Tennessee – Guidance for Tobacco Sellers and Distributors

SALT Report 3116 – The Tennessee Department of Revenue issued a notice to clarify the distinction between retailers, wholesalers, and distributors of cigarettes and tobacco products, for sales tax and tobacco tax purposes.


A person who sells or makes tobacco products available to the ultimate consumer is a retail dealer and is not required to obtain a license to sell these products.  However, some retailers believe that they may sell cigarettes and tobacco products to other retailers as long as they obtain a resale certificate from those other retailers; the Department warns that this type of sale is not advisable. This is because a seller of cigarettes and tobacco products may act as either a retailer or a wholesaler/distributor, but they cannot act as both. As a result, a retailer cannot legally accept a resale certificate for sales to other retailers.  Therefore, sales of this type are retail sales and are subject to sales and use tax.


Wholesalers are required to post a bond, obtain a tobacco wholesaler’s license, and comply with all reporting and sales requirements, such as filing tax forms and licensed distributor reports.

Wholesalers may sell tobacco products to other wholesalers, tobacco distributors, and retail dealers. However, wholesalers are not legally allowed to act as retailers; therefore, wholesalers cannot sell cigarettes and tobacco products to the ultimate consumer. A wholesaler who does so will be subject to penalties and license revocation.


Tobacco distributors may sell tobacco products to retailers and distributors but are prohibited from selling products directly to the ultimate consumer. Tennessee law treats tobacco distributors as secondary wholesalers, and as a result distributors who sell or make cigarettes and tobacco products available to an end consumer will also be subject to penalties and license revocation.

However, tobacco distributors are distinct from wholesalers, because distributors do not pay tobacco tax on their products.  Instead, distributors purchase stamped products or roll-your-own tobacco products on which the tobacco tax has already been paid by the wholesaler.  In addition, distributors are not required to file licensed distributor reports, but they are required to electronically upload invoice-level information for all tobacco sales to retailers.

Consequences for Non-Compliance

The Department will revoke the tobacco wholesaler or distributor license of any wholesaler or distributor that makes retail sales and impose penalties as follows:

  • A penalty of $250 per day may be imposed for making wholesale or distribution sales without a tobacco license
  • A penalty of $250 per day may be imposed if a retailer sells to another retailer, and
  • Retailers who make wholesale sales will be liable for sales tax on those sales

For Further Information

Tennessee Department of Revenue – Important Notice No. 13-10


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