What is the Impact of the PACT Act on Vape eCommerce?
With the PACT Act having recently been amended by congress to apply to all vaping merchandise, those who sell these types of products in vape ecommerce have been directly affected, including the CBD industry. Most specifically, USPS, FedEx, and UPS have all officially announced the end of shipping for electronic vaping devices and the related component parts to homes. Those who do not comply with the PACT Act are subject to serious penalties, even prison, no matter which carrier ships the vaping and e-cigarette products. This means that many online vape retailers will need to look for alternatives to best serve their customers. Because of the latest shipping bans and the complications around it, regional carriers will be needed to help fill in the gaps of delivering to vape customers. While there are some challenges with finding the best options, many of these carriers do offer an advantage of targeting specific geographic regions. Regardless of whether the shipments are B2B or B2C, the recent extension of the PACT Act now also requires that all shippers of vaping products register with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and provide monthly reports on their shipments of vapor products to state tax authorities.Online retailers that engage in B2C shipments will also need to apply for and secure tobacco or vapor product retailer licenses in each state that taxes vaping products and remit the taxes on a monthly basis. As such,
these products are now taxed in 30 states and the calculation in each state is different. This requirement goes beyond traditional sales tax as well. Vape wholesalers and retailers who purchase products from out-of-state manufacturers or distributors will also need to pay the excise tax.
With the increased tax complexity for anyone selling vapor products, these processes will need to be followed closely. There are options to prepare and avoid the problems that come with non-compliance. As rates, product taxability rules and tax laws are constantly in flux, without automation, your business is likely taking on unnecessary risk. With the help of tax experts, vape companies can utilize cloud-based compliance solutions for various transaction taxes to help ease the bulk of the process.
Navigating Compliance and the Customer Experience
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Along with these changes, your shoppers are likely to be affected by some of the confusion as well. That’s why it’s important to comply with the new standards put in effect, and it’s also important to communicate and simplify the buying process with your shoppers to maintain and optimize the customer experience. Whether your customers are purchasing from a business or a home, they need to know how their shipments will be affected. It’s best to ensure that all standards are being met throughout the entire process, from the time customers visit your website up until receiving the order, and that it is being communicated clearly.
Preparation and communication not only helps, it ensures that you are meeting the current needs of the industry. That can mean everything from verifying the age of the recipient and collecting all applicable sales tax, to creating custom extensions to specify which products or categories have restrictions for each state in the admin backend. There are many options to meet and exceed the needs of your customers along with these changes.
One way you can best prepare is to know all your options and learn all the requirements in order to best serve your customers. With our extensive guide for vape ecommerce, we’ve compiled some of the most relevant information and resources to help you understand and prepare. Along with our tax partner, Avalara, our ecommerce experts have come together to offer many useful insights and helpful tips, along with the necessary requirements to comply with the latest standards.