount thereof for containers with more than one ounce.
Licensing requirements for cigarette agents and wholesalers
You must be licensed as a cigarette agent to purchase and affix New York State cigarette tax stamps. Cigarette agent licenses may be issued to
- dealers (wholesalers or retailers) who
- maintain separate warehousing facilities for receiving and distributing cigarettes and conducting their business, and
- who have received commitments from at least two cigarette manufacturers whose aggregate market share is at least 40% of the New York State market
importers, exporters, or manufacturers of cigarettes
- certain other businesses dealing in unstamped cigarettes.
You must be licensed as a wholesale dealer of cigarettes if you intend to sell to a retail dealer or other persons for the purpose of resale.
For additional information regarding cigarette agent or wholesaler licenses, see Form CG 100 A, Application for License as a Cigarette Agent or Agent/Wholesaler.
Tobacco product distributor and wholesaler license
You must be appointed as a tobacco products distributor if you
- import or cause to be imported into this state any tobacco products (other than cigarettes) for sale
- manufacture any tobacco products in this state
- want to be authorized to file returns and pay the tax due on any tobacco products that you sell, ship, or deliver from outside the state to any person in the state
You must be licensed as a tobacco product wholesaler if you sell tobacco products for resale or own, operate, or maintain one or more tobacco products vending machines in New York State.
For additional information, see Form MT 202, Application for a License as a Wholesale Dealer of Tobacco Products or an Appointment as a Distributor of Tobacco Products.
Registration requirements for retailers
Every retail dealer of cigarettes or tobacco products in New York State, and every owner or operator of vending machines through which cigarettes or tobacco products are sold, must separately register each business location or vending machine.
Registration fees are
- $300 for each retail location
- $100 for each vending machine
To register a retail business, see Form DTF 716, Application for Registration of Retail Dealers and Vending Machines for Sales of Cigarettes and Tobacco Products.
To renew your current registration, see Form DTF 719 MN, Renewal Application for Registration of Retail Dealers and Vending Machines for Sales of Cigarettes and Tobacco Products.
Returns
Type of distrubutor
Tax formsFiling periodDue date Cigarette stamping Agent CG 5 for Non Resident Agents & CG 6 for Resident Agents Monthly On or before the 15th day of the following month Cigarette wholesaler CG 89 Quarterly On or before the 20th day of the month following the end of the previous quarter Tobacco product distributor MT 203 Monthly On or before the 20th day of the following month Tobacco product wholesaler MT 203 W Quarterly On or before the 20th day of the month following the end of the previous quarter Retail registration DTF 716 for New Applications DTF 719 for Renewal Applications Annually New Applications must be filed at least 30 days prior to anticipated start date. Registration Renewal Applications must be filed on or before September 20.
For more information
- Cigarette and tobacco product tax forms and instructions (current year) or (prior years and periods)
- Cigarette and tobacco product tax TSB M’s
- Cigarette and tobacco product publications
- Cigarette and tobacco product online services