Tennessee Revenue Dept. says ‘No Tobacco, No Tax’

The Tennessee Department of Revenue stated in a notice on Wednesday that e-cigarettes, vape devices and hemp and herbal cigarettes without tobacco aren’t subject to the state’s tobacco tax.

tax papers
Credit: ICB

When hemp and herbal product cigarettes don’t contain tobacco, they aren’t subject to the state’s tobacco tax, according to Notice 20-21, according to an article on law360.com.

E-cigarettes and vape devices transform liquids into gas and allow inhalation of vapor. While the liquid cartridges can contain nicotine and other compounds, they’re not subject to the tobacco tax because they don’t contain tobacco, the notice said. Smokeless oral nicotine patches also are not subject to the tobacco tax, the notice said.

The notice also said that while many new products are being introduced in the state, some with nicotine and others packaged like tobacco products, the department will not apply the tobacco tax to nontobacco products without statutory clarification on what is considered a tobacco substitute.

Tennessee imposes a tax on the privilege of selling cigarette and tobacco products. Cigarettes are taxed at 62 cents per pack of 20, and other tobacco products like cigars and snuff are taxed at 6.6% of the wholesale cost, the notice said.

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