PCA

Maryland

Alerts & Updates

Key Contacts

Comptroller of Maryland
Revenue Administration Division
P.O. Box 2999
Annapolis, Maryland 21411
(410) 260-7980
[email protected]

PCA Contact

Joshua Habursky
Glynn Loope [email protected][email protected]

Legislative Information

2019 Session Info
2019 Partisan Splits

Taxation

Maryland imposes a tax on tobacco products sold or purchased for resale in Maryland. The tobacco tax must be paid by the wholesaler who sells the other tobacco products (“OTP”) to a retailer in Maryland or by licensed OTP retailers or tobacconists who receive products on which the tobacco tax has not been paid.

Md. Code. Ann. Tax Gen. § 12-102

Md. Code. Ann. Tax Gen. § 12-302

The tobacco tax does not apply to

  • OTP that an OTP wholesaler licensed under Title 16.5 of the Business Regulation Article is holding for sale outside the State or to a United States armed forces exchange or commissary; or
  • OTP that
    • a consumer brings into Maryland
      • if the quantity brought from another state does not exceed other tobacco products having a retail value of $100; or
      • if the quantity brought from a United States armed forces installation or reservation does not exceed other tobacco products having a retail value of $100
    • a person is transporting by vehicle in the State if the person has, in the vehicle, the records required by § 16-219 or § 16.5-215 of the Business Regulation Article for the transportation of other tobacco products; or
    • are held in storage in a licensed storage warehouse on behalf of a licensed other tobacco products manufacturer.

Md. Code. Ann. Tax Gen. § 12-104

A county, municipal corporation, special taxing district, or other political subdivision of Maryland may not impose a tax on other tobacco products.

Md. Code. Ann. Tax Gen. § 12-102

The tobacco tax rate for OTP is 30% of the wholesale price of the tobacco products, except that the tax rate for cigars is 70% of the wholesale price, and the tax rate for premium cigars is 15% of the wholesale price.

Md. Code. Ann. Tax Gen. § 12-105

Maryland HB 1301 (2019) requires certain out-of-state sellers of tobacco products such as pipe tobacco or certain premium cigars to pay the state tobacco tax.

Manufacturers (Form 611) and storage warehouse operators (Forms 612, 612-1, and 612-2) must file monthly information returns with the Comptroller of Maryland no later than the 15th day of the following month, even if there is no activity to report for the previous month. Wholesalers must file a monthly report of Maryland sales of roll-your-own tobacco on which the tobacco tax has been paid by the manufacturer (Form 608-3) and an OTP tax return (Form 609) within 21 days after the end of each calendar month. OTP retailers and tobacconists must file quarterly tax returns (Form 610) by April 21st, July 21st, October 21st, and January 21st. Consumers in Maryland who purchased premium cigars must file a tax return (Form 620) by the 21st day of the month following the purchase.

Md. Code. Ann. Tax Gen. § 12-201: Returns of manufacturers and storage warehouse operators

Md. Code. Ann. Tax Gen. § 12-202: Returns of wholesalers

Form Type / NameForm Number / Link
Maryland Tobacco Tax Forms DatabaseTobacco Tax Forms
OTP Manufacturer ReportForm 611
OTP Storage Warehouse ReportForm 612
OTP Storage Warehouse Schedule – AcquisitionsForm 612-1
OTP Storage Warehouse Schedule – DispositionsForm 612-2
Wholesaler’s monthly report of Maryland sales of roll-your-own tobaccoForm 608-3
Maryland Wholesaler Tax ReturnForm 609
Maryland OTP Tax Return (Retailers and Tobacconists)Form 610
Consumer Premium Cigar Tax ReturnForm 620

Cigar and Smoking Tobacco Definitions

“Smoking” means the burning of a lighted cigarette, cigar, pipe, or any other matter or substance that contains tobacco.

Md. Code. Ann. Health Gen. § 24-501

“Other tobacco product” means (1) any cigar or roll for smoking, other than a cigarette, made in whole or in part of tobacco; or (2) any other tobacco or product made primarily from tobacco, other than a cigarette, that is intended for consumption by smoking or chewing or as snuff.

Md. Code. Ann. Tax Gen. § 12-101

“Premium cigars” mean cigars that (1) have hand-rolled wrappers made from whole tobacco leaves where the filler, binder, and wrapper are made of all tobacco, and may include adhesives or other materials used to maintain size, texture, or flavor; or (2) are designated as premium cigars by the Comptroller by regulation.

