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20 Mar 2001, USA

Dear Dr. Ecommerce

I live in the United States and would like to open a web site to sell tobacco. Do I need a license for that or should I go right ahead?

Thanks for your time,

Maher

Dear Maher:

I put your question to my buddy and US legal expert, the E-Commerce Genie at the Center for Law, Commerce & Technology at the University of Washington:

"While the Genie cannot tell you what action to take or otherwise give legal advice, we are more than happy to point you to resources on the Web that can assist you and possibly answer your questions. Should you require legal advice, please consult an attorney directly. While we cannot vouch for the accuracy of information contained on the Internet, we have located some sites that may be of interest to you.

It seems that there are several major issues that you need to consider when deciding whether to sell tobacco online to the United States. First, different states have laws requiring that tobacco sellers be licensed. Furthermore, you may need to keep a log of where your purchasers are located in order for states to enforce their local tax requirements for cigarettes sales. Finally, different states have different age requirements for when minors or young adults can purchase cigarettes. Therefore, you need to be aware of the laws of the 50 states and also consider how you will be able to verify a purchaser's age when making a sale.

Although it is unclear to what extent laws of the 50 states apply to Internet sales, many states have taken the position that their laws DO APPLY and they have tried to enforce them against online merchants.

The United States Center for Disease Control has a website which includes a map and summary of state tobacco legislation in the 50 states as of 1999. If you scroll down toward the bottom of the page (below the map) you will see links to various reports including a report on tobacco licensing and also on restrictions on sales to youth and pre-emptive tobacco laws.

Here is a good overview article on the topic:

http://www.bizreport.com/ebiz/2000/08/20000829-2.htm

Many of the states attorneys general have cracked down on sales of tobacco to minors (persons under 18) . Here are a few articles concerning this trend:

http://www.indiaabroadonline.com/PublicAccess/ia010700/Law/CrackdownOnInternetSites.html

http://www.localbusiness.com/Story/0,1118,STL_400862,00.html

Similarly, many states have started to take action to collect tax
revenues on cigarette sales to their residents. For example, in
California, officials found that a 50-year-old federal law called the
Jenkins Act was still in effect. Under the Jenkins Act, anyone who
ships cigarettes must file monthly reports to the state that detail
the purchaser and the amount purchased.

http://www.tobonline.com/ArticlePages/ArticlePagesVol36/vol36p8.htm

http://news.cnet.com/news/0-1007-200-1553811.html

We also note that in the recent pass, Congress has considered legislation designed to regulate online tobacco sales in the United States. To the best of our knowledge, none of the federal legislation has been enacted but you need to keep track of such developments.

http://techlawjournal.com/cong106/tobacco/Default.htm

http://www.cleanlungs.com/education/features/internet.html

New York recently passed a law making it illegal for out-of-state companies to sell tobacco to New York residents. Tobacco companies in New York Court successfully challenged the law. The case, however, is on appeal and the New York Attorney General will challenge the lower court's ruling. While it may be hard for a state to ban online sales of tobacco, they may still be able to pass laws concerning age requirements for online sales or tax collection.

http://adlawbyrequest.com/inthecourts/NYTobaccoLaw.shtml

We hope you found this information useful. Please let us know and don't forget to tell your friends and colleagues about the E-Commerce Genie!"

By the way, it's considered impolite to write an e-mail in all capital letters. It's considered the on-line equivalent of shouting!

All the best,

Dr. Ecommerce