South Dakota’s SB 221- Retailers: New Nicotine Regulations

Senate Bill 221 establishes a regulatory framework for the licensing and oversight of retailers of nicotine and vapor products in the state.

Retail Licenses Required:

Any business selling nicotine products (cigarettes and other tobacco products, vapor products, or alternative nicotine products) must obtain a state retail nicotine license for each location, in addition to their existing sales tax license. License fees vary based on the volume and location of nicotine products sold. Retailers should plan to begin applying for the new nicotine license approximately November 1, 2026.

Sales Restrictions:

Prohibited practices include online/phone/mail sales, free samples, and video game-style packaging. Vending machines are allowed only in licensed alcohol or gaming venues with access restricted to only those over the age of 21.

Sourced Only From Licensed Distributors:

Beginning July 1, 2026, all nicotine products must be purchased exclusively from state-licensed distributors or wholesalers, with records maintained and subject to inspection.

Penalties for Non-Compliance - Violations carry escalating penalties:

• $500 first offense
• $1,000 second offense
• $2,000 plus a 30-day suspension for the third
• $5,500 plus license revocation for a fourth offense within 36 months

As a reminder, all nicotine products may only be sold to customers 21 or older.