Md. Code. Ann. Bus. Reg. § 16.5-101

“Pipe tobacco” means any tobacco that, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco to smoke in a pipe.

Md. Code. Ann. Bus. Reg. § 16.5-101

“Tobacconist” means a person authorized under § 16.5-205(e) of the Business Regulation Article to purchase other tobacco products on which the tobacco tax has not been paid.Md. Code. Ann. Tax Gen. § 12-101

“Other tobacco products wholesaler” means a person who: (1) holds other tobacco products for sale to another person for resale; or (2) sells other tobacco products to another person for resale.

Md. Code. Ann. Bus. Reg. § 16.5-101

“Other tobacco products retailer” means a person authorized under § 16.5-205(b) of the Business Regulation Article to purchase other tobacco products on which the tobacco tax has not been paid.

Md. Code. Ann. Tax Gen. § 12-101

“Manufacturer” means a person who acts as a manufacturer as defined in § 16-201 of the Business Regulation Article or as an OTP manufacturer as defined in § 16.5-101 of the Business Regulation Article.

Md. Code. Ann. Tax Gen. § 12-101

“Wholesale price” means the price for which a wholesaler buys other tobacco products, exclusive of any discount, trade allowance, rebate, or other reduction.

Md. Code. Ann. Tax Gen. § 12-101

“Vendor“, under the sales and use tax, includes a person who engages in the business of a marketplace facilitators or marketplace sellers. 

Maryland HB 1301 (2019)

“Out-of-state seller” means a person located outside the state that sells, holds for sale, ships or delivers premium cigars or pipe tobacco to consumers in the state if, during the previous calendar year or the current calendar year: 

  1. The person’s gross revenue from the sale of premium cigars or pipe tobacco in the state exceed $100,000, or
  2. The person sold premium cigars or pipe tobacco into the state in 200 or more separate transactions.

Maryland HB 1301 (2019)

Restrictions

Maryland state law prohibits smoking in (1) an indoor area or a portion of an indoor area accessible to the public by either invitation or permission, including any establishment licensed under Article 2B of the Code for the sale or possession of alcoholic beverages; (2) an indoor area in which meetings are open to the public; (3) a government-owned or government-operated means of mass transportation including buses, vans, trains, taxicabs, and limousines; or (4) an indoor place of employment, meaning a place in or about which an employee is allowed to work.

Md. Code. Ann. Health Gen. § 24-504

Md. Code. Ann. Labor & Empl. § 5-101

Counties are not preempted from enacting more stringent smoking restrictions to reduce involuntary exposure to environmental tobacco smoke.

Md. Code. Ann. Health Gen. § 24-510

The following are exempt from the ban on smoking, subject to conditions:

  • Private homes, residences, including residences used as a business or place of employment, unless being used by a person who is licensed or registered to provide childcare, and private vehicles, unless being used for the public transportation of children, or as part of health care or childcare transportation;
  • Designated hotel or motel rooms;
  • A retail tobacco business that is a sole proprietorship, limited liability company, corporation, partnership, or other enterprises, in which:
    • The primary activity is the retail sale of tobacco products and accessories; and
    • The sale of other products is incidental;
  • Any facility of a manufacturer, importer, wholesaler, or distributor of tobacco products or of any tobacco leaf dealer or processor in which employees of the manufacturer, importer, wholesaler, distributor, or processor work or congregate; or
  • A research or educational laboratory for the purpose of conducting scientific research into the health effects of tobacco smoke.

Md. Code. Ann. Health Gen. § 24-505

Signs with letters at least 1 inch in height that state “Smoking Permitted in This Room” shall be prominently posted and properly maintained by the owner, operator, manager, or person in control of an establishment where smoking is allowed.

Md. Code. Ann. Health Gen. § 24-506

Maryland law does not provide a specific application procedure to qualify for exemption from the smoking ban. Localities may have specific requirements.

In 2019, the tobacco smoking and purchasing age was raised from 18 to 21 in 2019, with members of the US Military between the ages of 18 and 20 exempt.

Md. Code. Ann. Crim. Law § 10-107

Maryland HB 1169 (2019) specifies that retailers of tobacco must display a sign stating the following message in letters that are at least a .5″ in height. 

“NO PERSON UNDER THE AGE OF 21 MAY BE SOLD TOBACCO PRODUCTS”

A person who distributes tobacco products for commercial purposes may not distribute a coupon redeemable for a tobacco product to any individual under 18 years of age.

Md. Code. Ann. Crim. Law § 10-107(b)(2)(iii)

Staff reported that there is no tobacco tax on free samples of OTP.

