Ministry of Finance Proposes Licensing for Tobacco and Vape Sales: What Awaits the Market?
The Russian Ministry of Finance has put forward a comprehensive initiative for public discussion regarding the licensing of tobacco and nicotine-containing product sales. According to the draft amendments to the Tax Code, starting March 1, 2026, businesses will need to obtain special permits and pay substantial state fees to operate in this sector.
- Key Proposed Changes
The new regulations will affect both retail and wholesale sellers:
- Retailers, including mobile vendors, will be required to pay an annual license fee of 20,000 rubles. Wholesale operators dealing with procurement, storage, and distribution of tobacco products, raw materials, and nicotine components will face a significantly higher fee of 800,000 rubles.
- A special renewal system has been established for wholesale licenses. Renewals for periods not exceeding five years from the initial license issuance will cost 3,500 rubles, while longer renewals will maintain the full license price of 800,000 rubles.
- Additional Requirements and Fees
For already licensed tobacco industry activities, a new compliance confirmation fee will be introduced, matching the cost of the corresponding license. This measure aims to strengthen market participant oversight.
- Rationale Behind the Reform
The Finance Ministry’s initiative stems from the need to combat illicit trade, which experts estimate accounts for up to 98% of the vape market. The state budget loses approximately 300 billion rubles annually due to illegal nicotine product circulation.
Starting September 2026, criminal liability will be introduced for unlicensed trading, with penalties reaching up to 1 million rubles in fines or three years imprisonment.
- Retail Location Requirements
The proposal includes strict standards for sales outlets:
- Minimum retail space between 25 and 50 square meters;
- Mandatory registration in the “Honest Sign” labeling system;
- No outstanding tax debts.
These requirements mirror those currently applied to alcohol retail.
- Market Reaction and Potential Consequences
Business owners have expressed serious concerns about the new regulations. Industry associations report that about 70% of existing retail locations occupy less than 20 square meters and may face costly expansions or closures.
While experts generally support enhanced market regulation, many advocate for more gradual implementation. Some suggest starting with a registry-based model rather than immediate strict licensing requirements.
- Implementation Outlook
The proposal is currently in the public discussion phase. Simultaneously, amendments to the law on state regulation of tobacco product circulation are being prepared. Final reform parameters may be adjusted based on market participant and expert community feedback.
The new rules are expected to take effect no earlier than March 1, 2026, and not before one month after the law’s official publication. This timeline should give businesses adequate opportunity to adapt to the changing operational landscape.