Cigarette, Tobacco & Nicotine Products

Quick Navigation

Retailer Information

Retailer Registration

Distributors and Wholesalers

Manufacturer's Certification of Tobacco Brands

Internet and Mail Order Cigarette and Tobacco Product Sales

Direct Cigar Shipping 

Cigarette and Tobacco Product Resources

Cigarette and Tobacco Online Forms

What's new

HB 1220 (effective July 1, 2026) and SB 221 (effective January 1, 2027) introduce new licensing and regulatory requirements for businesses selling, distributing, or wholesaling nicotine products - including vapor products, alternative nicotine products, and related components. Businesses must comply with all nicotine, cigarette, tobacco, and sales tax licensing requirements.

Retailer: New licensing requirements

The Department of Revenue is responsible for collecting the Cigarette Excise tax, Other Tobacco Products Tax, and regulating the tobacco industry in South Dakota.

See Retailer Information

 Retailer Registration

• Retailer License Requirement: Starting January 1, 2027, any business selling nicotine products (cigarettes, vaping, or alternative nicotine) must hold a Retail Nicotine License for each location via the Department of Revenue. Applications are expected to open approximately November 1, 2026. There is a license fee of $200 or $300 based on the percentage of annual gross income from the sale of nicotine products. Vending machines have an annual license fee of $100. 
• Existing Sales and Use Tax License registration must remain active.
• Purchasing: Beginning July 1, 2026, retailers may only purchase nicotine products, including cigarettes, vapor products, and alternative nicotine products, from licensed wholesalers or distributors. All cigarettes must have a South Dakota tax stamp affixed. 
• Recordkeeping: Retailers will be required to keep documentation showing all nicotine and or tobacco products were purchased from a licensed distributor or wholesaler. If you need a list of licensed nicotine or tobacco distributors and wholesalers, please contact the Business Tax Division.
• Sales Restrictions: 
  • Only sell to persons 21 years of age or older
  • No mail, phone, or online sales; no free samples near youth settings
  • Vending machines must be placed in areas that are restricted from persons under the age of 21 at all times. 

Distributors and Wholesalers

Nicotine Products: New Licensing Requirements

• Distributor License: Required beginning July 1, 2026, for all businesses distributing nicotine products to retailers. License costs $1,000 per location, valid July 1 - June 30. A current sales tax license is also required. 
• Direct-to-Consumer Shipping: Prohibited except under strict conditions: licensed distributors only, age verification, signature upon delivery, and tax remittance. 
• Purchasing & Recordkeeping: Must sell only to licensed retailers; maintain records for inspection.  

To become a licensed distributor or wholesaler, please complete a tax license application.

Tobacco Tax & Stamp Requirements

• Cigarette excise tax stamps continue to be required from licensed distributors. As a tobacco distributor, you are required to purchase South Dakota tax stamps and apply them to each pack of cigarettes prior to distributing them to retailers. Licensed tobacco distributors are required to purchase at least seventy-five percent of their cigarettes and other tobacco products directly from the manufacturer. 
• Wholesalers much obtain stamped cigarettes from a licensed distributor who has already applied the South Dakota tax stamps to cigarettes. They may purchase other tobacco products from a licensed distributor or directly from the manufacturer. 
• Beginning July 1, 2026, the tobacco distributor and tobacco wholesaler license fee increases from $150 to $1,000. 
• Tobacco retailers should not apply for a tobacco distributor or wholesaler's license. 
• Existing recording and quarterly shipment reporting requirements for tobacco products remain in effect. 

Combined Compliance Expectations

Businesses that distribute both nicotine products and tobacco products must follow all applicable requirements for each product type. Nicotine distributor licensing requirements operate in addition to existing tobacco distributor and wholesaler rules. Cigarette stamping, manufacturer purchase requirements, and all historical tobacco regulations remain fully in effect. 

[Frequently Asked Questions about Nicotine Products and Licensing]

Manufacturers Certification of Tobacco Brands

Only certified tobacco brands (PDF) may be sold in South Dakota. Participating and non-participating manufacturers must complete the Tobacco Product Manufacturer Certification Form on an annual basis. If the certification is approved by the Department of Revenue, the brand will be listed and approved for sale.

Nonparticipating Manufacturers with brands listed on the directory or which had sales in South Dakota also need to file a Certificate of Compliance with the Attorney General’s Office every quarter. 

Internet and Mail Order Cigarette and Tobacco Product Sales

The shipment or transport of cigarettes or tobacco products to consumers in South Dakota is illegal under South Dakota law SDCL 10-50-99. Persons engaged in the business of selling or distributing cigarettes or tobacco products who ship or transport said products to consumers in South Dakota are subject to injunctions, substantial monetary penalties and surrender of profits. An exception exists for the shipment of cigars in South Dakota. See more information about direct cigar shipping below. 

Consumers purchasing nicotine products, cigarettes or tobacco products illegally online, over the phone, or by mail are subject to substantial taxes, interest, and penalties.  Additionally, the product is considered to be contraband and is required to be forfeited to the state and destroyed.

Direct Cigar Shipping

Any cigar seller located inside or outside the state may ship cigars to South Dakota consumers if they have met the requirements to obtain a cigar shipper license and a sales tax license. 

Licensing Requirements

Cigar shippers wishing to become licensed in South Dakota need a sales tax license and a cigar shipper license. There is no fee for a sales tax license, and they are valid until either cancelled or revoked. The cigar shipper license is valid from July 1st through June 30th and must be renewed annually. There is an annual fee of $100.00 for the cigar shipper license. Beginning January 1, 2027, any business that ships cigars directly to South Dakota consumers is also considered to be selling nicotine products and must obtain a Retail Nicotine License. 

Apply Now

Tax on Shipments

Cigar shippers are responsible for remitting 35% tobacco tax based on the wholesale purchase price of the cigars shipped to a consumer in South Dakota. If there is no wholesale price, then the 35% tobacco tax is due based on the manufacturer's cost to produce the cigar. Cigar shippers are also required to remit sales tax based on where the customer receives the order (the customer’s shipping address). Both the product cost and shipping charges are subject to sales tax. The 4.2% state sales tax applies to all shipments into South Dakota. The municipal sales tax applies to shipments made to a location within a municipality.

SEE MUNICIPAL TAX RATES

Reporting Requirements

Cigar shippers are required to file their tobacco tax and sales tax returns, as well as remit the tax due, each quarter through our online Filing and Tax Payment portal.

Other Requirements: 

Other items of interest as they relate to the cigar shipper license are:

• The license only allows cigars to be shipped to SD consumers.  All other tobacco products are still prohibited from being shipped directly to consumers in SD.

• Cigars may only be sold and delivered to consumers who are 21 years of age or older.

• Packaging must be conspicuously labeled indicating that the package contains cigars.

• Cigars shipped to consumers in SD may only be used for personal use and not resold.

Cigarette & Tobacco Product Resources

• SD RYO Cigarette Manufacturer Requirements (PDF)