Maryland state law contains no specific provisions concerning preemption of sampling, so local communities are allowed to pass more stringent laws or ordinances in this area.

Operating Your Business

Any person acting as an OTP manufacturer, retailer, storage warehouse, wholesaler, or tobacconist in Maryland must have an appropriate license. A license to act as an OTP retailer or tobacconist is required for each place of business. Licensing requirements do not apply to a seller located outside of Maryland when selling, holding for sale, shipping, or delivering premium cigars or pipe tobacco to consumers in Maryland.

Maryland also has a specific “place of business” requirements for license applicants:

  • An applicant for a license to act as a manufacturer must maintain in Maryland an established place of business for the manufacture and storage of other tobacco products. 
  • An applicant for a license to act as a storage warehouse must maintain an established place of business for the storage of other tobacco products on which the tobacco tax has not been paid. 
  • An applicant for a license to act as a wholesaler must maintain
    • an established place of business, including warehouse facilities, for the sale of other tobacco products and 
    • necessary equipment and vehicles for the storage and distribution of other tobacco products.

Md. Code. Ann. Bus. Reg. § 16.5-202

The following are the application requirements for each type of OTP license:

  • Manufacturer or Storage Warehouse
    • Submit a Cigarette and OTP Licenses Application to the Comptroller of Maryland (Form 637); and
    • Pay a fee of $25
  • Wholesaler
    • Submit a Cigarette and OTP Licenses Application to the Comptroller of Maryland (Form 637); and
    • Pay a fee of $250
  • Retailer or Tobacconist
    • Obtain a county license by submitting to the clerk an application for each permanent or temporary place of business located in the same enclosure and operated by the same applicant; and
    • Pay a fee of $15

Md. Code. Ann. Bus. Reg. § 16.5-203

OTP licenses expire on the first April 30th after its effective date and must be renewed annually by submitting a renewal application and paying the license fee.

Md. Code. Ann. Bus. Reg. § 16.5-206

There are two limitations on holding more than one of the above licenses:

  1. An OTP manufacturer, or person connected with the business of an OTP manufacturer or related by ownership, may not at the same time hold or have any financial interest in an OTP wholesaler license or in any business of an OTP wholesaler.
  2. A person licensed as an OTP wholesaler, or person connected with the business of a licensed other tobacco products wholesaler or related by ownership, may not at the same time hold or have any financial interest in an OTP manufacturer license or in any business of an OTP manufacturer.

Md. Code. Ann. Bus. Reg. § 16.5-201

The Comptroller may require a person subject to the tobacco tax to post an OTP Bond (Form 722) for the tax in the following amounts:

  • For a manufacturer or wholesaler:
    • $10,000, plus
    • The amount, if any, by which the tobacco tax due for any 1 month exceeds $10,000
  • For sub-wholesalers or vending machine operator:
    • $1,000, plus
    • The amount, if any, by which the tobacco tax due for any 1 month exceeds $1,000
  • For an OTP wholesaler:
    • $5,000, plus
    • The amount, if any, by which the tobacco tax due for any 1 month exceeds $5,000

The Comptroller may exempt a person from posting the above bond if the person is and has been for the past 5 years:

  • licensed as required under § 16.5-201 of the Business Regulation Article to act as an OTP wholesaler; and
  •  in continuous compliance with the tobacco tax laws (i.e. has not failed to pay any tobacco tax when due or file a tobacco tax return when due); and
  • in continuous compliance with the conditions of the person’s bond

Md. Code. Ann. Tax Gen. § 13-825(h)

Manufacturers (Form 611) and storage warehouse operators (Forms 612, 612-1, and 612-2) must file monthly information returns with the Comptroller of Maryland no later than the 15th day of the following month, even if there is no activity to report for the previous month. Wholesalers must file a monthly report of Maryland sales of roll-your-own tobacco on which the tobacco tax has been paid by the manufacturer (Form 608-3) and an OTP tax return (Form 609) within 21 days after the end of each calendar month. OTP retailers and tobacconists must file quarterly tax returns (Form 610) by April 21st, July 21st, October 21st, and January 21st. Consumers in Maryland who purchased premium cigars must file a tax return (Form 620) by the 21st day of the month following the purchase.

Md. Code. Ann. Tax Gen. § 12-201: Returns of manufacturers and storage warehouse operators

Md. Code. Ann. Tax Gen. § 12-202: Returns of wholesalers

Localities may require additional business licenses.

