The Virginia Department of Taxation does not license cigarette manufacturers to produce or sell cigarette products in the Commonwealth. However, cigarette manufacturers selling cigarettes to consumers within Virginia, whether directly or through a distributor or similar intermediary, must become listed on the Virginia Tobacco Directory published on the Office of the Attorney General website in accordance with Code of Virginia §§ 3.2-4205 and 3.2-4206.
Cigarette manufacturers must also either A) become a participating manufacturer (PM) and perform its financial obligations under the Master Settlement Agreement or, B) be a non-participating manufacturer (NPM) and place into a qualified escrow fund by April 15 of each year such amounts as directed under the Code of Virginia §3.2-401.
Roll-Your-Own Cigarette Machines
Some tobacco shops and cigarette retailers may have installed "self- serve" cigarette machines that allow the customer to make their own cigarettes. Typically, the customer can purchase tobacco and cigarette tubes and then use the store's machine to make the cigarettes. Establishments that have these machines are considered by federal agencies to be cigarette manufacturers for tax and enforcement purposes.
The 2012 General Assembly enacted a law, effective July 1, 2012 that provides for any person who maintains operates, or rents a "roll-your-own cigarette machine" at a retail establishment that enables a person produce cigarettes to be deemed a manufacturer of cigarettes. The resulting cigarette products are subject to state and local cigarette taxes, as well as Master Settlement Agreement (MSA) payment requirements, and also reduced cigarette ignition propensity requirements.
A retail establishment may purchase tobacco upon which tax has not been paid and which has not met the requirements of the Master Settlement Agreement statutes provided that i) the tobacco is sold only to consumers for use in making cigarettes on the roll-your-own cigarette machines, ii) the retail establishment pays the taxes due on such cigarettes, and iii) the retail establishment complies with the Master Settlement Agreement statutes.
The packaging of the cigarettes must also be marked as being compliant with fire safety standards and statements meeting federal requirements related to the health effects of smoking.
The sale and use of cigarette rolling machines purchased for personal use by an individual consumer to make cigarettes for personal consumption and not for rental or use by other consumers is not be subject to these provisions.
Store owners possessing or considering purchasing these machines should contact the Virginia Office of the Attorney General for further guidance regarding the legal requirements of using of these machines.
All manufacturers producing cigarettes in the Commonwealth, or shipping cigarettes into or within Virginia, must file a monthly report of such activities (Form TT-18) with the Department of Taxation. This report is due on the tenth of each month for the previous month. There is a late-filing penalty of up to $5,000 for each failure to file the TT-18 on a timely basis. A class 2 misdemeanor can also be assessed for failure to submit the monthly report.
For questions and information regarding the Virginia Tobacco Directory, contact:
Office of the Attorney General
900 East Main Street
Richmond, Virginia 23219
For questions and information regarding reporting, Form TT-18, or the Cigarette Export Credit, contact:
Virginia Department of Taxation
PO Box 715
Richmond, VA 23218