Form Type / NameForm Number / Link
Maryland Tobacco Tax Forms DatabaseTobacco Tax Forms
Cigarette and OTP Licenses ApplicationForm 637
OTP Manufacturer ReportForm 611
OTP Storage Warehouse ReportForm 612
OTP Storage Warehouse Schedule – AcquisitionsForm 612-1
OTP Storage Warehouse Schedule – DispositionsForm 612-2
Wholesaler’s monthly report of Maryland sales of roll-your-own tobaccoForm 608-3
Maryland Wholesaler Tax ReturnForm 609
Maryland OTP Tax Return (Retailers and Tobacconists)Form 610
Consumer Premium Cigar Tax ReturnForm 620
OTP BondForm 722

Political Involvement

“Regulated lobbyist” means an entity that is required to register with the Ethics Commission under § 5-702.

Md. Code Ann. Gen. Prov. § 5-101(hh)

Unless exempted under subsection (b) of § 5-702, an entity must register to be a regulated lobbyist with the Maryland State Ethics Commission if, during a reporting period, the entity:

  • For the purposesof influencing any legislative action or any executive action relating to the development or adoption of regulations or the development or issuance of an executive order
    • communicates with an official or employee of the Legislative Branch or Executive Branch in the presence of that official or employee, and except for the personal travel or subsistence expenses of the entity or a representative of the entity, incurs expenses of at least $ 500 or earns at least $2,500 as compensation for all such communication and activities relating to the communication during the reporting period; or
    • communicates with an official or employee of the Legislative Branch or Executive Branch and earns at least $5,000 as compensation for all such communication and activities relating to the communication during the reporting period;
  • In connection with or for the purpose of influencing any executive action, spends a cumulative value of at least $ 100 for gifts, including meals, beverages, and special events, to one or more officials or employees of the Executive Branch;
  • Is compensated to influence executive action on a procurement contract that exceeds $100,000;
  • Is compensated by a business entity to influence executive action to secure from the State a business grant or loan with a value of more than $100,000 for the business entity;
  • Spends at least $2,000, including expenditures for salaries, contractual employees, postage, telecommunications services, electronic services, advertising, printing, and delivery services, for the express purpose of soliciting others to communicate with an official to influence legislative action or executive action; or
  • Spends at least $2,500 to provide compensation to one or more entities required to register

Md. Code Ann. Gen. Prov. § 5-702

An entity that compensates one or more regulated lobbyists, and that reasonably believes that all expenditures requiring registration will be reported by the regulated lobbyist or lobbyists, is exempt from the registration and reporting requirements of this subtitle if the entity engages in no other act that requires registration. However, if a regulated lobbyist fails to report required information, the entity will immediately become subject to the registration and reporting requirements.

Md. Code Ann. Gen. Prov. § 5-702

“Lobbying” means performing any act that requires registration under § 5-702.

Md. Code Ann. Gen. Prov. § 5-101(x)

Every regulated lobbyist in Maryland must register with the Maryland State Ethics Commission within 5 days after first performing an act that requires registration by submitting a Lobbying Registration Form (Form 3), along with a fee of $100 per employee the registrant represents. Lobbyist registration must be renewed annually on or before November 1st.

Md. Code Ann. Gen. Prov. § 5-704

A regulated lobbyist must also complete a training course within 6 months of the regulated lobbyist’s initial registration with the Ethics Commission (or if the initial registration is for less than 6 months, prior to any subsequent registration) and thereafter within 2 years of the previously completed training.

Md. Code Ann. Gen. Prov. § 5-704.1

Every regulated lobbyist must file a separate Lobbying Activity Report (Form 4) for each registration: by May 31st of each year, to cover the period from November 1st through April 30th; and by November 30th of each year, to cover the period from May 1st through October 31st.

Md. Code Ann. Gen. Prov. § 5-705

The State Ethics Commission will launch a new lobbying filing system, replacing the system that has been in use for over ten years.  Outdated software and a limited number of programmers who could work on the system necessitated the change.  The Commission is excited about the new system, which utilizes the latest advancements in software and is very user-friendly.  The new filing system is expected go live September 2019.

Form Type / NameForm Number / Link
Maryland State Ethics Commission: Electronic Registration and Reporting SystemE-Registration and Reporting
Maryland Public Ethics Law SummaryPublic Ethics Law Summary

Shipping Regulations

Maryland has specific restrictions concerning the shipping of tobacco products to consumers. The prohibitions do not apply to the order, purchase, sale, or shipment of premium cigars or pipe tobacco by a licensed other tobacco products retailer or licensed tobacconist.Except as provided, a person who is engaged in the business of selling or distributing other tobacco products may not:

  • sell or ship other tobacco products, ordered or purchased by mail or through a computer network, telephonic network, or other electronic networks by a consumer or other unlicensed recipient, directly to a consumer or other unlicensed recipient in this State; or
  • cause other tobacco products, ordered or purchased by mail or through a computer network, telephonic network, or other electronic networks by a consumer or other unlicensed recipient, to be shipped directly to a consumer or other unlicensed recipient in this State.

A licensed tobacco products retailer or licensed tobacconist may deliver not more than two packages of other tobacco products directly to a consumer if the delivery is made by the licensed other tobacco products retailer or licensed tobacconist or an employee of the licensed other tobacco products retailer or licensed tobacconist. 

Md. Code Ann. Bus. Reg. § 16.5-217: Sales or distribution of other tobacco products  

A person may not ship, import, or sell into or within this State any other tobacco products unless that person is the owner of the brand, is the United States importer for the brand, or is a designated agent, and holds any license required by Maryland law.

Md. Code. Ann. Bus. Reg. § 16.5-216: Shipping, importing, or selling other tobacco products

A person who transports other tobacco products by vehicle on a public road shall have in the vehicle a delivery ticket or an invoice that states the name and address of the seller or consignor, the quantity and brands of the other tobacco products that are being transported, and the name and address of a buyer or consignee who is:

  • a person in the State authorized by Title 12 of the Tax – General Article to hold other tobacco products on which the tobacco tax has not been paid; or
  • a person in another jurisdiction authorized to hold other tobacco products on which the tax imposed by that jurisdiction has not been paid; and

Md. Code Ann. Bus. Reg. § 16.5-215: Transport of other tobacco products 

Any person acting as an OTP manufacturer, retailer, storage warehouse, wholesaler, or tobacconist in Maryland must have an appropriate license. A license to act as an OTP retailer or tobacconist is required for each place of business. Licensing requirements do not apply to a seller located outside of Maryland when selling, holding for sale, shipping, or delivering premium cigars or pipe tobacco to consumers in Maryland.

Md. Code. Ann. Bus. Reg. § 16.5-202

Additional information about licensing in Maryland is available at the Operating Your Business link above.

Maryland does not have any specific age verification requirements for the shipping of tobacco products. Sellers must comply with general age verification requirements. 

Maryland imposes a tax on tobacco products sold or purchased for resale in Maryland. The tobacco tax must be paid by the wholesaler who sells the other tobacco products (“OTP”) to a retailer in Maryland or by licensed OTP retailers or tobacconists who receive products on which the tobacco tax has not been paid.

Md. Code. Ann. Tax Gen. § 12-102

Md. Code. Ann. Tax Gen. § 12-302

The tobacco tax does not apply to:

  • OTP that an OTP wholesaler licensed under Title 16.5 of the Business Regulation Article is holding for sale outside the State or to a United States armed forces exchange or commissary; or
  • OTP that
    • a consumer brings into Maryland
      • if the quantity brought from another state does not exceed other tobacco products having a retail value of $100; or
      • if the quantity brought from a United States armed forces installation or reservation does not exceed other tobacco products having a retail value of $100
    • a person is transporting by vehicle in the State if the person has, in the vehicle, the records required by § 16-219 or § 16.5-215 of the Business Regulation Article for the transportation of other tobacco products; or
    • are held in storage in a licensed storage warehouse on behalf of a licensed other tobacco products manufacturer.

Md. Code. Ann. Tax Gen. § 12-104

A county, municipal corporation, special taxing district, or other political subdivision of Maryland may not impose a tax on other tobacco products.

Md. Code. Ann. Tax Gen. § 12-102

There are no additional tax requirements for the shipment of tobacco products. Sellers must pay all applicable taxes.

Disclaimer: PCA believes the information on this site is accurate. However, tobacco laws and regulations are subject to frequent change and court interpretation. Statements above are not intended as legal advice or restatement of law. PCA does not guarantee or assume responsibility for the accuracy, completeness or timeliness of this information, nor that this information complies with all federal laws or the laws of all 50 states. Parties acknowledge and agree it is not the intention of PCA to provide specific legal advice for particular individuals, but rather to provide users with general information to better understand these issues. Users shall neither construe any of these materials as legal advice nor make this site the primary basis for any legal decisions made by or on your behalf and agree to release and waive any claims against PCA for the same. You shall consult with legal advisors concerning any contemplated individual decision.